Exam 18 April, questions and answers PDF

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In talking to a manager from a consumer products company e.g. white goods (washing machines, fridges etc.)you find that they have no idea of the value of a Product Innovation Charter (PIC). You decide to help them by talking about a PIC: (10marks) Framing your ideation task starts with understanding what kind of idea you are looking for in terms of incremental vs radical. PIC is a document prepared by senior management designed to provide guidance to the strategic business units (SBUs) on the role of innovation -

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Sets the New Product Development (NPD) group / team goals and objectives (Eg. Long-term goals: Aim for market dominance and 25% market share, Short-term Objectives: 3% annual growth in year 1) Decide the group’s/ team’s direction (Eg. Chocolate mass processing technology and focus on healthy nut chocolate market and drive growth in Singapore supermarket) Set rules and guidelines (Eg. Apple aims to be the best, new product categories)

PIC provides a lead, but ideation is narrower e.g. want to be in the men's shaving market to focus on developing a new shaver for teens Problem often arise when team/ group leader are -

Unable to lead and guide the team Side track on unimportant task and delayed the timeline Unable to coordinate and interact well with cross-functional team

Discuss why have firms have felt increasing pressure to accelerate the speed with which a product is brought to the market (8 marks). Firms are facing increasing pressure accelerate speed of product brought to market as: -

Brands are becoming more similar Consumer needs are constantly changing Increasing price wars Rapidly evolving technology

1) For firms to be successful in producing new product development, firms need to first understand what the goals and objective of the company is. This is to ensure that clear view of what a firm wants to achieve has been clearly laid out. (Eg. Long-term goals: Aim for market dominance and 25% market share, Short-term Objectives: 3% annual growth in year 1) 2) Develop areas of strategic focus where firms will and will not compete. Eg. Technologies or product material. Analyse the market and customers to focus on product innovation and competitive advantage of NPD 3) After selecting attack strategy and entry strategy, firms need to either

a. First to the market with new products, being aggressive and acting as the industry innovator. Eg. Apple b. Fast follower – waiting and watching, ready to copy and improve on competitors product Eg. Samsung 4) Consider the resource allocation and strategic portfolio decisions as firms needs to find out on how much to spend on product innovation, what the priorities are and creating the road mapping

Further, discuss with examples the potholes or problems that can be associated with speeding new products to market and how these potholes can be avoided (12 marks). Potholes of new products usually occurs after launching of products into the market. It shows how the consumer react towards the new product, mainly disliking the features, taste, packaging look or even size of product not worth the price paid. Eg. Mother (a Coke product) failed initially and had to Relaunch after changing packaging, and how it was positioned and promoted. They have also reformulated the taste of coke and proclaim that “New - tastes nothing like old one”. To find out the potholes, a launch management system needs to be followed: 1) Spot potential problems from situation analysis such as role playing what the competitors will do and react. Firms can also use historical data to see what has happened in the past for similar launches. 2) Select those problems to control, by using pure judgement to determine the potential problems that are most significant and needed to be controlled. Eg, Allergy to ingredients that is in the Coke product. 3) Develop contingency plan for these problems by going through ATR model. Reach out to target market in raising Awareness, provide initial Trial to persuade and spark interest in consumer, and then follow by Repeat purchase from consumer from the product satisfaction. 4) Design tracking system to plan and avoid collision over time management – Create a desired level of ATR at different time over the launch. Eg. Awareness 6 months, Trial 3months and Repeat Purchase 9months 5) After action review helps organisation to learn from their launches and their NPD activities – must develop a knowledge system. Identify what went right so that it can be duplicated, and what went wrong so that it can be fixed in the future and be used as a learning tool for future NPD project. 1)

5 significant challenge for new and radically innovated products (10)

Incremental innovation are the products that are already in the market, but it has a slight user experience improvement. (Eg. Heinz tomato ketchup). The 5 significant challenge for new innovated products (incremental innovation) are 1) New category entry – Making new but related categories products (Eg. Snickers into icecream)

2) Additions to existing product lines – Extend product line in current market (Eg. Reduced sugar product line) 3) Improvements to existing products – Making current products a better version (Eg. P&G’s continuing improvement to the detergent packaging that helps improve on convenience on usage 4) Repositioning brand and product – Products that are retargeted for a new use for a new target market (Eg. Dove repositioned to “It’s ok to be me” 5) Cost Reductions – New product that offer similar performance but at a lower cost. Radical innovations are introduced to an entirely new technology which requires users to relearn on how to use product. (Eg. Microwave requires human to re-learn on cooking without the use of fire, instead it uses microwave technology to heat up food)

2a) stage gate model. describe stage (10)

(Stage 0) Discovery: To discover opportunities and to generate new product ideas using multiple sources which are ideas coming from everywhere, inside and outside of company. (Eg. Companies like Guinness Brewery have proactive idea being captured and has a great handling scheme on developing innovation ideas, by using techniques such as bothersome survey) (Gate 1) Idea Screen: Quick assessment of ideas to assess if it is worth developing further, and to see if it fits with product innovation charter made by the senior management in the firm which provides guidance on the role for innovation. (Stage 1) Scoping: Ideas are formed into concepts with the use of focus group or online panels. (Eg. New Chocolate product goes through Market assessment to ensure consumer interest and market size. Technical assessment on packaging and ingredients used are safe)

(Gate 2) Concept Screen: Detailed assessment of concepts form from the ideas, before heavy spending takes place. Assessment of strategic importance and strategic fit to the company, and the financial concern to company (Stage 2) Business Case: Detailed investigation of market and technical leading to product definition, project definition and project plans. Final concept would be assessed and potentially move forward to development and finalise the financial, marketing and technical final concept. (Gate 3) Go to development: Last point which product can be “killed” before serious financial commitments are made in design work and purchasing of materials. Gatekeepers need to check if stage activities have done well from ideation to concept to specification. (Stage 3) Development: Focus on the physical design and development of product, at this stage need to check if market is still real and does the customer value what has been developed? (Gate 4) Go to Testing: Ensuring that firms are ready to test the new product (Stage 4) Testing: Validate the entire project in terms of product and operation process by using test such as field test for checking if product works under ‘real’ conditions (Gate 5) Go to Launch: Work on marketing plan for Launching, Sales and Promotion to assess if product is ready to go to the market (Stage 5) Launch: Rapid national or global launch. Post Launch review to assess if objective are met, and if is it not, innovation needs to be continued to make improvement on products.

2b) challenges of stage gate for radical product (10) Stage-Gate is a concept for moving new product projects from idea to launch which helps to improve on effectiveness and efficiency. It maps out what the company need to do and how they should do it. Radical products are introduced to an entirely new technology which requires users to relearn on how to use product. (Eg. Microwave requires human to re-learn on cooking without the use of fire, instead it uses microwave technology to heat up food) The challenges is based on what caused new product to fail such as - Poor team leadership - Missed targeted timeline - Missing steps and activities

It is part of process innovation that even if going through stage-gate process, there would still be a 50% chance of product failing. However, launching product without asking question of what is suitable for the firm to develop, could lead to an even higher failure rate.

3a) what is business case (3) Business case is a document that defines the product and giving the rational for developing it. It helps to provide support planning and decision-making for an investment in the context of business objectives. A proposal of analysis on the cost, benefit and risks of the proposed investment, while giving a reasonable alternative.

3b) how do you design a business case for consumer product (acid test, atar model) (7) Business case are designed for internal stakeholders such as the management team, to convince them on the product market demand, feasibility of product and financial returns. Business case evaluation acid test are to check 1) is the market real? What s the potential target market? 2) Is the product real? Can it be manufactured? 3) Can our company be competitive? Is our advantage sustainable? 4) Can the product be competitive? What are the price and quality? 5) Will it make money? When is the break even? 6) Will there be other benefits? Will it gain experience or build relationship? Using ATAR model to make assumption on the pre-market trial and post-market trial. - Pre-market trial: Based on assumption of market and consumer behaviour - Post-market trial: Based on test market data about their experience regarding the product o Awareness – Forecast based on 1-year Advertising and media plan o Trial – In-home usage Product Test, results are used to predict repeat purchase and purchase cycle o Availability of Distribution – Sales Force, Trade Promotion o Repeat Purchase – Combine Trial prediction and Repeat Purchase into a forecast of 1st year sales This is to assume the values and to generate forecasts amount. By running on Sensitivity Analysis, it helps to see what happens under different scenarios (Eg. Trial rates, costs and availability of distribution) 4a) design: utilitarian and emotional (5) Design is to add real utilitarian (useful and practical such as Blood pressure monitoring device) and hedonic value (pleasant sensation such as FitBits) for consumer. An example of both utilitarian and emotional product would be Kinder Joy Surprise Eggs. Selection of toys, taste and value for money. Customer are pleasantly surprise and has a fun factor in finding out what is inside the packaging as there are wide selection of toys inside.

4b) design thinking process (5) Design thinking process is the ability to combine empathy for the context of a problem, having creative solutions, and rationally analyse and fit solutions to the context -

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Learning phase o Empathy: learning about the audience for whom the firm is designing for o Define: redefining and focusing firm’s question based on insights gathered from the empathy stage Designing phase o Ideate: brainstorming and coming up with creative solutions o Prototype: building a sample to show to others o Test: Ask the user and test ideas for feedback

5) diffusion of innovation (10) Diffusion of innovation is the rate that a product or innovation is adopted by the market. One of the critical issues is to consider the way the products are diffused into the population. Understand the Adopter Groups on their differences as each of it forms different parts of the market  Innovators: First to adopt an innovation, willing to take risks, have great financial lucidity  Early adopters: Second fastest who adopt an innovation At this point, the tipping point happens where the mainstream market starts to adopt the idea and the sales goes through the roof.  Early majority: Adopt an innovation after a period of time  Late majority: Adopt an innovation after majority of society has adopted the innovation  Laggards: individuals whom are the last to adopt an innovation Firms need to understand the factors that ensure new product penetrate the market quickly (Eg. Increase Awareness through friends and families recommendation as they have greater influence comparing to TV advertisement) The diffusion of innovation model helps the firm to consider the best way to promote their product, and enable consumers to experience it quickly. 6a) social media. why use social media in Singapore When firms do not have big budget for national TV or Radio, using Mobile and Digital campaign to deliver regular and retainable updates of the product can be effective to spread the awareness too. Social media is a great platform to drive buzz and to create talking points for people. People like to go online and search for information whenever they have doubts, which is why companies would need such a platform to allow leads/ customers to search online for self help/ quick resolution to their problems. (Eg. A movie name Sausage Party uses Digital Marketing to draw crowds and create buzz.) The key thing to cut through the clutter is to make advertisement Share-able, Click-able, Like-able, Tweet-able.

6b) ways to use social media for product launch Social media could help firms in promoting products in the best and easiest way as it helps to connect with prospect/ client. When there are any new updates on the product, social media helps to reach out to them as and when they would need the information. Firms may also reach out to Social Media Influencer and ask them to help advocate for your brand and product. It is generally accepted that word of mouth and peer recommendation are the most effective form of advertising comparing to TV advertisement or Radio. Influencer can impact their audience by sharing experience, ideas and information that are relevant to the audience. -

Create awareness: Search, Blogs Consideration: Online Research, User reviews Preference: YouTube, Social Networks Action: Purchase online or in-store Loyalty: Like on Facebook page, Subscribe to Newsletter Advocacy: “Likes” on post, Review on product

7a) 3 types of booz co strategy types (their culture and capabilities) (10) 1. Need Seeker  Consistently strive to be the first to market with new offerings and providing products & services based on quality product performance. They create new market, a new industry or even creating new lifestyle habits (Eg. Apple focuses on how customer uses the product and do a better job than anyone else at delivering that experience.)  Culture: Openness to new ideas from customer, competitors, supplies  Capabilities: Directly generate deep customer insights and analytics 2. Market Reader  They are the fast follower of any proven concepts as they monitor customers and competitors on its product. Mainly focuses on creating value through incremental changes and being fast follower of proven concept with differentiated attributes. (Eg. Samsung followed the steps of Apple after they came out with Ipad, Samsung improves on the tablet technology and launch it)  Culture: Collaboration across all functions  Capabilities: Engage supplier/ partners in development process 3. Technology Driver  Follows the company’s ability to produce technology product, and to invest in R&D to drive both breakthrough technology and incremental change (Eg. Google create translatable earpiece using their technology skill)  Culture: Respect for technical talent & knowledge  Capabilities: Product lifecycle management

7b) how to improve on culture and capabilities (20) Using the IDEO’s Innovation Culture Choices, the strategy is to articulate strategic vision precisely. This could be done by having more novel ideas that are practical and doing it faster than other, and the choice of becoming a design-thinker. The best way to organize talent and skills to achieve vision is by working on one project assignment at a time and to work in teams of diverse people. These teams are gathered from the cross-functional team from many different departments in the firm. The processes that can be employed to give talent a higher probability of success is through fair voting, brainstorming of ideas regardless of seniority and creating prototype to ensure that ideas can be formed into shape and that everyone can see the physical idea. To help inspire, evaluate and compensate talent, a few ways can be done such as peer-based project performance review and writing the rules of values on the wall The skills and talent that are required to achieve this vision can be done through hiring diverse people, and to create cross-functional teams to get deep and broad people to interact which could help in creating more innovative ideas....