: Growth Stategies- Home Entertainment Retail Industry

CDU Business School

Lesson 09 Strategic considerations - Innovation and NPD

Reading: review chapters 7, 8 and 9

Overview

• Innovation strategy

– Incremental innovation vs radical innovation

– Innovation dimensions and process

• NPD research – Idea generation and understanding need & motivation

– Product concept testing

– Evaluating & improving products

Incremental vs. radical innovation?

(& NPD)

Innovation - why bother? What are they?

Examples of each?

Leader vs. follower innovation strategies

Technological leadership

First-mover advantage may be achieved by:

• Patent protection – where possible

• Secrecy and advances in the product

innovation learning curve

Value chain strategies

The market pioneer may be in a position to:

• Pre-empt sources of supply

• Shape the way the product is distributed

• Establish close relationships or strategic

alliances with distribution partners Take-over

Let the pioneer take all the risks then

acquire the skills, patents, learning curve

Follower

Capitalise on mistakes made by the pioneer

Leapfrog the pioneer by perfecting the

processes:

• lower price due to economies of scale

• a technologically superior product /

superior product quality

• superior product positioning – value

proposition / segmentation

• superior customer service

• Superior marketing

Overview

• Innovation strategy

– Incremental innovation vs radical innovation

– Innovation dimensions and process

• NPD research – Idea generation and understanding need & motivation

– Product concept testing

– Evaluating & improving products

Seven dimensions of NPD best practice

See chapter 9 of the unit text for greater detail

Process, research, metrics

are all closely inter-related

The innovation strategy dimension

• NPD is considered within the context of

the organisation’s mission and vision and

long-term strategic planning processes

• Considered to be an ongoing process

• Focus on maintaining the right balance for

the innovation portfolio

Examples of companies that are

(not) innovative

Company culture

• A focus on fostering innovation

• Innovation a core and

continuous process

• Top-management support

• Cross-company alliances

• Collaborative partnerships and

alliances

Project climate

• Appointment of dedicated,

accountable and empowered

cross-functional teams

• Teams are typically specialists

in R&D, engineering,

manufacturing/production and

marketing

Commercialisation

• Strategy, e.g., Brand extension

• Implementation - three phases:

• Pre-launch

• Launch

• Post launch

Interactionist communication model Where sender and receiver play equal roles it is more likely to result in

developing products that match motives, values & lifestyle

CULTURAL CONTEXT

1 2 Self / Other

Other / Self

Object of communication

Process

• Idea generation and

development

• Concept testing and refining

• Incremental improvement

Process, research, & metrics

NPD research

Combination of traditional and

contemporary research techniques:

• Brainstorming, focus groups,

Delphi, customer visits, conjoint

analysis ethnography, lead user

processes, crowdsourcing and

open innovation

Metrics & performance

• A focus on performance goals:

• Metrics for each stage of the NPD

process:

• Concept generation & testing

• Launch & post-launch performance

monitoring and review

Evaluate brand value and track the brand performance (BHT)

Concept development &

testing

The process dimension

Idea generation

Concept development

& testing Product improvement

The fuzzy-front end of innovation

Idea generation

Concept development

& testing

More advanced innovation themes

Problems &

innovative solutions

Barriers to innovation

diffusion

Unintended negative

consequence of innovation

Increasing

complexity

Overview

• Innovation strategy

– Incremental innovation vs radical innovation

– Innovation dimensions and process

• NPD research – Idea generation and understanding need & motivation

– Product concept testing

– Evaluating & improving products

For the product (which includes service aspects), & packaging elements of the mix it is CRITICAL TO SATISFY

CUSTOMER NEEDS…

Clear competitive advantage can be gained in this regard.

Consequently there are well defined approaches for

understanding MOTIVES, VALUES & LIFESTYLES

Focus groups and ethnographic research are particularly effective in this regard

http://www.youtube.com/watch?v=9tHgNXzS2EY

Physiological Needs (food, water, air, shelter, sex)

Safety and Security Needs (protection, order, stability)

Social Needs (affection, friendship, belonging)

Maslow’s hierarchy of needs

Ego Needs (prestige, status, self-esteem)

Self-

Actualisation (self-fulfillment)

Lower order needs must

be satisfied first.

The least satisfied need

is the most motivating

SEGMENTATION &

POSITIONING

APPLICATIONS –

Many products (&

ads) seek to satisfy

particular needs in

the hierarchy ….

Much research (QUAL) in particular also seeks to identify different orders or levels of need

Types of motivation

• POSITIVE MOTIVATION - driving force towards some object or condition (e.g., a university degree) often referred to as an APPROACH object

• NEGATIVE MOTIVATION - driving force away from some object or condition (e.g., unemployment) thus sometimes referred to as an AVOIDANCE object http://www.youtube.com/watch?v=Iew6JNJcfFM

• The consumption of certain brands or products can also contradict or conflict with other motives / goals…

• Suppliers seek to reduce conflict to increase consumption of their brands.

Research (QUAL in particular) seeks to establish sources of positive & negative

motivation, as well as conflicting motives.

“Just like a Mars, only red”

“Legendary taste half the fat”

How does research establish sources of motivational

conflict?

What are all the reasons people have for eating at McDonald’s

& what are all the reasons

people have for NOT eating at McDonald’s

What are all the things you like about petrol?

& what are all the things you don’t

like about it?

Irrational logic – but it works?

S 400 BlueHYBRID the world's most economical luxury saloon

…. fuel consumption a mere 7.9 litres per 100 kilometres.

What conflict is being reduced

here?2015 emissions fraud!

Overview

• Innovation strategy

– Incremental innovation vs radical innovation

– Innovation dimensions and process

• NPD research – Idea generation and understanding need & motivation

– Product concept testing

– Evaluating & improving products

Product research – concept testing – can be a qual’ or quant’ approach…

DESCRIBE / SHOW NEW PROD with proposed mix elements, e.g., price, then

probe on

– Likes and dislikes

– Easy to understand

– How interested in buying

• if not why not

- Product meant for?

– How you feel about its VALUE

• if poor how much WILLING TO PAY

– Rate in terms of being DIFFERENT from other products

– How BELIEVABLE is the new product idea

Approach aims to:

• establish potential market

• tweak / modify the concept

40

30

25

30

35

25

5 5

0

10

20

30

40

50

Like idea a

lot

Concept

easy to

understand

Concept

believable

Will buy at

$20

Will

definitely

use in

future

Meant for

people like

me

Same as

other

products

Does NOT

appeal to

me

% Overall top box

Fictitious new product concept rating (top box / strongly agree %)

Base : 400

%

top

box

4.5 4.2

4 3.8

4.1

3

3.9

1

2

3

4

5

A B C D E F G

Malaria drug satisfaction rating

Fictitious case malaria drug patient

satisfaction scores

Satisfaction: 1= Extremely dissatisfied 5= Extremely satisfied

M e

a n

r a

ti n

g

Base: 1500 overall.

Good for benchmarking a brand’s relative market appeal v. competition… Indicates degree to

which a product might improve relative to competition

?

Fictitious case Malaria drug A likes

40

40

30

20

20

15

20

0 10 20 30 40

Effective treatment

Cheap

Easily available

Easy to take

Can be taken without

food

Can repeat dose after

vomiting

Clear instructions

Likes % Base: 1500 respondents

Simple dislikes and dislikes can give key pointers for product enhancement

Fictitious case Malaria drug F dislikes

50

35

25

20

15

10

25

0 10 20 30 40 50

Expensive

Taste

Not readily available

Unsuitable for children

Can cause vomiting / nausea

May not feel like eating

Side effects

Dislikes %

Base: 1500 respondents

Examining drug F DISLIKES against the LIKES of best in class helps

to reveal areas for improvement / attention

How does F

compete with A?

Product research – Gap analysis ‘Development News Website’ performance v. importance ratings

65 65

54 51

43 3839

72

55

45

35 32

0

20

40

60

80

100

Objective and

accurate reporting

Focus on

humanitarian

issues

Focus on Africa Making you aware

of new

humanitarian

issues

Up to the minute

information

Country profiles

Importance Performance

Top

box

%

Importance rated 1 to 5 where 1 = not important & 5 = absolutely essential Performance rated 1 to 5 where 1 = very poor and 5 = very good Mean ratings appear in the blue boxes / Top box % in the bar chart

Base : 1500 Development website users

Describe the type of attitude information presented and how it can be used.

Describe the data & what the company might do

http://www.irinnews.org/