Emerging Countries Wearing Innovation Crown

Nielsen finds manufacturers, consumers alike driving innovation in growth markets

Two out of every three products are destined to fail regardless of where they’re launched. In addition, more than half of all products launched won’t sustain their year-one sales performance in year two—regardless of whether they’re intended for India, Africa or North America.

But when success is realized, emerging countries are the ones leading the innovation charge. Nielsen Consulting Group’s Global Survey of New Product Sentiment “Where in the World is Innovation?” study revealed that in 2012 emerging-market countries such China, Brazil, India and Mexico stepped up their innovation efforts and entered the list of top 10 innovative markets.

Overall, emerging markets contributed 31% of the world’s new product innovation in 2012, while innovation in developed markets dropped to 69%. In 2008, the world’s 26 developed market countries, which include the United States, Great Britain, France, Germany and Canada, generated 75% of global new product innovation, while the 47 emerging markets launched the remaining 25%.

The methodology of the study showed Nielsen examining 35 years of new product concepts, from 1978 to 2013, by testing more than 175,000 concepts across 73 countries. In doing so, the research firm discovered a shift that saw emerging markets, such as sub-Saharan Africa, gaining ground as innovators.

The shift might not be as surprising considering what consumers in those markets are seeking. Consumers in emerging markets such as Latin America are more eager to try new products than their counterparts in Europe or North America, who exhibit the most trepidation.

Eighty percent of Latin American respondents agreed that they like it when manufacturers offer new innovations, well above the global average of 63%. Comparatively, less than one-fourth (23%) of respondents in Europe and 29% of respondents in North America consider themselves early purchasers of new products.

Nielsen performed close audits of various nations, and one of them was Russia. Louise Hawley, account director and Russia region manager, Nielsen BASES, said Russia is a huge economic powerhouse with significant room to grow. Its growing middle class, high education level and developed technology infrastructure make it ripe for opportunity. A few tips on the Russian market prove to be universal tips for marketers across the spectrum.

For one, don’t be intimidated by charging a premium price if the benefit is justified. There are many ways to make a price accessible to consumers and, by doing so, justify even a premium price. Consider strategies such as changing competitive set, offering size variations (up-size to take advantage of a lower cost per use, or down-size for a lower cost outlay), and offering new benefits over and above current offerings.

Further, successful innovation is not just about coming up with good ideas. It requires a deep understanding of local market knowledge, consumer understanding and category insights.