Author: Pranav Mehra

Innovation has always been a key agenda item for most large companies, although it often only becomes an urgency when gaining unit share in the category starts becoming increasingly difficult and expensive. 

Because this situation is a typical trigger behind innovation focus, it is common for the consumer strategy behind innovation to shift focus to capturing consumers outside of the existing brands’ current consumer base, by focusing on adjacent markets.

Developing these new product lines can open new opportunities in large markets, but most often also come with the need to develop completely new operating infrastructure. Development of completely new production systems & partnerships, new distribution channels and building trust among new consumers are some of the common challenges that come with implementing this strategy, which delays go-to-market & realization of revenues, meaning long investment cycles.

Often, a more efficient strategy to consider before adjacencies is, to innovate to upgrade a brand’s existing consumers and aim to charge premiums to different consumer segments in exchange for better value. Brands often start with the premise that their existing segment is saturated and there is little room to innovate, with a perception of low return on effort.

But that’s seldom the case. Consumers buy a category of products for a multitude of reasons and these products serve many ‘jobs’ that consumers have to do. Helping consumers get these jobs done better or helping them do more jobs can open an array of possibilities to transformation of portfolios to deliver more profits.

Gillette, for instance, has focused on helping their consumers do one job – remove or groom facial hair. It has always focused on that one job and consistently made its design and technology evolve to help get the job done better. Their portfolio strategy offers multiple models with different levels of sophistication (at a corresponding premium), thereby addressing the totality of the market while allowing consumers of every variant a route to upgrade (and for Gillette to increase revenues). It is a great example of a consumer-focused technology company with a sound business strategy.

Innovating for the core requires developing exceptional capability in understanding consumer needs pre-emptively, lean product design/development and data-driven market testing, however it’s a lucrative trade off to heavy investments involved in the adjacencies approach because existing consumers are relatively easier and cheaper to reach & convince as a result of existing resources & relationships being leveraged. Precisely because of this, iterations & improvements are also often cheaper, quicker to test, and investment cycles turnaround faster.

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