Salo 2015 university of patras greece new product development trends in the digital age

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P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
New product development in the digital
age
Jari Salo,
Professor of Marketing (Digital Business & Marketing)
Head of doctoral program
Adjunct Professor (Aalto University School of Business)
Associate Editor of Journal of Information Technology Research
Oulu Business School
University of Oulu
Department of Marketing
Agenda
• Digital marketing – organizing framework
• New product development
• The digital age
• Examples and cases (Starbucks, Dell,
Threadless, Volvo, Lush, Dominos Pizza, UKI
architects, Apple)
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Research:
• Industrial marketing (innovation, services, relationships,
digitization)
• Digital retailing (Facebook in clothing retail, click stream
analysis – big data, e-newsletters, FB addiction)
• Advertising and branding (industrial/digital context)
• Role of technology in marketing (e.g. avatar creation, virtual
world spending behavior, mobile advertising)
Company references
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Simula, Lehtimäki, Salo, & Malinen 2010
Commercializing new B2B products
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Digital Marketing – Organizing
Framework
A working definition for digital
marketing
• Digital marketing aims at creating, demonstrating, documenting,
communicating and delivering value in digitized way to customers (B2C
and B2B) and for managing customer relationships in ways that enhance
digital joint value creation of customers, organizations and stakeholders.
(Journal of Digital Marketing)
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Value
Value equation = Benefits (tangible/intangible) –
Costs (price, total costs)
+ CALT (comparison of alternatives)
+ Over life time evaluations (e.g. CLV)
Holds for all people - organizations, individuals
and employees
Digital Marketing Framework
SCM
CRM
INNOVATION & NPD
Onlinemetrics
Business
Strategy
Customer
Strategy
Business
Strategy
Customer
Strategy
Value
creation
Value co-
creation
Value capture
Value
creation
Value co-
creation
Value capture
Performance
assesment
process
a) Shareholder
results
b)
Performance
measuring
c) KPI
Performance
assesment
process
a) Shareholder
results
b)
Performance
measuring
c) KPI
Multichannel
integration
-FB, Instagram
Twitter
-YouTube
-Email &
newsletters
-Company
websites
SEO/SEA…
Web advertising
-Blogs, pods, -
Vpods, webcasts
-Mashups, widgets
-Location based
services
e.g. tablet
computers
Multichannel
integration
-FB, Instagram
Twitter
-YouTube
-Email &
newsletters
-Company
websites
SEO/SEA…
Web advertising
-Blogs, pods, -
Vpods, webcasts
-Mashups, widgets
-Location based
services
e.g. tablet
computers
Information systems
- Data storaging & mining
- Front & back office applications
- Big data and cloud applications
Information systems
- Data storaging & mining
- Front & back office applications
- Big data and cloud applications
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New product / service development
(NPD/NSD)
NPD phases
Basics:
- Two strategies: Acquisition or
developing (traditional)
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NPD vs. innovation
Incremental Radical
?
NPD vs. innovation
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Level/type of innovation / NPD
• Product
• Process
• Technology
• Business model
Business model innovation
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The digital age
Trends
1. User generated content (UGC) – source of
information
2. Social media – communities
3. Virtual worlds
4. Crowdsourcing
5. Interacting with customers
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1. UGC: From broadcasters to
audience driven content
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Turban et al
1. User generated content (UGC)
Places to share content and publish your own content
• Webopinions
• CNN (iReport)
• YouTube, Vimeo
• Flickr (photo management and sharing)
• Helsingin Sanomat, other magazines (send a picture)
• Creating a blog (see e.g. blogs.com)
• Twitter
• Slideshare (consulting, teaching – demonstrating
experience)
• FB etc.
Digital Marketing - Salo
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2. Social media, communities and
NPD
• Social media and online communities provide new ways for companies
to digitize business:
• Front end of Innovation - ideas
• NSD/NPD
• Testing
• Creating own communities (Philips healthcare) / participate established
communities
• Inform about new products
• Ask review and recommendations
• Competitions and games
• Press events & education virtually
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2. Taxonomy of communities (Salo & Härkönen 2009)
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YouTube MySpace
Facebook
Second Life
LinkedIn
Classmates
services
Flickr
Social orientation
LowHigh
High
Contentcreationandsharing
Low
Habbo Hotel
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2. Case Starbucks (2012)
• Starbucks created a platform “My Starbucks Idea”
• The site allows users to submit suggestions to be voted on by Starbucks
consumers, and the most popular suggestions are highlighted and
reviewed. Starbucks then took it a step further and added an “Ideas in
Action” blog that gives updates to users on the status of changes
suggested.
• By empowering their exceptionally web savvy consumer, Starbucks
strengthens their campaign to add a personal touch to coffee.
• Thinking of ways to build your company are great, but directly asking
your consumers what they want, is better. Acting on that information and
doing it publicly is key to the success of this campaign.
2. Case Starbucks
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2. Case Starbucks
• 70,000 Suggestions from Starbucks clients
• The top idea received over 95,000 votes and over 1,000
comments
• Starbuck has over 28 million fans on Facebook
• The Facebook fans mostly engage in applications such as
event calendars, discussions and notes
http://www.slideshare.net/khol
zapfel/social-media-success-
stories
2. Case Dell
• Dell has developed and is cultivating a cross-platform community.
They’ve created multiple Twitter handles, a network of blogs, and are
very active on Facebook and are used to provide additional
information
• Dell claims that Twitter presence led them to three million dollar
sales, that can be tracked down on their efforts on the platform. This
might not be huge, but it is above the costs of Dell’s presence at the
platform
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2. Case Dell
• The most active user has already posted over 20,000 replies.
All of this for no cost for dell as he is not an employee. His
posts have been read over 2 million times which led to
additional sales and huge savings in tech support
• Dell is also one of the few companies to publicly state that
they created a return on investment from Twitter. Apparently,
Dell’s social media efforts help create “$1 million in revenue”
• Social media isn’t all about ROI, but it is possible. Creating
cross-platform strategies can lead to the most success,
especially when your demographic is already Internet and
technologically savvy.
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3. NPD and Virtual worlds (WOW)
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3. NPD and virtual worlds
• Coke: Virtual Thirst ”send ideas for portable virtual
vending machine”
• Steelcase: ”design new innovative executive chair”
• BMW: BMW series 1 Use Facebook application
graffiti wall to design new and customize your BMW
1. Over 10.000 participated and 600.000 voted for a
best design
Kohler 2008
Virtual world marketing (Tikkanen et al 2009)
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Virtual world marketing (Tikkanen et al 2009)
Virtual worlds views from industrial
companies
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Generations online 2010
One of the least
used activities
4. User driven innovation
Use for innovation
• Observation of consumer behavior - generating new ideas and
improving products, retail store layouts etc.
• Evaluation of the new product ideas
• Actively generating new ideas
• Concept testing and design
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4. Crowdsourcing
• Simply defined, crowdsourcing represents the act of
a company or institution taking a function once
performed by employees and outsourcing it to an
undefined (and generally large) network of people in
the form of an open call.
• This can take the form of peer-production (when the
job is performed collaboratively), but is also often
undertaken by sole individuals. The crucial
prerequisite is the use of the open call format and
the large network of potential laborers. (Howe, 2006)
4. Crowdsourcing
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4. Threadless - T-shirts
5. Interacting with customer in the innovation
process – three archetypes
1. “Listen into” the customer domain
2. “Ask” customers
3. “Build with” customers
Piller et al., 2011+
Könkkölä
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“Listen into”
• Products are designed on behalf of the
customers
• Firms use existing customer
information from diverse channels to
identify customer needs
Könkkölä
“Ask”
• Firms explicitly ask customers for input for a
company innovation process
• (In the early stages of the innovation process)
customers’ needs are identified
• Pilot customers/beta users
Könkkölä
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“Build with”
• Active integration of customer
participation in innovation
• Customer co-creation/open
innovation with customers
• “Active, creative and social
process, based on
collaboration between
producers and consumers”
Könkkölä
“Build with” (cont.)
• User idea contests
• Consumer opinion platforms
• Toolkits for user innovation
• Mass customization toolkits
• Communities for customer co-creation
Könkkölä
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Typology of customer innovation
Piller et al., 2011
Simula, Lehtimäki & Salo 2008
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Illustrative case and examples
Use of technology to innovate: Data rich
environments: Industrial perspective
• Trucks
• Busses
• Dumpers (e.g. used to carry iron ore in mines)
• Autonomous vehicles
• Telematics (outsourced e.g. to Volvo)
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Process innovation:
retailing
example
• Lush sales team can change the
layout of their stores in response to
real-time sales data.
• "Not only has this helped to tap in to the ambitious spirit of staff -
competing over which store can do best in terms of sales and
performance - but it also gives them information to improve the
customer experience."
• For example, if staff notice a particular bath bomb is selling well
with a certain shampoo, they can change the store layout so the
items are closer together.
(Source BBC)
Business model innovation ?
• Public and private (company) internal data mashups
(data and functionality integrated, possibility to
integrate different apps/functionalities, databases to
present information in one seamless service to
customer
• Single view Dominos Pizza (Pizza builder for
customers + mobile apps, Pizza Tracker).
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Process innovation: Context / location
awereness
• Apple's iBeacon technology - in-store
Bluetooth location trackers designed to
interact with smartphones - enables
retailers and app publishers to identify
people individually the moment they
enter a shop
• iBeacon available with many vendors
• Similar to iJack service developed by
Teliasonera in early 2000 which they
abandoned in 2004
Sales/deals
80%
Content relevant to interest/
Location 62%
Swirl 2013
Process perspective
•Last month, Urban Research, a fast-
growing and popular fashion, home and
lifestyle retailer, launched an experiment
in Tokyo’s Parco Ikebukuro.
•Allows customers to stand in front of
one of two 60-inch screens, select
clothing items they want to try on and
see themselves dressed in the products
within seconds.
•Customers’ movements are
represented fluidly on the screen in 3D
and customers can use an integrated
iPad to take pictures of themselves and
share them with friends on social
networks.
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Case Apple
Music players and Itunes
Stage of the business – late 1990s
• Few clumsy hard drive music players
• Designed by and for technical experts – geeks
Challenges:
- Memory capacity limited
- Difficult to use
- Extremely expensive
- In order to use you have to be expert
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Apple gathers information on music
business – late 1990s early 2000s
• Mixed methods and netnographic approach
(Kozinets)
• Newsgroups, discussion and bulletin boards
are used as information source
• Analyzing these information sources
• Identifying influential groups and boards
• Identifying lead users – appreciated experts
• Analysis
• And collection other related information
Enter iPod and iTunes
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Commercialization time line 2001-2012
Case: UKI architects
Using 3D 1:1 virtual cave environment for
hospital design
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Project parties
• UKI architects (architect company) www.ukiark.fi
• Ludocraft (technology partner, 3D and virtual
world expert, builds realxtend virtual world
technolgy- platform) www.ludocraft.com/
• Intercircum – business partner (our company)
Construction business
• Customers and users have different
expectations
• Multiple technological and architectural options
• Varying business models and government
involvement
AS a result 3D Valo™ was born
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• Case Seinäjoki
HospicaseY Y-
house
• Target: Seinäjoki Central
hospital extension
• Multiple users
• Many agents (city, hospital,
government rules etc.)
• Idea: User involvement, user
centered design, functional
design
• Valo™ utilized
Intercircum Ltd.
Virtual 3D 1:1 design and presentation
tool for architects – Valo™
• Customer, user and architect and construction team experience the
space in virtual environment
• Helps customers and users alike to experience the building before
it is even built with 3D 1:1 design
• Changing solutions in the design are cost effective as the design is
virtual and house is not actually build yet
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Virtual 3D 1:1 design and presentation
tool for architects – Valo™
• Spaces are user designed for and
with users
• In future if needed all parties
involved can be in different places
assuming they have connection via
relevant technologies to the virtual
design environment
Illustrative video clip
• http://www.youtube.com/watch?v=smC-rvzSph4
• YouTube search – “UKI Architects - user-oriented
design - Seinäjoki Y-hospital emergency center”
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UKI architects
• 3D virtual 1:1 design tool Valo™ is also used in
internally and also in different types of customer
projects
• New hospital project in Tampere
• Valo™ is now commercially available to
construction business
To summarize
• NPD/NSD/ Innovation is a group level activity where
multiple organizational units, customers other stake
holders and even competitors are involved.
• Digital age offers wide array of possibilities to collect,
disseminate, analyze information, test “innovation” and
harness that to create wisdom.
• Digital tools (online communities, social media sites,
blogs, big data, internent of things, industrial internet,
virtual worlds, mobile technologies etc.) provide suitable
tools to enhance effective ”innovation”.
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Comments / questions?
jari.salo@oulu.fi
jari.salo@aalto.fi
+358 50 4675154
Task 1: Personal DM + NPD mind map
1) Take a sheet of paper and pencil
2) Think - What comes to your mind from DM
+NPD ?
3) Write your topics into boxes and form a
hierarchy i.e. mind map.
4) Save the sheet of paper
DM &
NPD
4
3
2
1
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35
Task 2: Sharing the personal DM & NPD
mind map
1) Pair up with any student in the class
2) Share your thoughts with each other on the
similarities and differences in the mind maps
3) Group similar issues under a theme and write
those into individual sticky notes
4) As a group lets draw unified map !
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