Hugh McDowall – Partner in Business Consulting for the Consumer Products market

Dyson, an icon of inventiveness, has just reported a doubling of operating profits to £190m and a 23% growth in turnover to £770m in 2009. Chief Executive, Martin McCourt, attributes these results, above all, to sustained investment in research and development (R&D) in the face of mounting financial pressure.

Like most manufacturing companies exposed to the recent downturn, Dyson took decisive action to cut operating costs but, unlike many, remained committed to its R&D program to claim market share and drive growth.

In a product category which is highly sensitive to a reduction in discretionary consumer expenditure, Dyson has demonstrated that consumers will not only spend but will also pay a premium for new innovative products – generating accretive revenue and margin not only for Dyson, but for distributors, wholesalers and retailers throughout the value-chain.

This model requires a continuous flow of creative ideas, a rigorous process to successfully identify and back future winners, and the courage and corporate culture to take measured risks. For those who succeed, the rewards are significant.

Other well-known manufacturers continue to capitalise on this business model; innovating to retain market share through consumer and consumer loyalty, driving value through the category, and raising barriers to competitor entry, whilst continuing safeguard future investment.

Gillette has an enviable track record across all of the categories in which it competes; blades and razors, oral care, batteries and electronic goods.

Heineken has also opened up a completely new revenue stream through the introduction of the Heineken DraughtKeg for take-home consumption... an innovation that will find its way into many UK households during the summer World Cup!

Even in tough trading environments, manufacturers can optimise performance through the management of costs and investment, whilst driving growth and competitive advantage through a sustained R&D program. Successful innovation creates the headroom for premium pricing, injecting new revenue and margin into the value-chain.

Read about: Driving growth and competitive advantage through efficient and effective innovation