How to come up with an innovation
This is Part 1 of a two-part series on launching innovations. You can view Part 2 on Bringing your innovation to life here.
This guide has been created to provide you directions to attempt the Reckitt Global Challenge 2021.
Now we know that some of you hate taking directions, and would rather hustle it out yourself. Well all the best to you. Mozart needed no teacher.
genuises never ask for direction
For the rest of you, let us set the context.
Creating an Innovation and marketing it is a challenging task. While there is a mob continuously fighting over how many new products fail every year, the general agreement is that at least as many as 3/4th of new innovations fail. Since this success rate is from marketers with years of experience, a line up of research agencies and a plethora of creative tools, and you on the other hand have, well, probably a fast internet connection and a super enthusiastic, slightly weird team mate, we thought we will help you out a bit.
This brief in no way advocates any one single way in which things should be done, nor does it claim to be an exhaustive hand book for everything you will face while attempting the challenge. Think of it as reading a book about raising a kitten. It will not prepare you for the late night crying or the consistent nail scratches, yet it will act as a source of some eternal truths, for example, keep them away from tulips, and calm you along the way when you see progress as mentioned in the book.
We would suggest you read this guide from start to finish in one go, and then probably refer to specific parts again when you are actually doing them. So let’s get started!
This is a two-part series on how to launch consumer product/ service innovations created for participants of the Reckitt Global Challenge 2021.
Similar to the previous years, the objective for Reckitt Global Challenge 2021 is to launch an innovation which solves an unmet need for the consumer, is strongly linked to an Reckitt Brand’s Purpose, and fuels brand growth in a scalable and sustainable manner. While this series will help you navigate the submission requirements as a Global Challenge participant, it will also be useful for anyone interested in bringing consumer product or service innovations to life, especially in the FMCG space.
In Part 1 of the series, we focus on the big picture by helping you understand:
  • and
In Part 2, we cover aspects about how to bring your innovation tolife, including how to
  • Come up with an impactful communication idea,
  • Design packaging that adds to the proposition
  • Figure an appropriate price strategy,
  • Create a high “RoI” media plan
  • Build an effective distribution and Go-to-market plan
So let’s begin!

1: What is Innovation?

Innovation in business isn’t simply a matter of coming up with something new and (seemingly) exciting. Instead, it’s first and foremost about creating better value for consumers. In other words, innovation, like most parts of business, is about solving problems that your consumers face better than any other solution available in the marketplace.
Do we really need to convince you of its importance to business success? The pace at which products, technologies, trends and user needs evolve imply that a company that can master the “process” of innovation, if such a thing exists, can build for itself a sustainable growth engine- just like Reckitt has.
The goal of innovation, then, is clear- it’s about unlocking growth. The obvious question is just how do we do that?
Before we show you the process of innovation you can follow, let’s take a moment to look at various innovation possibilities through a framework called the Growth Equation.
Growth Equation
The reason we love this framework so much is because it buckets possibilities for growth in a given market into 4 categories- penetration, frequency, average weight of consumption, and pricing. To grow, you need to pull any one of these levers.
To understand these possibilities better through the innovation prism, let us assume that you are tasked with the goal of driving growth for a condom brand.
Growing penetration means expanding your audience base by attracting consumers that don’t consume your brand currently.
In the case of condoms, you could do this by
  • Addressing barriers that potential users have in consuming your brand today. For instance,
    • You could identify untapped or poorly tapped needs and explore if you could solve them better. For instance, a if there is a large section of people who don’t use condoms (or use them but are dissatisfied with their current brand) because they don’t like the “feel” of it during sex, you could launch a product that feels like you have nothing on.
      Durex Ad
    • Or if price is a barrier to purchase, you could create an offering with similar benefits as your base (current) product but at a much lower price.
    • Etc.
  • Providing better solutions for triggers to consumption (triggers refer to core reasons why people consume a category). For instance,
    • If a certain set of condom consumers deeply care for protection against unwanted pregnancy/ disease, you could launch a product that offers more protection to attract this audience to your brand
    • If there a set of users who treat protection as hygiene and are looking for condom brands that maximize pleasure, you could launch a product that offers more on this aspect than current competitors
Frequency of Consumption
The next lever of growth, frequency of consumption, can be driven by providing your brand’s current users with reasons to use it more frequently.
For instance,
  • If you discovered that your current consumers were not using condoms as regularly as they’d have preferred because they simply kept running out of them without warning, you could launch a condom delivery service that would deliver a set number condoms to users’ homes at the start of every month
  • If you discovered that your current consumers were not using condoms as regularly as they’d have preferred because they simply kept running out of them without warning, you could launch a condom delivery service that would deliver a set number condoms to users’ homes at the start of every month
To point out the obvious, you would NOT launch a new product simply because your base brand is not being used on some occasion(s). If your base brand works equally well as the proposed new product in those untapped occasions, you don’t need this new product to drive frequency you could achieve that goal faster by simply communicating your base brand’s fit with the untapped occasions.
Average weight of consumption
The third lever of growth you can pull is average weight of consumption, which is a measure of how much quantity of your brand is consumed in a given occasion.
For instance, you could launch a condom pack of 2, with both units supposed to be used in a single occasion. (Of course not too many people would need a product like that. Average weight of consumption is not usually a lever activated through innovation, but you get the point)
Finally you could grow by incentivizing your current consumers to pay more per unit.
In the case of condoms this could mean:
  • If you discover that your brand’s consumers are often looking to add spice and variety to their sex life, you could offer new and exciting flavours of condoms. In fact, you could keep offering new flavours to match ongoing trends (Covid-19 flavoured condoms, anyone?)
    Live your fantasies Durex
  • You could also launch signature condoms to celebrate special occasions (such as anniversaries)
Note- The assumption is that the new variants are priced higher per unit than the base version.
A final suggestion before we get into the ‘how’ of innovation.

Do not use the ideas mentioned in this document for your global challenge submission.

Why, you may wonder…?
For one, evaluators from Reckitt have access to this training material, but even more importantly, we have come up with these ideas in one sitting without any consumer work, expert speak, trend research etc. Some of these exist already, others should never exist in the first place. You are not likely to win this Challenge with these ideas. Don’t believe us? Read on to find out exactly what it takes to come up with winning innovation ideas.

2: Figuring the Insight and Product Idea

2.1 How to identify which category and brand to work on?

The Global Challenge requires you to innovate for Reckitt for either of the following 2 categories: Hygiene, and Health. Each is in a unique position to make a difference in the world.

Here is a glimpse into the purpose of some of the Reckitt brands (not an exhaustive list, but you can find this information easily on Reckitt:

Go deep into them and their history to know what the brand stands for. Watch the commercials and initiatives that the brands have taken in the past 5 years to deeply understand their purpose so that you are able to suggest the innovations from a Brand Manager’s lens.
Once you have a good sense of the various categories and brands, you get started with the problem at hand.
The starting point for every innovation is to identify consumer pain point.
Changing consumer behaviour is a huge ask and thus, if the pain is not real then they will not be motivated to try something new. The stronger the pain point, the better the chances of innovation working. So, in this step, open up your minds and go and talk to consumers and use various other forms of research to narrow down on the category and the brand that you want to work on.
Step 1: Primary Research
Talk to 10-20 consumers to understand their needs & problems in the areas of health/hygiene. This could be your family/friends or anyone whom you have direct access to. Go completely in depth in terms of the broader space and if possible, observe them and ask questions on practically everything that they are doing. This is a divergent exercise thus far and the idea is to make a note of all the little things that interest you.
Let’s take examples of 2 different categories here. Make notes of consumer verbatims that point to an unresolved problem, an unfulfilled expectation or a need. Jot down these verbatims like,
Laundry: “I hate when my recently bought clothes lose a shade after the first wash”
Sexual wellness:“I wish my sex life was better. I rarely orgasm when we have sex. It feels more about him and his pleasure”
Step 2: Secondary Research
Do a secondary research i.e. read up on various reports, news articles and case studies that address the problems you’re interested in.
Ensure that you read up on the problems specific to your country and the various trends in these spaces. It would also be useful to investigate the various vision statements & sustainability goals of different Reckitt brands and find resonance.
For sexual wellness, based on what the consumers have told you, you could further research & find lots of reports to see the broad sentiment around these topics.
Orgasm Gap Between Men and Women
Accounting for women's orgasm
Step 3: Explore a few Spaces through additional tools
Now from Step 1 & Step 2 you should have found a few starting Spaces. You can now try and substantiate these Spaces using additional tools to collect more data points, including (but not limited) to the following:
Tool 1: Keyword research
In Keyword research, you listen into what users are actually searching for online.
It is one of the most accurate researches since it isn’t plagued by a lot of problems that primary research has, like biased researcher, leading questions, etc. It is also very actionable as we get precise information about the size of each query.
There are tons of use cases of Keyword research, such as this example where figuring out the misspellings being searched by users made the ad campaign improve dramatically.
Besides running ads, Keyword research is also very useful for:
  • To suggest new product categories: For example, a new toy company figuring out that toys for children with special needs is being searched for, and deciding to create toys of this category.
    search volume
  • To create useful content: For example, One Plus can utilise keyword research to figure out that there is a specific issue that is being searched for a lot, and choose to create a video or blog content addressing it.
In this case our objective is to do a Keyword Research to get a better understanding of the consumer needs and hopefully find out some direction towards unresolved pain points.

Step 1: Identifying Use-cases

To be able to do Keyword Research, we must create use cases. i.e. finding all the possible use cases that our category has in the life of the consumers. It is a very “consumer-out way of thinking”.
Let’s go back to our examples again:
For Laundry: We would mention each and every use case in which the consumer might search for our category. For example, searches around:
  • ‘laundry near me’
  • ‘How to get out tough stains’ E.g. Pre-treatment of clothes, etc.
  • ‘How to care for my clothes better’
  • ‘Washing clothes of specific colors’ E.g. washing whites, washing dark clothes etc.
  • ‘Shrinking clothes’
For female orgasm: The following use cases might be important to explore:
Searches around
  • ‘how to pleasure a woman?’
  • ‘women orgasm’
  • ‘can’t reach orgasm’
  • ‘better sex’
  • ‘sexual wellness products online’
  • ‘How to last longer in bed’
  • Etc.

Step 2: Extensive Keyword List

Once all the use cases have been listed, start putting these in the Google Keyword Planner. The GKP will throw up more keywords connected to the keywords that you have put in it. Keep putting them in an excel sheet. The more the number of people searching for a keyword, the bigger the problem is. However even smaller keywords can sometimes lead to interesting insights.
Tool 2:
This tool can really help build on what you were trying to do in Keyword Research. This tool will provide you a list of questions that people have with respect to any word. Click on each question and read up on what the people who ask these queries read. It is a good way to exhaustively research what all is being searched for.
Tool 3: Google Trends
Google trends gives you how a keyword has been trending across a specific time frame. It can be used to understand which keywords are growing in number and which are declining.
Tool 4: Social Listening
Social listening is a type of research which can be pretty useful for marketers. It helps you study sentiments of consumers on social media, providing you relevant data for a number of decisions, such as choosing a brand ambassador, making a statement, understanding competitor’s strengths, etc.
While it’s a great tool to understand the competitor's brand strategy, it is an equally useful one to understand what users are discussing about a specific category per se.
Multitudes of tools like Awario ensure that you can look at individual user posts that mention the keywords that you are looking for. This gets you to hear straight from the users. You can also see what other brands are posting about your category and what is the conversation in popular culture like.
chioe grand
demand orgasms from male partners
You can also get a macro perspective by looking at reports that help you understand trends.
Step 4: Converge
Now with all the data points that you have gathered, it’s time to converge. Narrow down on Spaces which seem large, align with Reckitt’s brands and a deep pain point for the consumer.
Since your goal is to investigate deeply in a short period of time, you might be better served by picking a Space where expertise will not be hard to come by, either because you already have pre-existing information (by being a consumer of it yourself), or you can find experts/ real consumers to speak with at a short notice

A common question for students every year is whether you should narrow down a Space first or pick up a brand first.

You can do either, and both options have their pros and cons. If you pick up a brand first and then narrow down on the Space, it will be much less chaotic and could lead to some deep and focused research with a good output, especially if you are on a clock. But if you pick up a Space first and struggle with it through various sources and with consumers - you will be going wide and the journey could be much harder to converge but can also lead to a goldmine insight which can then be married with the Reckitt brand that fits well with it.
The output of this stage should be the broad category and the specific brand that you want to work on.

2.2 How to do unbiased consumer immersions?

In the good old pre-Covid days, this would have been best done by meeting the consumer in person, but a video call will be a good substitute now. You will try and understand their lives completely in the category that you want to go after. Structure your discussion a bit (with a discussion guide) but let it flow as whatever they say will tell you what to ask next.
What is a Discussion Guide?
It is a set of questions that you put together to use as a guide while conducting consumer immersions. This guide helps us prove or disprove the various hypotheses that we have created so far.
One must start with broad questions (on their life, routines, food habits) and then move towards your category (hygiene in various aspects of life, family members, habits related to hygiene, behaviours towards the various aspects related to hygiene) and then various products or brands (what all products do they use, what do they like, don't like - ideally observe them go about their routine because they will not be able to tell you all that they struggle with and observe it with an open mind for various insights- you are looking for an innovation idea so will have to be something that is not available to them right now so will not be an a straightforward observation).
Points to keep in mind while doing a consumer immersion:
  • Make it in a natural conversation format. If you are only asking questions and they are giving you one word/line answers - it is not going well.
  • Make them trust you by sharing your stories as well.
  • Don’t break their flow of thoughts
  • Inform the respondents that there are no right or wrong answers - everything that they say is interesting to you. Let them know that. Be curious, ask them little details about their home, about how life has changed, about what they think about getting back to normal, about their cooking process, about how they order groceries etc. Share your stories as well for her to feel comfortable.
  • Record the conversation if possible
  • Don’t use marketing terms
  • Ask follow up questions
  • Avoid asking leading questions
In consumer immersions, consumers may often give you solutions or some specific suggestions. Now for each of these, while you must make notes but remember that the more critical thing here is to make a note of the way in which they evaluate and measure value and not the actual suggestion. E.g. If the consumer tells you that they want a spray to clean the door handles, what they are really telling you is that they value portability and want to expend less effort. Customers might also use terms like ‘ease of use’ etc which is open to interpretation and is not an actionable input as you might have a different benchmark of ease of use as compared to someone else and there might be multiple ways of delivering it. For this, you want to go deeper into understanding what they mean by this.

2.3 How to identify Product Insights?

Let’s first understand what we mean by a Product insight.
A Product insight is a problem that a consumer is facing and may or may not know about the solution.

Note: it is always framed from the perspective of the consumer and hence in first person.

Let's take examples of how the conversation with a consumer could flow and how can you get to these problems/needs and thereby the insights. Let us look at them for the laundry category:
You will start the discussion by talking about their usual day and set up an understanding of the kind of person they are. Let's assume that you are visiting existing users of the category i.e. laundry. Let's take a look at the conversation that might happen:
You and consumer
Some more questions that you can ask -
  • What do you use currently? Why?
  • Have you ever tried something different? What? Why?
  • Do you plan to try something else? Where did you come to know of it? Why do you want to try it?
  • What is your washing routine? How was it different when your maid was washing it?
  • Do you think these additional steps you have taken make your clothes virus-free? Why or why not?

Now from the above conversation, we can infer the following -

  • Washing for her is a pain as it is very time consuming
  • Longevity of clothes is very important to her
  • She believes that every cloth needs to be washed differently else they get spoilt
  • The 2 strongest needs for her are saving up on time and customizing the wash as per the cloth type
  • She believes detergents are in general harmful because they contain strong chemicals to remove stains
  • She is aware of other alternatives but none of them help her with a standardised wash (to save time) without spoiling her clothes

Now from the above inferences, we can determine the following insights -

  • I fear that my favorite clothes will get spoilt by washing because that’s what detergents do but I really wish I could have worn those more frequently!
  • I hate washing clothes because I either need to waste time separately washing the whites, inner wear, expensive wear etc or I wash them together and see them getting spoilt.
  • During these pandemic times, I am determined to do everything to keep my family away from the virus. But given that the situation is becoming worse and worse every day, am I doing enough?
Let us take the example of the other space on ‘sexual wellness’ that we had zeroed in.Let us look at some of these conversations. We would be interested in talking to couples as well as individuals.
what was the start

Now from the above conversation, we can draw the following inferences, which can further be drilled down into product insights -

inferences to insights

Output of this stage are real consumer insights in the category that you have chosen.

You might have multiple insights at this stage and as you move forward, you will narrow down on one of them.

2.4 From Insights to Product Ideas

We earlier stressed on identifying a real pain point. But once you have landed gold, the job is to build a product that addresses the need.
Every insight that we have identified above could lend itself to one or more product ideas. And thus, at this stage you again go divergent and let the ideas emerge through a brainstorming session. Look for inspiration in other markets, in other categories and keep an open mind. Don't constrain yourself with any thoughts on feasibility, scalability or sustainability for the moment.
For each insight (or a combination of insights), you note down a product idea, the benefits and an associated big idea. A product idea is when you flip an insight into an opportunity for the brand.
For each insight (or a combination of insights), you note down a product idea, the benefits and an associated big idea. A product idea is when you flip an insight into an opportunity for the brand.
Let’s take the example of the laundry again:
  • Insight “I fear that my favourite clothes will get spoilt by washing because that’s what detergents do but I really wish I could have worn those more frequently!“
    • Product Idea: A natural fabric wash for premium clothes
    • Another Product Idea: Soft wash for clothes which do not have stains
  • Insight “I hate washing clothes because I either need to waste time separately washing the whites, inner wear, expensive wear etc or I wash them together and see them getting spoilt.”
    • Product Idea: A laundry service which takes your clothes in separate clusters and customizes the laundry process for each of them
  • Insight “During these pandemic times, I am determined to do everything to keep my family away from the virus. But given that the situation is becoming worse and worse every day, am I doing enough?”
    • Product Idea: A laundry solution that promises extra protection from the virus
Let’s now take the example of sexual wellness:
insights to product ideas
We will reject Product Idea 3 & 4, since we are looking for innovation ideas and not intent on creating content/communication platforms. These ideas can certainly be explored later on when we are trying to create content marketing pillars as a part of our Media Activation.
Similarly there could be other Product Ideas that could come up in this space from some other conversations in section 2.3. For example,
Insight 5: “I feel strongly about the environment and try to reduce my environmental impact in every sphere of my life. I wish my condoms could also follow the lead”
  • Product Idea 6: A more environment friendly condom
Insight 6: “I am genuinely scared of accidental pregnancies, to the extent that it can sometimes put me off my mood for sex”
  • Product Idea 7: A condom with spermicidal lubricant that can prevent the sperm from fertilizing the egg in the case of condom breakage.

2.5 Finalising the One Idea

Once you have identified multiple ideas, the next step is to shortlist the one product/ service idea that you want to go forward with. This decision should be based on 2 factors – how attractive is the opportunity, and how likely are you to win with it.


is measured by looking at the size of the opportunity: how many people are likely to be interested in buying your product/ service today, how many people would be interested in the future (growth trends), and how profitable is your idea.

Likelihood to win

is measured by evaluating
  • Internal factors such the level of technical/ R&D expertise available within the org to solve this problem well, fit with Brand Purpose, investment needed vs available, distribution capabilities etc
  • External factors such as the competitive environment and regulatory framework within a country
Attractiveness vs Likelihood to win
Using this framework, we can plot the ideas identified for the sexual wellness category and clearly identify that a condom that helps couples to climax together is the most promising idea to build upon.
Likelihood to win
Obviously, you’ll still need to deploy your judgement in plotting ideas on the 2*2 matrix, especially when you do not have enough data, but this framework will help you think about the right kind of issues to consider while narrowing down on the most promising opportunity to pursue.

2.6 Detailing the product/service

Your job here is to be able to list to us the product/service attributes that you can find based on your competitive research and consumer understanding.
As a brand owner, your typical role will be to brief the R&D team on the consumer problem that you want to solve for. Sometimes we need to look for inspiration from alternate categories/markets etc to help the R&D team to visualize the kind of solutions that might work.
For example, say the consumer insight is that “My biggest nightmare is that my baby’s in discomfort or worse falling ill, and I don’t even know about it.”
The product idea in this case would be “A product that indicates the babies’ health to the parents quickly”.
Now it would require some research for us to identify that parents associate their baby’s health with their body temperature. The traditional solution is to keep feeling your baby’s forehead or neck. How can we solve this problem through the product which helps them to know the temperature on an ongoing basis? Your job is not to find out how to do it but only list down the problems that need to be solved for the consumer and the R&D team will be the best one to suggest the technical solution.
We also start to research about what is already out there that can point out a temperature change. You come across dyes & paints that can change color based on temperature. Voila! This can lead us to the area of thermochromism, and present inspiration that can help our R&D team to formulate baby suits and sleepwear that change color the moment a baby gets hot.
In short you have to do the job of starting from the consumer insight to creating an inspiring product idea, and then also do some inspiring research on how you think this product idea can be delivered. Mostly that of Steve Jobs, not Wozniak.
Let's go back to the example of the sexual wellness category -
Since your Product Idea is: ‘A condom that helps partners climax together’, your objective is to do a thorough competitive research to understand what is present out there that can help the product deliver this benefit to act as inspiration for the R&D as well.
In this specific case, textured condoms (with ribs and dots and other textures) were already present out there. These condoms provide additional stimulation to sexual partners. At the same time other condoms with temporary numbing, using a miniscule amount of a local anesthetic were also already present that help against premature ejaculation of men.
Our product idea can be brought to life by dovetailing both these product attributes. What if we had a condom with the ribs and dots on the outside for the additional stimulation of the female, as well as the temporary numbing on the inside so that the male can perform for longer?
This direction was enough to the R&D team at Reckitt to formulate the Mutual Climax condoms that had the following attributes: “Ribs and dots on the outer layer that stimulate the woman. Performa Lubricant that mildly numbs the men.”
Remember that it is upto you how you bring this to life for the evaluator. Present clearly on the things which are needed for the consumers and the associated features which solves for it. You will also get to take technical inputs from the Reckitt team as well once you qualify for a national round.
In this case, since you have to directly propose the solution, we recommend the following -
  • For the big pain point that you are trying to solve for, list down the specific consumer problems that need to be addressed by the product/service
  • For each problem, detail out the how will the product or service solve for it with specific features
  • Create a mock-up / video or anything else to help the evaluators visualize this well. Remember this is a very crucial part as the entire work comes together here for folks evaluation your submissions.
  • Check for feasibility and scalability by seeking technical help and some research

3: Scoping the Opportunity

To scope out the opportunity, you can leverage some of the work done already with more data/ trends to make a persuasive case for your product/ service.

3.1 Calculating the Size of Prize

Using the working that you have done in 2.5 for assessing the attractiveness of the opportunity, present the scope of this opportunity (size of prize) in your submissions taking into account the size of the market, the share that you will be able to occupy, the number of people who will adopt it etc – over a horizon of 3-5 years.

3.2 Reckitt’s right to win

In this section, you use the working done for “Likelihood to Win” in 3.1 to determine Reckitt’s right to win.
You have done the selection of the brand and category in one of the earlier steps. But in this section, the idea is to go back and make sure that the product idea that you have eventually landed is still fitting in that brand’s purpose. Infact, as a good practice, this is a check which should be put in at almost all levels.
For example, if you have picked VANISH as a brand that you are working on, you want to ensure that the problem that you are solving has not become whiteness of clothes and is still around longevity of clothes.
The second part of checking whether Reckitt has a right to win in the space that you are proposing is again by using the logic that you have used to narrow down on your opportunity in section 3.1. Mention the various reasons why your opportunity has a high likelihood to win for Reckitt.

3.3 Financials

Any innovation will work if the financials make sense. And this forms a crucial part of a brand manager’s role. You will need to present a 3-5 year working on the investments and the associated returns to get the buy-in from various stakeholders that this is a viable innovation for the company to invest in.
Lets walk you through some of the relevant heads within a P&L basis which you can make one for your innovation and present the key financial KPIs.
Variable cost
  • These are the costs which vary with output /sales volumes
  • As the volume of production and output increases, variable costs will also increase. Conversely, when fewer products are produced, the variable costs associated with production will consequently decrease
  • Examples: Raw Material, Packaging Material, Variable Manufacturing Expenditure like electricity and labor, transportation of goods from factory to warehouse to customer, and many more.
Fixed cost
  • A fixed cost is an expense or cost that does not change with an increase or decrease in the number of goods or services produced or sold.
  • Fixed costs are expenses that have to be paid by a company, independent of any business activity.
  • Examples: Factory fixed expenses such as salary of factory management, General administrative expenses, Cost of research and product development, Marketing expenses, and many more.
Marginal Contribution
This helps to evaluate the impact of volume changes. It is the amount left over after the payment of variable expenses to cover fixed expenses and a profit margin. MC is important because:
  • Measures the success / cost of gaining / losing an extra tonne
  • An increase or decrease in MC directly impacts the bottom line
  • MC must cover all Fixed expenses if we are to make a profit
Revenue – Variable costs = Marginal Contribution
Marginal Contribution – Fixed Costs = Profit
This is also called the EBIT (Earnings Before Interest and Taxes) and from that we can finally get our Net Operating Profit.
Your objective would be to create the above for your product for a period of 3-5 years. For that you would have to show Sale Projections for the next 3-5 years. Present the key KPIs (Revenue, MC, EBIT, Net Operating Profit) in your one-pagers and expand on it in the subsequent rounds.
Found this useful? Head over to Part 2 of this module to know more about how to bring your innovation idea to life
Written by Eshu Sharma, Nishtha Jain and Varun Satia, co-founders at Kraftshala. Thanks to Anupriya Singhal, Shweta Dogra, Ratika Mehra, Alok Sinha, Jaiveer Duggal, Ankita Chakraborty, Saranya Mukherjee, Shikha Dsouza and a host of former participants of the Reckitt Global Challenge for sharing their inputs and perspectives. Design and illustrations by Geetika Sharma.