Product Innovation

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What is an innovation?
Why the case for innovation is even stronger today?
Product innovation
Explain why some product innovations are unsuccessful.
Examine the process of product innovation.
New Product Development (NPD) framework.
Evaluate the merits of NPD framework.
Why some innovations are popular/unpopular?

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Product Innovation

  1. 1. PRODUCTINNOVATION
  2. 2. Learning ObjectivesI. What is an innovation?II. Why the case for innovation is even stronger today?III. Product innovation i. Explain why some product innovations are unsuccessful. ii. Examine the process of product innovation. iii. New Product Development (NPD) framework. iv. Evaluate the merits of NPD framework.IV. Why some innovations are popular/unpopular? © 2013 Berlin Asong. All rights reserved. 2
  3. 3. Innovation© 2013 Berlin Asong. All rights reserved. 3
  4. 4. A new idea, practice, process,product or service that benefitsan individual, group or society. West, M.A., Farr, J.L. (1990), "Innovation at work", in West, M.A., Farr, J.L. (Eds),Innovation and Creativity at Work: Psychological and Organizational Strategies, Wiley, Chichester, pp.3-13 © 2013 Berlin Asong. All rights reserved. 4
  5. 5. novelty Does it suggest is a necessary attribute of innovation?© 2013 Berlin Asong. All rights reserved. 5
  6. 6. When …andnew to who?© 2013 Berlin Asong. All rights reserved. 6
  7. 7. …to the community thatadopts the “innovation” even though it had long existed? © 2013 Berlin Asong. All rights reserved. 7
  8. 8. Is innovation Invention© 2013 Berlin Asong. All rights reserved. 8
  9. 9. Invention© 2013 Berlin Asong. All rights reserved. 9
  10. 10. Not all innovations are inventions.© 2013 Berlin Asong. All rights reserved. 10
  11. 11. TYPES OFINNOVATIONS© 2013 Berlin Asong. All rights reserved. 11
  12. 12. Product/service innovations© 2013 Berlin Asong. All rights reserved. 12
  13. 13. Electronic smartcard(replaces paper tickets) forboarding public transports in London.© 2013 Berlin Asong. All rights reserved. 13
  14. 14. Process innovations New ways to achieve an existing or a new goal.© 2013 Berlin Asong. All rights reserved. 14
  15. 15. Finding new ways to reduce costs, speed up check-ins, eliminate delays.© 2013 Berlin Asong. All rights reserved. 15
  16. 16. © 2013 Berlin Asong. All rights reserved. 16
  17. 17. Outsourcing of call centers.© 2013 Berlin Asong. All rights reserved. 17
  18. 18. They cause adopters tobreakaway from traditions. E.g. telephone, PCs, Internet© 2013 Berlin Asong. All rights reserved. 18
  19. 19. Feature-led innovation Augmenting the attribute(s) of an existing product,service, or process. E.g. microprocessors, iPad 1→iPad 2→iPad 3.© 2013 Berlin Asong. All rights reserved. 19
  20. 20. Modifying the attribute(s) of an existing product,service, or process.© 2013 Berlin Asong. All rights reserved. 20
  21. 21. © 2013 Berlin Asong. All rights reserved. 21
  22. 22. Why should my firm innovate?© 2013 Berlin Asong. All rights reserved. 22
  23. 23. 1 Innovate or If not you will be outran by the competition. die! © 2013 Berlin Asong. All rights reserved. 23
  24. 24. Kodak, the company that invented the digital camera, filed for bankruptcy inJanuary 2012, after losing its competitiveness to rivals like… Other players © 2013 Berlin Asong. All rights reserved. 24
  25. 25. The 100-year-old iconic UK high street retailer ceased operating in Nov. 2008.© 2013 Berlin Asong. All rights reserved. 25
  26. 26. 2 A means to create new markets. © 2013 Berlin Asong. All rights reserved. 26
  27. 27. 3 A means to findsolutions to organisational & competitive challenges. © 2013 Berlin Asong. All rights reserved. 27
  28. 28. Internal Challenges Lack of skilled people. Structural impediment. Satisfying competing stakeholders’ expectations. Sustaining a pipeline of innovations. Rising operations costs. Financial constraint. Etc.© 2013 Berlin Asong. All rights reserved. 28
  29. 29. External Challenges Rapid changes. Slow industry growth. Changing consumers’ preferences. Tightening regulatory conditions. War, civil unrests, & geopolitical tensions. Rising resources costs. Economic uncertainties. Ecological concerns & disasters. Stiff competition. Resource shortage.© 2013 Berlin Asong. All rights reserved. Etc. 29
  30. 30. 4 Innovation can be a means to sustainable competitive advantage. © 2013 Berlin Asong. All rights reserved. 30
  31. 31. © 2013 Berlin Asong. All rights reserved. 31
  32. 32. of new products fail. Solomon et al. 2008© 2013 Berlin Asong. All rights reserved. 32
  33. 33. Why?© 2013 Berlin Asong. All rights reserved. 33
  34. 34. 1 Innovation Offers nothing “new”. © 2013 Berlin Asong. All rights reserved. 34
  35. 35. 2 Consumers were not yet ready for such innovations. © 2013 Berlin Asong. All rights reserved. 35
  36. 36. The modern credit card,created by Diners Club in 1950. © 2013 Berlin Asong. All rights reserved. 36
  37. 37. The currentadoption of electric cars is slow… © 2013 Berlin Asong. All rights reserved. 37
  38. 38. …amid other reasons, because of fewer charging stations.© 2013 Berlin Asong. All rights reserved. 38
  39. 39. 3 Producthad glitches. First generation HD TVs © 2013 Berlin Asong. All rights reserved. 39
  40. 40. Knowledge@Wharton (2012), “Pop Quiz: Can Indra Nooyi Revive PepsiCo?”. Retrieved March 31, 2012, from http://knowledge.wharton.upenn.edu/article/2966.cfm© 2013 Berlin Asong. All rights reserved. 40
  41. 41. Launched in 1993. Reasons for failure:expensive, poor handwriting recognition, marketing messages disguised imperfections. © 2013 Berlin Asong. All rights reserved. 41
  42. 42. 4 Product Planet Price Product was poorly Process Marketing Place marketed. Mix Physical Promotion Layout People © 2013 Berlin Asong. All rights reserved. 42
  43. 43. Tata Nano launched in 2009 has been dubbed a flop.© 2013 Berlin Asong. All rights reserved. 43
  44. 44. India car boss Ratan Tata admits Tata Nano “mistakes”. Source: BBC (January 2012)© 2013 Berlin Asong. All rights reserved. 44
  45. 45. In 1999, Cosmopolitan rolled out yoghurt line. Reasons for failure:expensive, not a right fit for apublishing firm. © 2013 Berlin Asong. All rights reserved. 45
  46. 46. 5 Innovation was aimed at the wrong consumer segment. © 2013 Berlin Asong. All rights reserved. 46
  47. 47. 6 Innovation was killed by rival innovations. © 2013 Berlin Asong. All rights reserved. 47
  48. 48. HP’s Apotheker 18 August 2011— discontinued TouchPad after 2 months in market.© 2013 Berlin Asong. All rights reserved. Former HP CEO Leo Apotheker 48
  49. 49. 7 Innovation was hastily withdrawn from the market. © 2013 Berlin Asong. All rights reserved. 49
  50. 50. Was the TouchPad killed too early?© 2013 Berlin Asong. All rights reserved. 50
  51. 51. What is asuccessful product innovation?© 2013 Berlin Asong. All rights reserved. 51
  52. 52. Customers Impact on customers Successful innovations society Impact on society Firm Impact on firm© 2013 Berlin Asong. All rights reserved. 52
  53. 53. © 2013 Berlin Asong. All rights reserved. 53
  54. 54. NEW PRODUCTDEVELOPMENT PROCESS© 2013 Berlin Asong. All rights reserved. 54
  55. 55. Philip Kotler & Gary Armstrong (2009) Principles of Marketing, 13Ed.© 2013 Berlin Asong. All rights reserved. 55
  56. 56. Ideas generation Ideas screening Concept Development & Testing Business Analysis Marketing Strategy Product Development Test Marketing Commercialisation© 2013 Berlin Asong. All rights reserved. 56
  57. 57. Ideas generation Ideas screening Concept Development & Testing Business Analysis Marketing Strategy Product Development Test Marketing Commercialisation© 2013 Berlin Asong. All rights reserved. 57
  58. 58. Merchant Approach Formal InformalApproach Approach© 2013 Berlin Asong. All rights reserved. 58
  59. 59. © 2013 Berlin Asong. All rights reserved. 59
  60. 60. A deliberate effortdesigned to encourage innovative ideas.© 2013 Berlin Asong. All rights reserved. 60
  61. 61. …top management is committed to spur innovations.© 2013 Berlin Asong. All rights reserved. 61
  62. 62. Innovative ideas come not only from R&D people but everybody inside & outside the organisation.© 2013 Berlin Asong. All rights reserved. 62
  63. 63. © 2013 Berlin Asong. All rights reserved. 63
  64. 64. Customers© 2013 Berlin Asong. All rights reserved. 64
  65. 65. Capture innovative ideas from consumers by…© 2013 Berlin Asong. All rights reserved. 65
  66. 66. © 2013 Berlin Asong. All rights reserved. 66
  67. 67. Observing consumers’ behaviours.© 2013 Berlin Asong. All rights reserved. 67
  68. 68. Experimentation (R&D) © 2013 Berlin Asong. All rights reserved. 68
  69. 69. © 2013 Berlin Asong. All rights reserved. 69
  70. 70. © 2013 Berlin Asong. All rights reserved. 70
  71. 71. © 2013 Berlin Asong. All rights reserved. 71
  72. 72. …learningfrom mistakes.© 2013 Berlin Asong. All rights reserved. 72
  73. 73. “Celebrate” mistakes.© 2013 Berlin Asong. All rights reserved. 73
  74. 74. © 2013 Berlin Asong. All rights reserved. 74
  75. 75. Brainstorming© 2013 Berlin Asong. All rights reserved. 75
  76. 76. Questorming© 2013 Berlin Asong. All rights reserved. 76
  77. 77. Ideas generators are rewarded.© 2013 Berlin Asong. All rights reserved. 77
  78. 78. © 2013 Berlin Asong. All rights reserved. 78
  79. 79. Accidental sources, chancedoccurrences, emergent ideas. © 2013 Berlin Asong. All rights reserved. 79
  80. 80. © 2013 Berlin Asong. All rights reserved. 80
  81. 81. Ah-ha moment© 2013 Berlin Asong. All rights reserved. 81
  82. 82. Seek new product or service ideas through the…forbesindia.com Jobs-to-be-done methodology. Clayton Christensen © 2013 Berlin Asong. All rights reserved. 82
  83. 83. © 2013 Berlin Asong. All rights reserved. 83
  84. 84. If you can’t generate it, buy it.© 2013 Berlin Asong. All rights reserved. 84
  85. 85. The iPodconcept was the brainchild of Anthony Fadell, before he got hired by Apple. © 2013 Berlin Asong. All rights reserved. 85
  86. 86. Ideas generation Ideas screening Concept Development & Testing Business Analysis Marketing Strategy Product Development Test Marketing Commercialisation© 2013 Berlin Asong. All rights reserved. 86
  87. 87. Suitability Acceptability Feasibility© 2013 Berlin Asong. All rights reserved. 87
  88. 88. Is the new product idea an excellent fit with the company? Does it have potential to improve the growth of the company? Suitability Is it a good fit with the company’s product portfolio?© 2013 Berlin Asong. All rights reserved. 88
  89. 89. Does the new product idea meet the expectations of stakeholders? What’s the potential return on investment of the new product idea?Acceptability What and how much risks are involved?© 2013 Berlin Asong. All rights reserved. 89
  90. 90. Does the firm has the resources to develop the new product idea? Feasibility Can the required resources be mobilised in time?© 2013 Berlin Asong. All rights reserved. 90
  91. 91. Ideas screeningeffected by potentialconsumers. © 2013 Berlin Asong. All rights reserved. 91
  92. 92. © 2013 Berlin Asong. All rights reserved. 92
  93. 93. Ideas generation Ideas screening Concept Development & Testing Business Analysis Marketing Strategy Product Development Test Marketing Commercialisation© 2013 Berlin Asong. All rights reserved. 93
  94. 94. © 2013 Berlin Asong. All rights reserved. 94
  95. 95. © 2013 Berlin Asong. All rights reserved. 95
  96. 96. In-house testing Off-house testing © 2013 Berlin Asong. All rights reserved. 96
  97. 97. © 2013 Berlin Asong. All rights reserved. 97
  98. 98. Ideas generation Ideas screening Concept Development & Testing Business Analysis Marketing Strategy Product Development Test Marketing Commercialisation© 2013 Berlin Asong. All rights reserved. 98
  99. 99. © 2013 Berlin Asong. All rights reserved. 99
  100. 100. How much sales our we aiming for? What’s the projected profit? How much costs would be incurred?© 2013 Berlin Asong. All rights reserved. 100
  101. 101. Ideas generation Ideas screening Concept Development & Testing Business Analysis Marketing Strategy Product Development Test Marketing Commercialisation© 2013 Berlin Asong. All rights reserved. 101
  102. 102. Product Planet Price Marketing Configure the right Process Mix marketing mix for Place the new product. Physical Promotio Layout n People© 2013 Berlin Asong. All rights reserved. 102
  103. 103. Ideas generation Ideas screening Concept Development & Testing Business Analysis Marketing Strategy Product Development Test Marketing Commercialisation© 2013 Berlin Asong. All rights reserved. 103
  104. 104. Product goes into ‘full’ development and production.© 2013 Berlin Asong. All rights reserved. 104
  105. 105. Ideas generation Ideas screening Concept Development & Testing Business Analysis Marketing Strategy Product Development Test Marketing Commercialisation© 2013 Berlin Asong. All rights reserved. 105
  106. 106. Product is made available tolimited customers | region aimed to test its likely acceptance. © 2013 Berlin Asong. All rights reserved. 106
  107. 107. © 2013 Berlin Asong. All rights reserved. 107
  108. 108. Ideas generation Ideas screening Concept Development & Testing Business Analysis Marketing Strategy Product Development Test Marketing Commercialisation© 2013 Berlin Asong. All rights reserved. 108
  109. 109. Launched in March 2012© 2013 Berlin Asong. All rights reserved. 109
  110. 110. What challenges or problems could I face during the commercialisation phase?© 2013 Berlin Asong. All rights reserved. 110
  111. 111. New Product Development Process Criticisms© 2013 Berlin Asong. All rights reserved. 111
  112. 112. 1 Ideas generation Ideas screening Concept Development & Testing In practice, Business Analysis NPD is not a Marketing Strategy linear process. Product Development Test Marketing Commercialisation © 2013 Berlin Asong. All rights reserved. 112 112
  113. 113. 2 Ideas generation Ideas screening Concept Development & Testing Some activities Business Analysis are performed Marketing Strategy simultaneously. Product Development Test Marketing Commercialisation © 2013 Berlin Asong. All rights reserved. 113 113
  114. 114. 3 Ideas generation Ideas screening Concept Development & Testing Some radical Business Analysis innovations skipped some stages of the Marketing Strategy NPD process. Product Development Test Marketing Commercialisation © 2013 Berlin Asong. All rights reserved. 114 114
  115. 115. © 2013 Berlin Asong. All rights reserved. 115
  116. 116. DIFFUSION OFINNOVATION© 2013 Berlin Asong. All rights reserved. 116
  117. 117. 3D TVs have been around for some years now, yet the adoption rate has been very slow. Why? Source: socialexcerpts.com© 2013 Berlin Asong. All rights reserved. 117
  118. 118. …attempts to explain why some people are quick in adopting new products or services. Source: alldaytech.com© 2013 Berlin Asong. All rights reserved. 118
  119. 119. …or why some people are slow in adopting (oravoid)new products or services.© 2013 Berlin Asong. All rights reserved. 119
  120. 120. Dr. Everett M. Rogers Diffusion of Innovation© 2013 Berlin Asong. All rights reserved. 120
  121. 121. the spread of something,DIFFUSION = over a period of time.© 2013 Berlin Asong. All rights reserved. 121
  122. 122. INNOVATION = idea, service, product, etc.© 2013 Berlin Asong. All rights reserved. 122
  123. 123. 2.5% 13.5% 34% 34% 13.5% 2.5%© 2013 Berlin Asong. All rights reserved. 123
  124. 124. Factors influencing consumers adoption of an innovation…© 2013 Berlin Asong. All rights reserved. 124
  125. 125. Product Consumer Message Messenger© 2013 Berlin Asong. All rights reserved. 125
  126. 126. © 2013 Berlin Asong. All rights reserved. 126
  127. 127. Is the innovation difficult to use, or understand? Complexity© 2013 Berlin Asong. All rights reserved. 127
  128. 128. Does the innovation offer significant benefits than existing product, etc.?Relative advantage© 2013 Berlin Asong. All rights reserved. 128
  129. 129. Does the innovation offer observable results? Observability© 2013 Berlin Asong. All rights reserved. 129
  130. 130. Does the innovation fit my beliefs, lifestyle, values, needs? Compatibility© 2013 Berlin Asong. All rights reserved. 130
  131. 131. Can the innovation be tested or tried on a limited basis? Trialability© 2013 Berlin Asong. All rights reserved. 131
  132. 132. © 2013 Berlin Asong. All rights reserved. 132
  133. 133. Age. Gender. Occupation. Income. Personality. Referencegroup. Perception. Education. Attitude. Culture.© 2013 Berlin Asong. All rights reserved. Belief. 133
  134. 134. Reference Groups Clubs Gangs Churches Classmates Interestgroups Politicalaffiliations Onlinecommunities Professionalassociations© 2013 Berlin Asong. All rights reserved. 134
  135. 135. © 2013 Berlin Asong. All rights reserved. 135
  136. 136. Source: threestatesplusone.blogspot.com The content of the message affects the adoption of innovation. © 2013 Berlin Asong. All rights reserved. 136
  137. 137. Do you thinkthe message in this advert iscommunicated effectively? © 2013 Berlin Asong. All rights reserved. 137
  138. 138. Does this AD get its message across effectively?Does it increase your interest to know more about Vita Coco? Source: www.celebritybug.net © 2013 Berlin Asong. All rights reserved. 138
  139. 139. …sound, text, fonts, colours,pictures, white space affect how the message is perceived.© 2013 Berlin Asong. All rights reserved. 139
  140. 140. Which features are (not) highlighted in this AD? Source: Apple.com (2012)© 2013 Berlin Asong. All rights reserved. 140
  141. 141. © 2013 Berlin Asong. All rights reserved. 141
  142. 142. …the medium that carries or conveys the message to the receiver.© 2013 Berlin Asong. All rights reserved. 142
  143. 143. Radio. Magazine. Newspaper. Opinionleader. Spokesperson. Fan-boysandfan-girls. Socialmedia. Directmail. Television. Internet.© 2013 Berlin Asong. All rights reserved. Leaflet. 143
  144. 144. Samuel L. Jackson, iPhone 4S TV Ad Source: Apple.com (2012)© 2013 Berlin Asong. All rights reserved. 144
  145. 145. © 2013 Berlin Asong. All rights reserved. 145
  146. 146. © 2013 Berlin Asong. All rights reserved. 146
  147. 147. Lance Armstrong,former spokesperson of the Nike brand. Source: deadspin.com © 2013 Berlin Asong. All rights reserved. 147
  148. 148. The doping evidence made Armstrong an untrustworthy messenger of the Nike brand.© 2013 Berlin Asong. All rights reserved. 148
  149. 149. Which “adopter” category are you? Does it depend on the product or service?© 2013 Berlin Asong. All rights reserved. 149
  150. 150. © 2013 Berlin Asong. All rights reserved. 150

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