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The Team217 53 058641 83 049940 57 072783 28 069121 85 070658 31 067

Idea Generation Reportprepared for Tim Silk and Comm 482

Executive Summary

The Industry & New Product IdeaChoosing a great bottle of wine can be an overwhelming task. Every year, hundreds of millions of Americans buy billions of dollars worth of wine. Even though there is a plethora of information available, consumers often have trouble synthesizing that content into a satisfying purchase decision. Consumers often make wine purchases without a clear understanding of what factors ultimately impact the quality of their wine, resulting in unsatisfactory consumption experiences.

Smartphone applications are a growth industry that has taken the world by storm over the last two years. In 2009, an estimated $1.1 Billion was spent on consumer applications that offered products as simple as basic hand-held video games and as complex as integrated real-time stock analysis (Elkin, 2009). Our product’s goal is to allow Smartphone users to leverage aggregate wine information to assist them when making bottle purchase decisions on and off-site.

Target Consumer Segment Overview

• Educated professionals aged 25-45 with individual incomes of $40,000 +• Active wine drinkers who are Tech-savvy and curious to try new things but don’t like

unpleasant surprises• Purchase a minimum of one bottle every 2 weeks

Analyzing Market Need & Market AttractivenessThrough unobtrusive observation, and several styles of interviews, we have identified a number of key factors that will influence a consumer’s interest in our product. The team has also developed a matrix listing what it perceives to be most the important characteristics that our product should have. Items that consistently ranked as the most important variables were:

• A quick and easy lookup function• A value comparison tool• Personalized suggestions for an individualized pallet

Through this idea generation process, our team now has a much more in depth understanding of the size and scope of our target market, what pains our product should look to address, and the viability and potential profitability of a product to serve this market needs.

Primary ChallengeAlthough there were a variety of challenges we faced on from the outset of this project, the most difficult task was in the process of idea/concept generation. It was difficult to manage our personal biases on potential topic areas and we found it challenging to remain focused on issues and market need without jumping into suggesting solutions. By incorporating a simple voting system to help guide our group discussion, we were able to focus on a specific market need and leverage our extensive research to help guide our ideations process.

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Part 1 - Background Information

Given the copious supply of wine brands available in most liquor stores, choosing a bottle of wine can be an arduous task for many consumers . The moment one walks into a wine store they are confronted with walls stacked roof high featuring hundreds of bottles of wines offering innumerable permutations of grape varieties, regions, vintages and prices, culminating in a final decision which they ultimately hope will be one excellent bottle of grape juice ‘gone bad’.

Armies of sommeliers have tasked themselves with helping these unenlightened consumers make the right selection, by pouring their experience of wine tastings into the pages of magazines and books, and sites across the internet. One issue remains however: while helpful indeed, these resources are more often than not out of reach when the consumer enters into the store or stares at the menu at the table with friends; leaving them to their memory, or a handful of ‘rules-of-thumb’ in selecting the right wine.

The following idea generation report assesses the opportunity and needs associated with making this information available to consumers at all times, regardless of context by leveraging the increasingly common multi-purposed mobile platform – the Smartphone. The category is software for Smartphones targeted to the wine consumer market. This greatly interests us for a number of reasons. Firstly, we are all active wine drinkers and are therefore familiar with the needs of oenophiles. Secondly, the market for wine drinkers is a substantial one. And finally, we as consumers are frustrated by the lack of an ideal Smartphone application that would satisfy all of our needs. It is for these three reasons that we became excited about developing software catered towards the wine consumer market.

Part 2 – Assessing Market Attractiveness

A) Categorizing the Opportunity

According to the product/market matrix, our product would be categorized as an improvement to a product in an existing market.

To be more specific, the broadest category for our product would be software. Narrowing the scope, our product is software specifically designed for use on mobile web devices, particularly Smartphones. The market for Smartphone applications, colloquially referred to as “apps”, is a nascent but rapidly growing technology market. Consumers are looking for opportunities to make their lives more interesting, more fun, and easier. The Smartphone application market is quite diverse, offering products as simple as calendar integration software and as complex as real-time mapping and GPS tracking systems.

Our product targets Smartphone users who are wine drinkers, but are still learning how to fully enjoy their latest hobby. In this specific niche, there are several Smartphone applications that already try to address the issue of wine selection, but our team believes that we have found a deficiency in the products currently in the market at serving a particular client need.

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NewMarket/Segment Exis3ngMarket/SegmentNewProduct/Service

ImprovementtoExis3ngProduct/Service

TheOpportunity

B) Attractiveness of the Market

Note: Section headings represent market attributes. Following the heading is a number that represents the relative attractiveness of the particular attribute. The number is based on a scale of 1-10, with 1 being the least attractive.

Market Size: 8

In 2009, worldwide mobile application spending on consumer applications was projected at $1.11 Billion by Piper Jaffray & Co (Elkin, 7). A Q2 2008 estimate for US Mobile Application projected that there were 28 Million people using Smartphone applications (Elkin, 11) . Smartphone application users make up 68.8% of Smartphone users, and there are expected to be approximately 60 Million Smartphone users in the United States by the end of 2009. On a more micro scale, assuming that this rate holds true for the city of Vancouver, there would be approximately 500,000 Smartphone users in the Greater Vancouver Area.

In 2007, the market for wine consumption in the United States was 2.85 Billion liters (Hodgen, 2) or a total retail value of $30 Billion (Hodgen, 2). An even distribution of wine consumption would suggest that the 30 Million Smartphone application users spent $3 Billion on wine in 2008, or approximately $100 per capita. We have done this calculation to demonstrate not what the market is for our product, but to evaluate whether or not a consumer of wine would be willing to spend money on a wine information system like our product. We were unable to find any statistics that correlated Smartphone application users with wine consumption. Our working assumption is that Smartphone application users would have a higher than normal propensity to consume wine, as Smartphone application users tend to be in a moderate-to-high socio-demographic class, a consistent demographic with wine consumption.

Market Growth: 10

Smartphone applications are a growth market that has exploded in the last two years and is expected to continue its rapid growth through till 2013. According to eMarketer’s report titled “Mobile Applications: Moving Beyond Apple” (June 2009), shipments for Smartphones in 2009 grew by 4%, which is significant considering that the traditional cell phone market contracted by 10% over that same time frame.

The market for Smartphone applications is expected to grow even faster than the overall Smartphone market, reaching worldwide sales of approximately $5.63 Billion by 2012, (Elkin, 7). This represents a compound annual growth rate of approximately 50% over the next 4 years.

Competitive Intensity: 3

There are several wine selection applications for Smartphones that attempt to help wine drinkers make better selections. The competitiveness of this industry is one of the least appealing aspects to this new product, as many players have already moved into developing applications to serve this market need. Some examples of the most popular renditions are listed below. All data from this section was collected from the iTunes App store and BlackBerry App World.

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(1) Wine Enthusiast “Transform you iPhone into an indispensable companion for choosing, evaluating, managing and enjoying wine.” Wine Enthusiast has experts review wines from around the world. The user types in the name of a bottle of wine, and can find that bottle with an accompanying picture in their database. This application focuses on selecting wines and managing wines that have been recommended to you.

(2) Drync Wine Pro This application allows you to research and record wines that have been recommended to you, and as well includes expert ratings.

(3) Nat Decants Food and Wine Matcher, (4) Wine and Dine, (5) Pair it! – Food and Wine Guide these applications attempt to match a consumer’s meal with a potential wine pairing.

Key influencers: 5

Key influencers in the Smartphone application market include customer reviews, distribution via application stores, telecom carriers, and handset manufacturers. All of these players hold significant power over application developers, decreasing the attractiveness of the opportunity.

Customers play a large part in the success of applications, especially ones coming from a first-time production team. Every application in the application store carries a dynamic rating, defined by how successful users have deemed it to be. It is therefore crucial to have our first customers thoroughly enjoy their experience. Application stores also play a large role in gaining access to consumers. Finally, decisions made by carriers and handset manufacturers may adversely affect the success of a mobile application. This can come from in the form of a decision to block distribution, as was the case for Google Voice on the iPhone, and Skype on BlackBerry. As well, being tied to handset manufacturers’ platforms can lead to technical challenges depending on hardware and software/OS evolutions.

Barriers to entry: 10

Apple and Research in Motion have set up online tutorials on how to create applications for their products. As both handset manufacturers are aggressively competing for market share, they are actively encouraging developers to produce content for their handsets, making it very easy for first time application creators to setup an app.

Investment Required: 8

Development costs for applications can vary significantly. Cost elements have been broken down to server-side requirements (i.e. databases to host the content), client-side requirements (the ‘app’ itself, user interface, etc.), potential licensing costs for professional content (i.e. professional reviews), and potential licensing costs of certain technology elements (e.g. if we wanted to employ barcode scanning technology with Smartphones camera). Preliminary estimates put our fixed costs for development for the first iteration at $30,000, with licensing costs of content and technology still yet to be determined.

Launch costs for an application are dependent on the size and scope of our desired reach. Given how specific our target niche is, our team will look to do much of the promotion at minimal to no cost, focusing on word-of-mouth, PR and virtual media.

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Profitability: 7

Much of the costs associated with setting up an application like this are frontloaded. The success of this new product would be heavily reliant on volume sales to recover the upfront costs associated with the development and launch of the application. Peers in this market segment are priced in the range of $2.99 to $9.99 (Elkin, 13). A significant variable cost comes from the industry standard that the application store hosting your product will charge a 20-30% levee for listing (How We Built). On top of this, software licensing may contribute significantly to our per-product costs amounting to as much as another 20-30% of sales. Accounting for this, the product has break-even sales figures (assuming minimal additional variable costs) of between 6,000 and 20,000 applications. Knowing that our product will be targeting a more differentiated position, this range decreases significantly. Assuming a $9.99 selling price for the application, our new break-even range would be between closer to the 6,000 customer mark. This represents a market penetration of 1.2% within the Smartphone user market in Vancouver.

A survey taken in March of 2009 asked Smartphone users what they would be willing to pay for a mobile application. The willingness to pay changed significantly over different handset manufacturers, but the predominant trend was that on average, approximately 50% of Smartphone application users said that they would spend up to $9.99 on an application (Elkin, 13).

Additional Relevant Data:

Of a group of 1700 American traditional mobile phone users, 26% had downloaded an application in the previous three months. Of users in the age group from 25-34, 41.2% had downloaded an application. For users aged 35-54, that same statistic was 28.9%. These statistics were significantly higher when looking exclusively at Smartphone users as 68.8% of them have downloaded an application (Elkin).

The same article estimates that 26% of American mobile phone users will be use their Smartphone to access the internet in 2009 (representing approximately 73 Million people). This percentage is expected to grow to 43% of the US mobile phone market by 2013 representing a compound annual growth rate of approximately 19% and roughly 130 Million users in the United States by 2013 (Elkin).

Works Cited:• Blackberry App World• iPhone Application Store• Elkin, Noah. “Mobile Applications: Moving Beyond Apple”. eMarketer. June 2009.• Geoff. “How We Built an iPhone App for $4873.92”. December 2008. <http://

gifterapp.com/blog/files/bedd9a6a1425818f49ef0645cc71044c-1.html >• Hodgen, Donald A. “U.S. Wine Industry 2008” U.S. Department of Commerce.

June 2008. <http://www.trade.gov/td/ocg/wine2008.pdf>

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Part3:ConsumerSegment

Description of Consumer SegmentBased on our exploratory research, we’ve identified an ideal target market segment and provided both an overarching segment descriptor as well as an artificial persona to represent the centroid of the market. In an effort to concentrate our efforts, we have also identified whom our target segment is not to ensure product developments is focus on where it will achieve the most impact.

Segment Descriptors• Demographics: Educated professionals, male and female, 25 – 45 years old,

individual income of $40,000+.• Psychographics: Active wine drinkers. Enjoy gatherings with close friends, socially

conscious, and concerned about their personal brand image.• Descriptors of the Segment: Tech-savvy and curious to try new things but don’t want

any surprises. They have mid to high expectations when it comes to quality, and are value conscious in the pursuit of this effort. They enjoy being perceived as knowledgeable, and aspire to have an ‘ere of sophistication’ about them.

• Influences Purchase Behaviour: Price, Labels, Region, Varietals, Ratings, Friends, Professional Opinions, Social Expectations.

• When/How often do they buy: Minimum of a bottle every two weeks.

Consumer Segment Persona“The Young Professional Urbanite”Jessie Ho is an account executive in her late twenties and works for a mid-sized marketing firm in Vancouver that specializes in communication strategies for BC-based startups. Whether it’s a hike up the Grouse Grind or a swim in Kits Beach Jessie maintains a healthy lifestyle and makes the most of her natural surroundings to keep herself in good shape.

Although not an expert, Jessie has actively consumed wine for the past 5 years and is now purchasing a bottle at least once every two weeks. On most occasions she’s up for trying a new wine and browses the aisles taking into account a variety of information (region, varietals, labels and price) to help her decide which wine to choose. She’s not that worried about price as long as the bottle is under $30, yields good value for the money, and “seems inviting”. Ultimately, she selects her wine haphazardly which results in her choosing an unsatisfactory wine one out of every four purchases. Jessie is quick to admit that she trusts recommendations from professional sources and friends, but can never seem to remember the wines that have been recommended to her when it comes time to purchase.

Jessie has never considered herself a computer nerd, but over the years has become increasingly tech-savvy. It began with her purchase of a MacBook two years ago, which coincided with an increasing amount spent online with sites like Gmail and Facebook. More recently she ‘took the plunge’ and purchased an iPhone and has enjoyed both the stylistic and functional aspects of the device, whether its accessing her online communities or checking her email while mobile, or playing with apps that pique her interest, she has found the Smartphone has taken on an increasing role in her daily routines.

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Who Our Target Segment is NOT...“The Empty-Nester Mom”Although Suzan, a mother of 2 boys aged 23 and 21, loves a few glasses of wine throughout the week, she’s at a point in her life where she wants to hold onto anything with a sense of nostalgia, including her wine. She’s been using the same cell phone for eight years and no matter how many times her kids try to teach her, she still can’t understand how to send a text message. “Oh well. At least I have my wine...” she thinks.

“The Palate-Neutral Drinker”Darren is a 34-year-old bachelor in Burnaby and thinks himself to be quite the wine connoisseur. Every time he goes to pick up a bottle of wine, he never selects the same bottle. He rarely (if ever) finds a wine he doesn’t like and enjoys taking his time to consider which wine will suite him best for the weekend. Darren has never been one to be influenced by others and believes that everyone’s tastes are subjective and he’s more than happy with the “success” he’s had at selecting wine.

Part 4 -Idea Generation & Needs Analysis

The following ideas generated and needs identified were drawn from extensive research conducted by the team, consisting of:

• Unobtrusive observation of 21 subjects in wine stores across Vancouver • Interviews with six subjects in a BC Liquor store to catch them in their natural

environment when it comes to wine selection• In-depth interviews with five ‘lead-user’ subjects over the phone to catch them in their

natural environment for wine consumption• One in-depth interview with an independent wine store manager

(i) Quick & Easy, Visual Lookup – During our observation in wine outlets we noted the majority of the subjects took significant amounts of time selecting their wine, averaging approximately eight minutes per visit, and four minutes per bottle (average two bottles per visit). During this time patrons appeared to be actively comparing numerous labels, price points, regions, and varietals, pausing occasionally when something caught their eye. A four-minute time span could easily yield 20+ comparisons with a select number of bottles being further scrutinized. Surprisingly, there was very little physical interaction with the bottles themselves, with few of the subjects touching the bottles or even turning them to read the descriptions on the back label. Based on these observed behaviours of rapid, visually dominant comparison methods it was determined that the application must best compliment this process otherwise it risks posing too much of a behaviour change for people to adopt. From this, we’ve conceptualized an application that could act as a lens with which subjects could look through to better identify quality wines that suit their tastes. Matching existing technologies, we feel the Smartphones camera lens and an image recognition technology (such as image based barcode scanning) could be the key to achieving this ideal.

(ii) Advanced Search - For the majority of the subjects interviewed price was the key-determining factor. The subjects were often looking for a specific varietal in a target price range of good quality and based on this would like wine suggestions. If an advanced search feature were added which could allow users to input information such as a price range, varietal, region and a rating, this would allow users to focus on a few select bottles which would likely satisfy their needs without requiring much manual searching.

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(iii) Wine Location – For those looking for a specific bottle of wine, whether recommended by a friend or experienced previously, one issue identified was trying to find out where that bottle could be purchased. If feasible, it would be beneficial for the application to be able to detect locations of where the wine is sold, perhaps through on-boarding supplier or retail outlets.

(iv) Personalized Suggestions – Many of the subjects interviewed raised the topic of subjectivity in wine preferences, suggesting that “following a good review or recommendation may get you a ‘quality’ wine but not necessarily one you particularly enjoy.” Qualifying wines based on the user’s palette would address this. Ideas generated suggested mimicking Amazon’s recommendations system by ‘crowd-sourcing’ data from like user’s to identify whether the wine being looked up matches the user’s tastes, and offering recommendations for wines that do.

(v) Value Comparison – As previously mentioned, price was often the key-determining purchase factor for subjects and within that price range they often look for the best quality available. This is becomes an increasing issue particularly when they go beyond their usual price range in an attempt to purchase something ‘special’. Somehow offering stylized price-to-quality ratios would address this need, and would differentiate the product by offering more effective comparisons than usual rating methods.

(vi) Professional Ratings – A key observation was seeing subjects react to on-shelf merchandisers that featured professional reviews and ratings of a particular wine. This behaviour was further qualified in the interviews in which subjects identified professional reviews and ratings as being key-influencers in their purchase decision. Based on these results, having access to professional reviews and ratings has been identified as essential in creating a product that would have appeal to our target market. Sourcing this information from a single source or aggregating multiple sources has been identified as a ‘must-have’ feature for the application.

(vii) User feedback – Aside from professional reviews, another key-influencer identified from our interview research was word-of-mouth feedback from the subjects’ social network. Building off this concept, and drawing upon ideas from the “Personalized Suggestions” section, ‘crowd-sourcing’ reviews from the users friends and family, and the general user base as a whole could provide further qualification mechanisms for the user to draw upon during the selection process. This could also provide further value as sometimes it can be very difficult to find professional reviews for smaller or local wineries, or wines that have just come on the market.

viii) Food Pairings – Subjects interviewed also outlined their difficulties selecting wines for specific meals, often times relegating to “red for red meat and white for white meat” as a general rule of thumb. Including food pairings with the review information based on varietal or specific reviews would address this. More elaborate ideas discussed included being able to look up wines based on meals.

(ix) Cellar Tracker – For the more advanced oenophiles interviewed, an important need identified was the process of keeping track of what wines currently owned and their peak time (i.e. the user’s wine cellar). Having a tracking system in place with peak times, and perhaps automatic notifications to notify these times are approaching would appeal to the more advanced portion of the market.

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(x) Tracking Past Purchases – A reoccurring issue brought up in the interviews was the ability to track the names and personal experiences of previously tasted wines, and wines recommended from friends. One team member brought up seeing a specialty book sold in stores where people could transfer wine labels from bottles to the pages of the book and take notes on their experience with the wine. Creating a feature that would allow people to rate wines that they had tried and remember ones recommended to them would be an easy inclusion in the application. This would create synergies with other needs identified discussed thus far such as User Feedback and Personalized Suggestions.

(xi) Sharing With Friends – Reversing the word-of-mouth process, users also identified sharing ‘finds’ with friends. This could be included in the product by allowing users to input a list of friends who they would like to send as well as establish links with the users’ Twitter and or Facebook communities.

(xii) Appear Knowledgeable – The majority of subjects observed selected wine without any consultation, and often refused help when store clerks offered. This happened even when the subject appeared ‘lost’, drifting from section to section. When interviewed, subjects also appeared hesitant to appear unknowledgeable. Granted the aspirational elements and perceived sophistication of wine culture, the team has extrapolated a potential hidden need of appearing knowledgeable of wines even when not. Focusing on educating users on terminology, and providing background information on particular wines, or on topics of region, vintages, varietals, and more could become ‘secretly’ treasured aspects the applications value proposition.

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Prod

uct M

atrix

Ideas Generated

Classification of Attributes

Perceived Im

portance of the Benefit to

the Target M

arket

Ability to Differentiate the

Benefit from

Competitor

Offerings

Ease of Com

municating

The Benefit

Technological Feasibility of the Benefit

Total Score

Rank

Quick & Easy

LookupM

ust Have10.0

9.08.5

6.534

1

Advanced SearchLinear

6.54.0

6.08.0

24.58

Wine Location

Delighter5.0

6.07.5

4.523

12

Personalized Suggestion

Linear7.5

8.56.5

7.530

3

Value Comparison

Linear8.0

8.07.0

8.531.5

2

Professional Ratings

Must Have

9.01.0

9.59.0

28.54

User FeedbackM

ust Have8.0

5.07.5

7.528

5

Food PairingsDelighter

6.05.0

7.06.5

24.58

Cellar TrackerLinear

5.03.0

6.59.0

23.511

Tracking Past Purchases

Linear6.5

2.07.5

9.025

7

Sharing with

FriendsDelighter

5.53.0

7.08.5

2410

Independent Wine

SelectionM

ust Have8.3

1.08.0

9.526.8

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Part 5 - Key Points Summary

A) Key Learning Outcomes

Necessity of Time Constraints in Ideation ProcessIt’s imperative to set time constraints for each step in the brainstorming and idea development process otherwise a team can easily go off-track and endure long meeting times that lack a central focus.

Persistence in ResearchInformation is out there, and that a dedicated researcher, given time and patience can find a wealth of content to qualify and build a particular business case. Our research specifications were highly specific, and we found an incredible amount of data to support our vision and claims.

Open Minded ApproachAn open mind is desperately needed to allow ideas to flow in early stages.  Groups are better served allowing ideas to cultivate before immediately pointing out their flaws.

Constrain InnovationAlthough counter-intuitive, without boundaries the discussions were without depth and focus. Establishing the product category to then innovate off of offered scope with which the team could concentrate their efforts.

Allow Consumer Behaviour to Drive InsightsActual behavior of product users varied greatly from expectations. Observing subjects in the natural environment offered insights that were never conceived by the team nor articulated during interviews.

B) Specific Challenges EncounteredInitiation of Idea Generation ProcessOur team struggled with the development of an idea that all individuals were keen to support and pursue further. This occurred for two primary reasons:

1. The tendency to recommend solutions before clearly identifying the problem2. Immediate criticism during the brainstorming phase preventing an outflow of

potentially useful ideas on the topic had it been given opportunity to further materialize

After identification, the team made efforts to avoid these issues, and eventually made a final decision by employing a voting system to determine which product to select after hearing a pitch from each member.

Supporting ResearchIn terms of conducting research, we learned that it can be very challenging to find extensive research on current topics but there is a vast amount of amount of information available through academic sources. Coupled with that, it is also extremely difficult to fully develop a new product idea until data collection through observation and interviewing is done.

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C) Future ApplicationsIn the future we recognize its first important to constrain the discussion to a product category before initiating the idea generation process. Once determined, we would encourage members to take a set period of time to identify some problems that can be addressed with this product and/or within the category. Afterwards the team would reconvene to discuss the problems and further analyze the problems and then begin brainstorming potential solutions. As noted above, members will avoid evaluating ideas until the brainstorming procedure is complete. Once a host of problems and potential solutions are identified, given time available, the team could a) either conduct preliminary research to determine qualify the opportunity, or b) through the process of elimination, vote on the product to address. From here the procedures would remain the same, conducting market assessment and needs analysis research and distilling the results into a final Idea Generation Report.

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