Blog: Category leaders are not true innovators. Don´t innovate, copy.

Why Copying Can Be a Smart Business Strategy: 5 Key Reasons

In the fast-paced world of business, innovation often takes center stage. However, there are situations where copying can be a strategic move that yields significant benefits. In general, category leaders don´t truly push for breakthrough innovations. They observe small players, start ups and disruptive minds who dare to challenge decreasing categories to improve them and make it more relevant for current consumer needs. In the image below you see the example of Alpro, in Mercadona´s shelf. This brand owns this big format while the retailer keeps offering small ones. Do you think the spanish retailer is preparing its own one? When do you think they will lauch it?

Let’s explore five reasons why copying, when done thoughtfully, can be a smart business strategy.

Alpro format

1. Mitigating Risk in a Competitive Landscape

When a successful business idea emerges, imitators naturally follow. These copycats aim to replicate the success of the original venture. While innovation carries inherent risks, copying provides a safer path. By observing what works for others, companies can reduce the uncertainty associated with untested ideas. Investors often seek firms with strong competitive resilience or those operating in markets with high barriers to entry to mitigate risks1.

2. Leveraging Existing Market Insights

Copying allows companies to tap into existing market insights. When a competitor introduces a successful product or service, it reveals valuable information about consumer preferences, demand, and market gaps. By emulating these successful offerings, businesses can leverage the knowledge gained by others. For instance, in African open markets, vendors switch from selling bananas to yams when they notice their neighbors’ profits from yams1.

3. Sophisticated Imitation in Developed Markets

Even in developed markets like Western Europe and the U.S., companies engage in sophisticated imitation. They carefully avoid legal issues while emulating each other. Consider the cloud storage services—Apple iCloud, Microsoft SkyDrive, Google Cloud Storage, and Dropbox. Despite branding differences, they imitate one another to meet customer needs1.

4. Strategic Adaptation to Consumer Trends

Copying can be a strategic response to changing consumer behaviors. When a competitor introduces a successful product aligned with emerging trends (such as healthier lifestyle choices), imitating that product can position a company well. Over 50% of recent Breakthrough Innovations winners in Europe include “healthier lifestyle” claims2.

5. Focusing on Execution and Efficiency

While innovation requires creativity and risk-taking, copying emphasizes execution and efficiency. Established companies can optimize their supply chains, distribution networks, and operational processes by imitating successful practices. This synergy-based model helps control costs and ensures consistent execution1.

Breakthrough Innovation in FMCG Sales

Now, let’s look at breakthrough innovation in the Fast-Moving Consumer Goods (FMCG) industry. Historically, FMCG companies excelled in mass-market brand building, product innovation, and early entry into developing markets. However, recent trends indicate stagnation in top-line growth. From 2012 to 2015, the FMCG industry achieved organic revenue growth of 2.5%, net of M&A, foreign exchange effects, and inflation. This figure is slightly lower than global GDP growth over the same period3.

Table Summary: Breakthrough Innovation in FMCG Sales

Below 5 key FMCG players worldwide and the % of Breakthough Innovation in Sales ($)

FMCG Manufacturer	Breakthrough Innovation in Sales (%)
Company A	6%
Company B	8%
Company C	4%
Company D	10%

Conclusion

While innovation remains crucial, strategic imitation has its merits. Companies should balance creativity with practicality, leveraging existing insights and adapting to changing consumer preferences. In the ever-evolving business landscape, a thoughtful blend of innovation and imitation can lead to sustained success.