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Almost half of large businesses leaning on innovation to grow

ROI growthAlmost half of large UK businesses are looking to innovation to drive growth in the next 12 months, suggests data from YouGov.

Launching new products and services is listed as among the most popular means for driving growth this year, with 45% of large businesses indicating they’ll be investing in it over the next year, according to a poll of more than a 1,000 decision makers.

With the rate of inflation slowing in 2024, businesses will most likely need to sell more volume to drive growth this year. Innovation can be a key path to that, with it giving consumers new usage occasions or new reasons to buy a business’s product.

Last month, Coca-Cola CEO James Quincey described innovation as a “competitive advantage” for the business. Nike’s CFO Matt Friend linked innovation directly to pricing power earlier this month and said that “newness” was crucial in driving growth for the brand.

Speaking to Marketing Week at the beginning of the year on how brands could drive growth, Ananda Roy, senior vice-president at FMCG advisory business Circana said, “Nothing replaces innovation”.

According to the data from YouGov an expansion of sales and marketing efforts also ranks highly among business decision-makers as a way for growth. Over two in five (41%) of decision-makers in large businesses say they’ll be investing in this for growth this year.

Notably, it is the most popular strategy to achieve growth among small businesses, with 43% saying they’ll be enhancing their sales and marketing efforts in the next 12 months. It is the second most-popular among decision-makers at medium-sized businesses also.

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Digital transformation initiatives were the most common strategy being pursued by large businesses for growth (56%), closely followed by efficiency and cost reduction measures (55%).

It may seem counter-intuitive to cut costs to drive growth, but many brands are being expected to deliver increased sales on tighter budgets.

Unilever is one business that has spoke about being “stretched too thin”, a phrase used by CEO Hein Schumacher last year as he began his tenure leading the company. His plan of doing  “fewer things with better impact”, saw the company announce it will be selling its ice cream division earlier this month.

Businesses may have to look at portfolio simplification to drive growth this year, Saatchi & Saatchi’s chief strategy officer Richard Huntington told Marketing Week in January.

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While efficiencies take high priority for many large businesses, they also have sustainability high on the agenda, the data suggests. Two in five say they are pursuing sustainability and environmental initiatives as a strategy towards growth this year.

Around a third of large businesses also say they’re investing in collaborations (37%), entering new markets (32%) and workforce expansion (31%) as strategies to drive growth in the next 12 months.

This suggests many businesses are looking to multiple levers for growth.

Speaking to Marketing Week at the beginning of the year, Steve Challouma, chief marketing officer of Nomad Foods, which owns frozen food brands including Birds Eye, said that, during inflation, there had been a fairly “single-minded” focus on price by the business.

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He indicated that in 2024 growth would necessitate the business using all the levers at its disposal. It appears many businesses are looking to do the same, whether that be innovation, expanding marketing efforts or indeed just making more precise choices about investment.

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