The relationship between market share and new product launch in FMCG

Abstract

Research has shown that firms within the fast-moving consumer goods (FMCG) sector are innovating and launching new products to sustain and enhance market share. For innovation to be successfully launched and supported, however, resources – especially financial resources – are required. This research aimed to establish the relationship between market share and new product launches. Do firms achieve higher market share through new product launches, or is it those firms with an already strong market share that are best positioned to undertake and leverage from innovation? The research was designed as a causal study. Data from four sub-categories within the Personal Care sector in South Africa over a period of five years were obtained from Datamonitor. The unit of analysis was firm per market, and descriptive statistics were used to analyse patterns of market share and new product launches as variables per firm. The results indicated that market share precedes new product launches. In all categories, it was the three existing market leaders that were launching new products, and the market share of each was increasing or at least holding stable. Market leaders are driving innovation within FMCG. However the findings also underlined new product development as a key factor in a firm‟s ability to hold or improve market share. The findings of this research contribute to the literature by enhancing understanding of the practice of innovation as a competitive advantage for businesses within FMCG in survival, sector leadership and attainment of strategic goals.