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Rohit Nautiyal November 19, 2012 Last Updated at 00:33 IST

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As product lifecycles shrink and R&D costs continue to spiral beyond control, smarttweaking of existing offerings can save the day

In his 2012 book Likeonomics, digital marketing strategist Rohit Bhargava explains how

relevance is the key to building real trust and achieve likeability. The idea may not be exactly

new but it has come back into the spotlight as brand managers and R&D heads across industriesstruggle to come up with relevant offerings as product lifecycles become shorter.

The fundamental question is simple: how do you extend the life of a product at a low cost.

Traditionally, extension strategies have revolved around five basic models. As a marketer, youcould launch a fresh advertising blitz to gain a new audience or remind the current audience or

try brightening up old packaging and introduce subtle changes that dont disturb the basicproduct or alienate your current consumer basethus, creating some excitement on a tightbudget. If you are more adventurous you could opt for price reduction to make your product

more attractive to customers. And if you had a sizeable budget you would add value add

new features to the current product (for instance, video messaging on mobile phones) or evenexplore new markets and try exploring overseas markets. All these strategies have their ownshare of risks but can give your brand the much needed shot in the arm.

From the looks of it, our marketers are revising the old textbooks to come up with smart plans to

extend their products shelf-life without chivvying the bosses for fatter product development

budgets. Mind you, the extent to which product life spans are getting shortened will vary from

industry to industry, from category to category. For instance, technology and youth-drivencategories like mobile handsets and fashion call for an upgrade within three to six months.

On the other hand, FMCG brands, which reap the trust built among its consumers over the years,

survive for longer periods without fundamental changes. Consider this example. In India, there

have been no significant modifications in the formulation of hot-selling brands like Maggi

noodles (Nestle), Cadbury Dairy Milk and Dove (HUL). Innovation is not always an imperativein these categories because consumers are largely habit-driven and, by inference, averse to

radical changes. In 1997, the change in Maggis formulation was rejected by consumers; Nestle

was forced to launch the old Maggi after two years.

At the same time, these star products have been indispensable items in the shopping list of urbanconsumers for decades. In a large measure, this is the result of a strong distribution muscle and

effective brand management. Says Harish Bijoor, CEO, Harish Bijoor Consults, The legacyof star products must be retained to increase a brands lifecycle. Path breaking innovation has a

lower acceptance rate.

The capital-intensive auto industry lies somewhere between the two poles. While engine

technology may not evolve fast, steady changes in design play a critical role in extending the life


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of a vehicle. Siddharth S Singh, director, fellow programme in management and associate

professor of marketing, Indian School of Business, says, A company primarily considers the

return on investment (RoI) in introducing innovations of any kind. Major innovations do nothappen often, and are risky. Therefore, it is attractive for firms to introduce minor innovations as

long as they do not have compelling reasons to introduce major innovations.

He explains how several factors can influence the decision to improve old products without

major changes. Some such key factors relate to a companys internal discipline and external

market forces. For example, a company may be organised to create and introduce majorinnovations as part of its corporate philosophy. So if you are a Hewlett Packard, introducing

regular innovationssometimes even making your own products obsoletewill all be part of

a days work. On the other hand, if a company organises itself for reducing cost, it would avoid

introducing innovations that lead to an increase in its cost unless it becomes necessary due toexternal factors. Examples would be retailers such as Walmart that focus on offering low prices

to consumers .

Smart floggers and tweakingsBarring mobile handsets, R&D costs in industries like automotive, FMCG and consumer

durables have been going through the roof. According to KPMGs 2012 Global Auto ExecutiveSurvey, the importance assigned to new products or new technologies as a factor contributing an

auto companys growth is down to 38 per cent from 44 per cent last year. Brand management has

risen to 8 per cent from 5 per cent in 2011. A new product launch in auto industry is a Rs 1,000-

crore bet materialising in three years after idea screening. This cost must be recovered within theestimated lifecycle of the product.

Things are not very different in white goods. Appliance lifecycles are down to nine years from30 years, say experts. In 2010, Godrej Appliances added 100 stock keeping units under various

categories in its portfolio. Despite following a multi-generation product plan to launch productsin line with changing consumer lifestyle, the journey has not been easy for the company.Because of shorter lifecycles, we have to come up with new platforms every three years which

involves high cost. Also, we do product facelifts on a bi-annual basis to bring new designs to

consumers. The going gets tough if these initiatives are not supported by volumes, says KamalNandi, executive vice-president, sales and marketing, Godrej Appliances.

Currently, Godrej is working to make its existing range of air conditioners more energy efficientby making technology tweaks. A new brand launch is not always the best way out, says the

company. New product failure rate in the US and Europe can be as high as 50 per cent and 90

per cent respectively. Its not much different in India according to studies the new product

failure rate stands at 53 per cent. In this scenario, it makes sense for a company to flog its starproducts by making frequent tweaks in them rather than invest resources on a spanking new idea.

Look at what Maruti Suzuki has been doing in recent years. It has refreshed its offerings fromtime to time to stay abreast of new technology and push sales. Traditionally, there has been a

long time gap between the launch of its cars. The company sailed through during these gaps by

launching new variants (at least two in a year) and making tweaks in the engine, interiors anddesign of its hot-selling cars like Alto, WagonR, Swift and Ritz, among others. Says Sumit


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research, and co-creating products with consumers. That said, innovation is a critical decision

and companies do not take it lightly, he adds.

Smart managers know that. Pareek of Maruti Suzuki, who spends three days in a week with

consumers from across the country, agrees. Getting the most out of existing products with

minimum new investment is certainly attractive, he says, but that should not be a reason to cutdown on investments in new product development.

Of course, the spread of communications technology has made things both easy and difficult formanufacturers. Earlier, collaborations took longer and access to information was limited. This

restricted the pace of innovations. Now people can collaborate easily at a much faster pace, in

fact in real time. The access to information is also easy. Technology has enabled people fromacross the world to work on projects all the way from ideation to finance. While all these factors

have resulted in more and faster innovations they have also resulting in reduced life cycles of

existing products, adds Singh.

So there you have it: enhancements and innovations should go hand in handyou cant winmarkets piggybacking on one element and ignoring the other outright.

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