Last month, it relaunched its best-selling car as the Alto 800 with new 

features. The new Alto is Rs 4,000

to Rs 8,000 cheaper than the old one, depending on the variant. The idea was to push sales. The sales of
the car have been flagging for some time now— in financial year 2011-12, it sold an average of 25,000
units a month. The figure, so far this year, is down to 18,000 a month.

The company works on a five-year plan for each brand to understand the number of variants and full
model changes. Launched in 2000, the Alto, for instance, has been refreshed eight times — the
maximum for a Maruti Suzuki car — followed by the WagonR and the Swift. Says Mayank Pareek, chief
operating officer (marketing and sales), Maruti Suzuki, “Product lifecycle is shortened when it becomes
too familiar in the mind of the consumers (not obsolete) or when a better product hits the market. At
Maruti, customer feedback data is the most important ingredient of our product refreshments.”

At times, companies try to stretch product lifecycles by taking its offerings to new markets with effective
brand management. Around 2009, Research in Motion, the maker of BlackBerry smart phones realised
how its market was restricted to the affluent consumers. In June 2010, in a bid to bring affordability to
its portfolio, the company launched BB 8520 priced at Rs 15,000. This was followed by the launch of a
co-branded campaign with Vodafone, which positioned the brand as the choice of the youngsters, and
not just a communication tool best suited for the corporate honcho.

Later in the year, component costs of handsets saw a steep fall, resulting in BlackBerry slashing the price
of its models. Its service plans had also become cheaper by that time. Says Amit Mathur, director,
channel sales, RIM India, “This helped in taking all our products including the 8520 beyond metros to tier
1 and 2 cities that were warming up to smart phones. Market dynamics, right pricing and branding
helped us increase the life of our handsets.”

According to Yamaha India’s national business head Roy Kurian, manufacturing companies must do

their homework properly before zeroing on a new product launch. On the back of design tweaks made
in the R-15 FZ series and the Fazer in the last one year, the company claims to have achieved a spike of
25-30 per cent in sales.

The right mix

All this is not to say companies should stop investing in new product development and focus tactically —
on simply extending the shelf-life of their faster moving brands. Points out Singh of ISB, “To deal with
rising R&D costs, companies sometimes form alliances to conduct R&D and share benefits. They
sometimes let new ventures test innovative concepts and products in the marketplace and then buy
them out. Other methods are moving R&D resources to lower cost areas such as the developing
countries, working with faculty members by supporting their 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 cut down on investments
in new product development.”

Of course, the spread of communications technology has made things both easy and difficult for
manufacturers. 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 from across 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 hand — you can’t win markets
piggybacking on one element and ignoring the other outright.