Marketing Innovation Products

Strategy and Strategic Innovation Strategy is the long term plan to achieve the desired

goals and objectives

Strategic Innovation includes innovative business models, to make a business more competitive. It leads to either: New business models (including a new value chain

architecture) New Markets Increased value for both the customer and the

company Combination of all the above

Features of Strategic Innovation A frame work of independent content, process

and context dimensions Application of creativity and innovation to

strategic management Acts as an enabler strategic differentiation and

competitive advantage By challenging conventional logic and redefining

the company’s business model, redrawing market boundaries, creating new markets and value improvements for customers and company itself.

Dimensions of Strategic innovation Industry foresight – Top-Down Approach Customer insight – Bottom – Up Approach Strategic Alignment

Internal Alignment and External Alignment Core technologies Disciplined implementation Organizational Readiness

Cultural; Process and Structural readiness Managed innovation process

Divergent and Convergent thinking

Strategic aspects of Innovation

Market Impact

Market opportunity

Market Dynamic

s

Market Dynamics Change in external environment is very

dynamic and demands the business to respond dynamically

Market Opportunity Understanding Market Dynamics

provides opportunities Eg.,

3M – Scrotch brite Odomos mosquito repellent cream Amruthanjan comin with gel cream and

sprays Iodex changing from brown color cream to

gel and sprays

Market Impact How is the market responding to the

new product? Is the price-performance equation

perfect? Are there any gaps in existing products? Is there scope for improvement? Is the introduction of new product

triggering action by competitors?

Corporate Strategy Cost-Leadership Differentiation Focus

Innovation Platforms incorporating NPD When business strengths are able to

meet opportunities in the market, becomes a platform for strategic innovation and helps a business take actions for commercialising the business and forecasting the market impact.

Advantages of Plan of Action

Faster Decisions More autonomy to teams Encourages intrapreneurship Encourages team ownership Economies of scale Economies of scope

Case: Apple’s Innovation Platform Apple’s Ipad is a mass-produced

product. Using this as a base other parties can create and capture value with their own apps. Apple has maintained greater control over how something is developed. Apple is also particular how value is captured, but apple’s platform has found wider applications.

New Product Development New product are those which are really

innovative and truly unique replacements for existing products that are significantly different from the others

Strategic reasons for NPD Deviations in consumer demands Foundation of competitive advantage Provide long term ROI Optimum utilisation of existing production and

operations. Leads to capitalisation on research and

development Influence brand equity Enhance corporate image Helps in meeting environmental threats

Types of New Products Discontinuous Innovation

Eg., Innovative car, Laptop etc Category Extension

Eg., Dell manufacturing Mobile phones Line Extension

Eg., P&G adding new products to its line Product Improvement Eg., Toyota Cars Repositioned Products

Eg., Liril comin with modification and repositioning Lower Priced Products

Eg., Nirma, surf excel price wars

DSM’s Innovation PlatformDutch Life science’s company aims to build an intrinsically

innovative a company using innovation platforms instead of single projects. This helps in proper estimation of the risks in the beginning. Opportunities in the market also get defined properly. Projects are properly grouped in well-defined platforms.

DSM’s Chief innovation officer Rob van Leen says, “Projects can fail but you can’t kill an opportunity”. The innovation pipeline in DSM is used for looking at related opportunities. The burden of innovation is shared by the platforms. Passion, ownership and drive contribute to success of innovation in DSM. Even smaller projects get visibility due to the platform approach.

Opportunities are given more importance than projects. Platforms encourage innovation to think more broadly across the value chain. They also foster team spirit and energise the team members to put in their best. Platforms make the organisation more respective to open source innovation. Collective decision making increases the chances of success because risks are better understood. This makes it easy to migrate the risks.

Factors influencing a New Products success

Right product, right time and right message Concentrate on providing a solution Recognize and nurture core capabilities of the

company Proper working environment Support from top management Disciplined new product development process Dedicated development teams Effective communication to the targeted audience Appropriate business strategies Understanding the external environment

Factors influencing a New Products success

Identifying market opportunities that fit core competencies

Proper understanding of consumer needs and wants

Wide range of product ideas Clear and focused product definition Superior and differentiated product and

package Effective category and management

philosophy Well-executed launch Effective promotional strategies

New product development Process NPD Strategy Generation of New product ideas Idea screening and business analysis Concept development and testing Marketing strategy development Business Analysis Product development Market testing Commercialisation

1: New Product strategy Focus on new idea/concept generation

and guidelines for establishing screening criteria keeping company objectives in mind

Identifying the strategic business requirements that the new product should comply with.

2: Generation of New product ideas Objectives of this stage are:

Ideas for new products New attribute for existing products New uses of existing products

Sources of New Product ideas: Customers Competitors Employees R&D Licensing Marketing research agencies Distribution channels

3: Idea screening and Business analysis Criteria for Ide screening

Market feasibility Technical feasibility Potential competition Compatibility with the promoter Consistency with governmental priorities Growth potential Ensure acceptable growth Competitive price Should meet company’s objectives and goals Availability of resources Ensure capital requirements within manageable limits

4: Concept development and testing

Concept testing is defined as “ A printed or filmed representation of a product or service. It is a device to communicate the subject’s benefits, strengths and reasons for being”.

Objectives of Concept testing To get customer feedback about new product idea To assess relative attractiveness of the ideas To understand strengths and weaknesses of each idea To know customers product rating To direct the development of the project To select the most promising concept for product

development To ascertain the product potential for its

commercialisation

5: Marketing Strategy development

Marketing Plan should consist of three parts: First Part

Target Market size Structure Behaviour Sales volume Market share Profit goals Planned product positioning

Second Part Planned price Distribution strategy Marketing budget for the year

Third Part Long run sales Profit goals Marketing mix strategy over time

6: Business analysis Forecasting Market opportunity Forecasting sales Financial forecasting

7: Product Development An Organisation must ensure following:

Establish a product with desired characteristics

Production at minimal cost Produce as per demand forecast Product attributes must the customers

requirements Adequate testing of product for quality Estimate forecasted sales Appropriate budgeting Satisfactory ROI Provide for testing the product

8: Market Testing Simulation Testing: Launching a product in few selected areas to

test feasibility and functionality of the product The main purpose is to provide final and total validation of the

entire project; the commercial viability of the product, its production, and its marketing

Characteristics of Market testing High advertising costs High manufacturing costs Lack of economies of scale Low volume of production High distribution costs

Benefits of Market testing Helps to determine product’s likely performance Helps in understanding product’s functional performance Provides information about customer perception Helps to understand market response Provides opportunity to make necessary changes Helps in effective marketing mix plan

9: Commercialisation Roles of Marketing Manager

Product must be channelized appropriately to support the new product planning

Recognize the situational aspects of market entry Need to decide the introduction timing Ensure effective maintenance and servicing facility Clarify the strategic importance of market entry

decision Ensure intensive selling Formulate the market entry decision problem Ensure widespread availability of the product

through distribution channel Effective promotion to create awareness of the new

product

Process Innovation

Is the implementation of the new or significantly improved production or delivery method

Includes changes in technique, equipment or even the software

Ex: 3D modelling, Automation in manufacturing process, Robotics, Scanners, Barcodes, E-tailing, tracking of parcels, etc.,

Stages of Process Innovation

Generate Ideas

Capture ideas from the first

stage

Begin the innovation

Develop a Business-

Effectiveness strategy

Apply Business

improvementDecline

Support for Process Innovation Policies and procedures Performance management frameworks Well defined Organization structure Use of state-of-the-art technology

Business Process

Innovation

Visioning and Strategy

Supply chain management

Asset management

Organisation structure

Enterprise Resource Planning

Business Process Management

Improving Process Innovation’s effectiveness Streamlining and sharing of existing processes Improved service delivery Automation of workflows A supporting infrastructure Strategic approach to managing supply chains Increased operational efficiency Reduction in costs Increase in revenues

Service Innovation Is a new or significantly improved service

concept that is taken into practice Types of service innovation

Innovation in service/Service products Innovation in service process

Innovation in services, in service products

• May include technological elements• Related to service design and new service

development• Ex., Retail stores providing home delivery• Beauty parlour providing services at home• Bigbasket.com, E-tailers like amazon,

flipkart, delivering products to home

Innovation in service process• May include service delivery systems• Technique or expertise based services• Ex., Doctors introducing appointments to

reduce waiting time of patients• E-tailers introducing COD system as

customers were scared of using Credit cards online.

• Air tickets can be booked online much before the travel date.

Successful Service Innovatio

n

Unique value

proposition

Improved delivery

approach

Growing emerging

trend

Enhanced customer

experience

Areas of Innovation – Den Hertog’s model The Service Concept

New types of bank accounts, Information services, Online auctions etc.,

The Client interface Internet banking, ATM’s, etc.,

The Service delivery system Home delivery system B2B delivery is called as Servuction =

Service+Production Technological options

Phone banking, etc.,

Patterns of Service Innovation Pattern 1: Supplier-Dominated Service

These innovations from external suppliers are disseminated and implemented by service industry

Ex., Microwave oven in catering, Cash registers POS

Pattern 2: Innovation within services Innovation and implementation is initiated and

takes place at the service firm Ex., New shop formulas by retailers New pension and savings schemes

Patterns of Service Innovation Pattern 3:Client led innovation

Innovation clearly articulated by the clients Ex., Door-to-door public transport aimed at business

traveller Green banking services, invest in a socially responsible

way Pattern 4: Paradigmatic Innovations

Arise when complex and pervasive innovations affecting all actors in a value chain profoundly are involved

Ex., Very densely populated area, the regular transport of goods is no longer possible and the decision to switch to underground transport was taken by both parties involved in the value chain and have to change pratices

Service design innovation

Design

Analysis

Development

Full Launch

Portfolio and Standard Portfolio is grouping of financial assets

such as stocks, bonds and cash equivalents, as well as their mutual, exchange-traded and closed-fund counterparts

Portfolio Evaluation refers to the evaluation of the performance of the portfolio