The shock caused by the pandemic has forced companies worldwide to cast a critical eye over their portfolios. Brands have been culled and ranges rationalised as the crisis showed in stark relief the products resonating with consumers and those struggling to make any discernible impact.
This pressure has been felt at every level, from startups to global behemoths. Following its steepest quarterly sales decline for 25 years, Coca-Cola began weeding out 200 so-called “zombie brands” that made up just 2% of the company’s revenue.
The brand cull helped the company double its revenue per innovation compared to 2019 and bring “stronger innovation to the table”, because efforts were being targeted on the brands most likely to deliver growth.
At the same time pressure is on for brands to keep developing fresh innovation. New research from LinkedIn reveals nearly three-quarters (74%) of the UK C-suite, including CMOs, believe customers now expect a greater level of innovation than pre-pandemic.
With all these factors in play, will brands be able to make a better return on investment in the short-term by placing selective bets on innovation, or do they run the risk of stymying long-term growth?
Head of global innovation at Tata Consumer Products, Liliana Caimacan, recognises the coronavirus crisis has put pressure on budgets and encouraged companies to focus their energy on established brands. However, she believes it’s important to strike a balance between growing the core and staying relevant.
In fact, Caimacan urges companies to ensure “disruptive innovation” contributes at least 5% of brand growth and to achieve this patience is key.