Marketing

Project
Submitted by:
Aayush Sharma (B14126)
Akshay Pandita (B14129)
Karan Chhabra (B14149)

Contents

INTRODUCTION............................................................................................... 2

FACTORS AFFECTING PRODUCT INNOVATION.................................................2

FACTORS ENHANCING PRODUCT INNOVATION................................................3

ROAD MAP FOR DEVELOPING A NEW PRODUCT..............................................4

PRODUCT INNOVATION- A POTENTIAL SOURCE OF COMPETITIVE ADVANTAGE

FOR FIRMS............................................................................................................. 7

TRENDS IN DEODORANT INDUSRTY:................................................................8

NEED FOR NEW PRODUCT INNOVATION IN DEOS...........................................12

DEMAND DRIVEN INNOVATION:.....................................................................12

DIFFERENTIATING YOUR PRODUCT FROM COMPETITORS THROUGH

INNOVATION........................................................................................................ 13

PROSPECTS:.................................................................................................. 13

SUMMARY..................................................................................................... 14

 INTRODUCTION
For a company to succeed and sustain, it becomes necessary at a point to bring innovation in
products and offerings by the company. Increasing competition in todays world has created a
strong need to provide product differentiation. Thus innovation becomes central to business
strategy.
But innovation should also be targeted in the right direction. Companies must be well aware
about the areas which require innovation and then work towards the grey areas.
Although it is imperative to innovate, generation of innovative ideas is highly challenging as
there are plenty of factors involved for the idea to succeed. This makes it risky and difficult to
implement considering the high cost of R&D involved, short PLC (product life cycle and
changing technology. While developing a new product it is important to consider profitability,
quality, cost, flexibility, creativity and delivery.
Companies generally face strategic dilemma whether to exploit existing technologies or
explore new ones. Existing competencies may provide them short term success, but
competence exploitation may hinder firms long term vision by blocking the exploration of
new competencies. Successful product innovation demands that a firm must exploit its
existing competencies while trying to avoid their dysfunctional rigidity effects by renewing
and replacing them with entirely new ones.

FACTORS AFFECTING PRODUCT INNOVATION

Global Engagement
Firms have a great advantage if they have global exposure which shows direct
positive relationship between global engagement and innovation by firms. Firms have
more opportunities to improve and innovate their technologies if they have access to
foreign technologies or capital goods for production.
Thus Multinational enterprises tend to have higher propensities for innovation of
product and process.
Information Spillovers
Innovation by one firm not only benefits it but also benefits the imitators. The
decision to invest in R&D depends on the expected future profits generated by the
new product, which in turns depends on the ability of potential competitors to imitate
such innovations.

 Market Structure
Innovation is considered to be both cause and consequence of competitive pressures
characterized by market structure. Thus the threat of new firm entering the market
with better or equivalent product can force the existing players to invest in R&D for
product differentiation.

FACTORS ENHANCING PRODUCT INNOVATION

Market Knowledge
Market knowledge is basically knowledge about its customers and competitors. The
firm should be very thorough with its Market research.
The first component of market knowledge, customer, deals with generating
information about present and prospective customers and using it within the firm.
The second, competitor, refers to generating information about current and future
competitors.
Cross-Functional Collaboration
For a firm to develop a sustainable product, it is very important for various
departments to work in sync. Cross-functional collaboration refers to cooperation in
inter departmental functioning and extent of representation by various departments
(marketing, finance, R & D, etc).
Knowledge Integration Mechanism
Maintaining database is crucial for taking decisions in any organization and becomes
vital when taking strategic decisions. Knowledge integration mechanism is the
process that ensure the capture, analysis, integration and interpretation of market and
other types of knowledge and various departments and functional units of the firm.
Majority of the firms fail to innovate product because of the inability to manage these factors.

ROAD MAP FOR DEVELOPING A NEW PRODUCT

The process of developing a new product idea can be segregated into five phases:

Phase I: Identify the research method and study related to the innovation targeted and

identify the problem.

Phase II: This phase involves clarification of problems and results from Phase 1
Phase III: Based on the problems and research methods identified, conduct the

analysis and measure the article quality within current cases.

Phase IV: Phase III results are fed in two channelsFirst channel goes back to phase II
Second channel led to phase V to develop new ideas.
Phase V: Final Results are compiled to support new product development.

New ideas generated are then further used for developing new products.

The Feedback from the organization helps identify the importance of idea as the basis

of products and suggest changes necessary for improving the idea.

Based on the feedback received, ideas are reworked upon to reduce cost and risk.

The results of all the previous stages are then compiled to create a new product or
service.

The above framework can be used by companies to radically increase use of scarce resources
and reduce cost and risk simultaneously. But it is also important for the organization to
continuously nurture and develop innovation process.

Best methods for developing ideas for product innovation

Voice-of-customer methods

Customer visit teams: Teams visit clients and customers to conduct interviews based

on a structured guide to understand problems, needs, and wants.

Customer focus groups for problem detection: Focus groups are used to identify

needs, wants, problems, points of pain, and new product suggestions.

Lead user analysis: A group of innovative customers or users are roped in to identify
problems and potential solutions.

Ethnographic research: Observing, following and probing customers for extended

periods as they use or misuse products.

The customer or user designs: Customers incentivised to design their next new
product.

Customer brainstorming: Group of users are assembled and employed in formal

brainstorming sessions.

Customer advisory board or panel: Customer advisory board or user group is

consulted to advise on problems and new products needs.

Community of enthusiasts: A community of enthusiasts discuss your product, often on

the internet and thereby identify problems and seek ideas for new products.

Open innovation approaches

Partners and vendors: Utilizing outside partners and vendors for seeking new product

ideas. The advantage is that partners bring extra technical capabilities.

Accessing the external technical community: It is an open innovation approach which

solicits ideas and solutions from the external scientific and technical community
Scanning small businesses and business start-ups: It is an open innovation approach
in which small and start-up businesses are accessed to get ideas.

External product designs: This open innovation method involves using the internet to
invite customers and others from the external world to submit finished product

designs and ideas.

External submission of ideas: In this open innovation approach, customers, users, and
others in the external world are invited to submit their new product ideas, often via the

internet and your Web site.

External idea contest: Involves hosting a contest and inviting the external world to
submit ideas.

Other

Peripheral vision: Examine the outside world to find trends and threats and thereby
identify potential new products

Disruptive technologies: Monitor technological trends formally and identify potential

radical technologies; and thereby define the resulting new product ideas.

Patent mapping: Mapping or mining others patents to understand where the technical
and competitive activity is and identify the potential areas for a new product.

Idea capture internally: Formally soliciting new product ideas from your own
employees.

Above methods sourced from http://www.prod-dev.com/SGI/downloads/wp/wp_29.pdf

As per Arthur D. Little global study, of five best practices identified, idea management has
the strongest impact on the increase in sales by new products. In other words, having
effective idea management results in an extr 7.2 percent of sales from new products.
Role of Research and Development in Product Innovation
Success in product Innovation is very critical issue for a company, irrespective of its domain.
Understanding the factors that push success of a product can help a company focus valuable
resources which in turn improves value delivery process and increase the market demand for
a firm's new products. Product development as rational plan, communication web, and
disciplined problem solving. Second, synthesize research findings into a model of factors
affecting the success of product development. The model highlights the distinction between
process performance and product effectiveness and the importance of agents, including team
members, project leaders, senior management, customers, and suppliers, whose behavior

affects these outcomes. Third, indicating potential paths for future research based on the
concepts and links that are missing or not well defined in the model.
Co-relation between R&D and product innovation

Co-relation between R&D factors and improvement in product innovation

Co-efficient of corelation
increase in technological
advancement
between positive attitude
toward new technology
organizational structure
production capacity

core
competencies

competitive
edge

profit

market
share
expansion

0.876

0.461

0.136

0.715

0.876

0.461

0.136

0.715

0.136
0.715

0.34
0.361

0.75
0.287

0.287
0.62

PRODUCT INNOVATION- A POTENTIAL SOURCE OF COMPETITIVE

ADVANTAGE FOR FIRMS
As per The Scientific Activity Predictor from Patterns of Heuristic Origins product
success was primarily related to the following five factors:
(1) User needs should be understood,
(2) Attention should be given to marketing and publicity,
(3) Development should be efficient,
(4) Technology and external scientific communication should be adequately used,
(5) Utilization of expertise and knowledge of senior managers.

 TRENDS IN DEODORANT INDUSRTY:

Given the recent exit of Jyothy Laboratories due to apparent differences with Henkel of
Germany, gives insight of the trend in Indian Deodorant sector, especially in Women
Deodorant market. Where Fogg created its own market with intense market research and
making a right fit product in market, Jyothy laboratories realized it quite late that Indian
population is predisposed towards stronger fragrances, which products such as Fa in its
portfolio did not accomplish.
Jyothy laboratories integrated Fa and other brands of Henkel in its portfolio and its problems
started early when Henkel did not let it temper with the original fragrance to make it more
India specific. It was one of the initial brands in Women Deodorant category when Jyothy
laboratories realized that mens category is already saturated with many products.
New Entrants:
With the growth of Indian Deodorant market pegged at 18%, it is one of the fastest growing
good in FMCG. Riding on this bandwagon, small town, low end deodorant brands such as
Dynamite, Aira sensual, Men club, Lady Diana are taking steps to enter into major towns to
take like of Axe, Engage and Fogg head on. Earlier Deodorant business happened to be a
phenomenon usually reserved for long and hot summers, but its very recent that Indian
consumers have given an ear to marketers pitch of smelling good as a part of looking good.
Brand expert Harish Bijoor is of opinion that The smell culture is evolving. Deodorants are
taking the place of talcum powder just the way tooth paste displaced tooth powder a long
time ago,"
"Low income families are taking to deos as well," he added.
Little wonder then the deodorant market is seeing brands emerging as if they are being
sprayed out of an aerosol can, and winners are not always predictable. At the higher end,
ITC's Engage, available now in 14 variants, have become the second largest player by
volume. But the even more smell-good story is that of the largest player, Fogg, marketed by
FMCG minnow Vini Cosmetics.
Intense Competition:

FMGC major HUL's popular deo brand Axe was beaten by Fogg last October and then ITC's
Engage claimed the second spot.
Now Wildstone, a deo from another FMCG minnow, McNROE Cosmetics, is spraying down
Axe's neck, having achieved fourth place in the market. It has become one amongst two top
players with its Wildstone and Secret temptation brands. Bottom line being, that even in
urban India, Deodorant penetration stands to be at 9%, holding opportunities for all the
players to grow the demand.
But one thing which expert agrees upon is that one thing which is driving demand more than
anyone is preference of different fragrances for different occasions. Over 10 per cent of
deodorant consumers are said to be the heavy users who prefer multiple brands and/or
variants of a single brand for multiple occasions. These consumers are vary of the fact that a
usual day at office, an informal party or evening dinner require different fragrances. This
trend is not seen in any other FMCG product as consumers are more loyal towards the brand
they have been using, be it detergent or toothpaste. This is why growth in deodorants is
pegged at 18% vis--vis 9% average growth rate in FMCG.
Deodorant Market in India
Deodorant market is among the fastest growing product in the FMCG category and is
growing at 16 percent in India. This kind of growth also makes India, as the fastest growing
deodorant markets in the world. As a result major FMCG companies are fighting an intensive
battle in for a share of the pie in the Indian. They have made various attempts through
product innovation to grab the consumers attention.
Year
2014
2012
Deodorant
Market Size (In 2100
1521
Rs. Crore)
Source: Euromonior International

2011

2010

1129

793

In India the market is dominated by companies of Indian origin, rather than MNCs. As
Economic Times report based on the March 2014 quarter Nielsen data, Fogg leads the
market with 17% market share and is followed by Park Avenue with 8%. While Axe has
slipped to third place with only 6% market share and its market share is now almost identical
to Wild Stone. Although Axe has been in the market for long, it just took four years for Fogg
to become the leader in the market. The reason for this phenomenon success is attributed to
product innovation and creative positioning of Fogg.

 Segmentation of this market

Aerosols

Body sprays

Deodorants/anti-perspirants

Roll-ons

Growth driver

Overflow from supply side: Various new brands are introduced in the market every
year each backed by intensive marketing strategy.

Ever evolving consumer preferences: Mass media campaigns have led to creation of
the need to smell good. Natural climatic conditions of the regionof heat/ humidity/
dust, etc fuel this need.

Men in India are slowly becoming more and more conscious of their grooming needs
(including body odour)

Affordability: Most deodorants are in sub - Rs 200 price points which make them
more affordable.

Future growth determinants in deodorant category:

Category penetration would continue to increase as the channel increases in its reach.

Higher disposable incomes.

Consumers looking for products that are strong on innovation.

From Sensational To Functional - The Shift in the Deodorant Industry

As the market has matured and competition stiffened consumers, especially well-aware urban
consumers have started looking for secondary benefits from their deodorants, such as antiperspirant, underarm skin whitening and alcohol-free.
To tap into the growing needs of urban consumers, new entrants like Fogg and Engage have
hit the right chord with the consumers. Fogg has increased its market share manifolds in two
years. It clearly managed to dent the market share of Axe that was leading the market. The

story is simple: clear product innovation to fill the gap, clear advertising communication
and a clear win.
Fogg made a clutter breaking entry with a clear message of 800 sprays in one bottle and
grabbed the attention of the consumers who saw the functional benefit as a unique offering.
This category faces three types of consumers - loyalists and semi-loyalists and then there are
hunter consumers. The bulk consumers belong to the segment of loyalists and semi-loyalists
consumers who like to experiment with new fragrances and packaging.
Communication strategy in boring loop
Deodorant market in India for men is much bigger than women. The size ratio is 3:1.
But most of the communication strategy had remained the same highlighting the sex
appeal. Globally, fragrances always talk about attraction that it creates around you. But the
difference lies in how does one goes about communicating that message. Fogg challenged
this model by communicating its product innovation.
Other product innovations in deodorant market space are

Skin whitening deodorant

Fragrance retention deodorant
Anti-perspirant deodorant
Deodorant sticks
Alcohol-free

Degree of usage (Consumer study report):

According to a consumer research carried out by Mcnroe, Delhi and NCR region contributes
almost 14% to the overall deodorant market and consists of heavy users. Also, about 70% of
the users are Men, study pointed out.
Changes in lifestyle, evolving preferences along with increase in disposable income are also
some contributors that are spearheading the growth in the category. Deodorants are becoming
an integral lifestyle product as urban youth is increasingly searching for grooming choices to
indulge in.

(Taken from Internet)

NEED FOR NEW PRODUCT INNOVATION IN DEOS
In recent years, with the increase in men's awareness of personal hygiene, there is a rapid
growth in antiperspirants and deodorants formulated for men. The usage rate of
antiperspirants and deodorants for men was low. This trend has changed and is here to stay.
The market trends for deodorants and antiperspirants are toward clear and highly effective
formulations that are mild and non-irritating. Consumers want choice in their
antiperspirant/deodorants. While some consumers find fragrance to be the most important
aspect they're looking for, others find odour and wetness protection to be the most vital.
Improving efficacy and skin compatibility is an ongoing trend in the antiperspirant field.
Another latest trend is to formulate products based on naturally-derived raw materials and as
a result, formulators are constantly revising old formulas.

DEMAND DRIVEN INNOVATION:

Success in innovation is based upon the three core disciplines. Organizations that inculcate
these disciplines have a higher chance of success than others:
Demand-Driven Insight:
At the heart of breakthrough innovation is a deep understanding of latent demands either
through market research or an understanding, which not many organizations have.
Demand-driven development:

Innovation team of the organization has to pursue demand driven insight religiously. They
have to ensure the alignment of concept, product and go-to-market execution, which should
be sufficiently different from the approaches followed previously- then only can the firm
ensure breakthrough proposition.
Pervasive leadership:
Innovation process has to be driven with commitment and passion, crossing the countless
hurdles that come in all the stages and in different forms. It requires an all pervasive
leadership to achieve success.

DIFFERENTIATING YOUR PRODUCT FROM COMPETITORS THROUGH

INNOVATION
A company can differentiate its product from the competition on the basis of any 1 or more
variable in the marketing mix i.e. 4Ps Product, price, place and promotion. Being a FMCG
product; Fogg played the first P i.e. Product card quite well. T
Consumer need gap leading to Innovation: They found out that the deodorant can be
differentiated by having less gas and more perfume. Thus providing more value to the
customers. The customers were guaranteed to have 800 sprays from a bottle of Fogg Royal
priced at Rs. 170/-. Thus the functionality of having more number of sprays in a bottle
worked wonders for Fogg and it became the leader in the market.
Communicating the innovation: The functionality was also adopted well in the promoting
the product with the tagline No Gas, Only Deo. This kind of positioning was also different
from the competition including Axe, which emphasized only on the seduction aspect to sell
their deodorants.

PROSPECTS:
Increasing number of brands are expected to dive in categories like Antiperspirant, skinwhitening or hair growth so as to increase the perceived value to the customer and thus
earning higher margins on the products.

Deodorant market is expected to grow by a value CAGR of 12% at prices taken constant at
2013 value and reach INR34.1 Billion by 2018.
Deodorant sprays are likely to remain the category leaders given its level of acceptance and
the focus of companies towards new launches in this segment.
As number of launches in women deodorant market as is appearing from the recent launches
by Hindustan Unilever and its plan to extend Lux brand into it.
Engage from ITC ltd can be the fore runner in the market given the positive response it is
able to garner from the market, both customers as well as retailers.
Siyaram Silk Mills Ltd and HLL Lifecare Ltd are planning to enter the deodorant market in
2014. Also, Viacom 18 Media Pvt Ltd (MTV deodorants) and Fizikem Laboratories Pvt Ltd
(Ozo deodorants) are aggressively increasing their penetration in the market.
Deodorant sprays are slowly taking over talcum powder market due to conveniencein the
rural market which have traditionally been strong point for rural markets.

SUMMARY
In the Indian market several domestic and international companies launched their Deodorant
range due to its high growth potential. 2013 witnessed several new launches and marketing
campaigns by new manufacturers.

Growth in value terms of deodorants in 2013 was 28%. Various factors as were
discussed earlier are responsible for it like growing acceptance as a cheaper
alternative to fragrances, increasing penetration in tier III cities and rural areas,

growing working population and increasing need to feel fresh for the whole day.
Growth was slower than the 35% value growth in 2012 (although being highest in
personal care) because deodorants was relatively new in India and was moving

towards a stable growth rate.

Deodorant sprays witnessed fastest growth with 28% in 2013 reason being its
convenience to use compared to a deodorant roll-on. Deodorant sprays also replaced

talcum powder for grooming in urban India.

Interestingly, Mens deodorants accounted for 70% value share of deodorants in India
because of higher proportion of working class men and many times women use Mens
deodorant because of its strong smell.

Marketers noticed a gap in dedicated women segment of deodorants and thus it

witnessed launch in this segment such as Fogg for women range from Vini Cosmetics
Pvt Ltd, Engage for women range from ITC Ltd and Flip for women range from

Provogue (India) Ltd.

TV commercials were the preferred way to build the brand equity over the review
period. Mens deodorants continued to be marketed on sensual theme, which was
followed by many new entrants. However, new entrants such as Vini Cosmetics Pvt

Ltd and Nivea India Pvt Ltd tried different themes such as no-gas and antiperspirant.
Womens deodorants continued to be marketed on additional benefits theme such as
under-arm whitening or antiperspirant, although there were exceptions like Engage for

Women from ITC Ltd, which was based on sensual theme.

Deodorants segment witnessed low brand loyalty and impulse buying was the
common phenomenon. Thus, over-the-counter promotions and discount offers in

supermarkets and hypermarkets were preferred by marketers.

In order to differentiate their products in the competitive market, the owners of
deodorants brands like Nivea and Dove offered some additional benefits such as
antiperspirant, skin- whitening characteristics or deodorants with no gas. Companies
even tried peculiar features, for example, Eternal Personal Care (I) Pvt Ltd launched a

deodorant range named Bad Boy.

This brand was promoted showing the typical sound created by its cap when it is

opened.
There was no trade down from fragrances to deodorants but brands like Fogg from
Vini Cosmetics Pvt Ltd moved closer to perfumes by providing no-gas deodorants.