Innovation Management Iii Bcom (Unit Iv)

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[INNOVATION MANAGEMENT] B.

COM III YEAR

UNIT – IV INNOVATION PROCESS


New Product Development - Criticality of the Value Proposition,
Differentiation - Paths to Market Systems of Ideation, Experimentation and
Prototyping - Innovation Labs.

NEW PRODUCT DEVELOPMENT PROCESS


New product.
• A product is anything that can be offered to a market to satisfy
needs and wants.
• A New product is any product which is perceived by the customer
as being new.
New product Categories…….
1:New to the world.
2:New to the product lines.
3:Additions to the existing product line.
4:Improvements & revisions of existing products.
5:Repositioning.
6:Cost reductions.
New Product development Process
New Product Development is the development of original
products, product improvements, product modifications, and new
brands through the firm’s own R & D efforts. This process consist of
following steps.

3.Concept
1.Idea Generation. 2.Idea Screening. Development &
Testing.

4.Marketing Strategy 6.Product


5. Business Analysis.
Development Development.

7.Market Testing. 8.Commercialization

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1.Idea Generation .
• Idea generation is continuous, systematic search for new product
opportunities.
• Ideas form using creativity generating techniques and generated
through firm’s Internal Sources & external Sources.
2.Idea Screening.
• Filtering the ideas to pick out good ones & dropping the poor ones.
• It involves a preliminary elimination process in which a large
number of product ideas are screened in terms of the organization’s
objectives, policies, technical feasibility, and financial viability.
• Total ideas are categories into three group. They are, promising
ideas, marginal ideas and rejected ideas.
• In screening ideas, the companies normally face 2 serious errors &
they must try to avoid these mistakes.
1. DROP ERROR 2. GO ERROR
3. Concept Development & Testing.
 Here, the Product Idea is converted into product concept.
 Product Ideas means Possible product that company may offer to
the market.
 A product concept is a detailed version of the idea stated in
meaningful consumer terms
 When developing product concept following criteria should be
consider.
 Who will use the product.
 What primary benefit should this product provide.
 When will this product be consumed.
 Concept Testing means presenting the product concept to target
consumers, physically or symbolically, and getting their
reactions.

4.Marketing Strategy Development.


After concept testing, for concepts that qualify a preliminary
marketing strategy is created to introduce new product into market.

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5.Business Analysis.
 This stage will decide whether from financial as well as marketing point
of view, the project is beneficial or not.
In Business Analysis ,
• Estimate likely selling price based upon competition and customer
feedback.
• Estimate sales volume based upon size of market.
• Estimate profitability and break-even point.
 If above are match with the company's objectives, then the new product
concept moves to product development stage.
6.Product Development.
• Up to now, the product has existed only as a word description, a drawing.
• The company will now determine whether the product idea can translate
into a technically and commercially feasible product.
7. Market Testing.
• Now the product is ready to be branded with a name, logo, and packaging
and go into a preliminary market testing.
• Marketing Testing involves placing a product for sale in one or more
selected areas and observing its actual performance under the proposed
marketing plan.
Methods for market testing:
1. Sales wave research.
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2. Simulated test marketing.


3. Controlled testing marketing.
4. Test markets.
8.Commercialization.
• After successful market testing, new product comes to commercialisation
stage.
• During this stage, production of new product on a commercial basis is
rapidly built up and implementing a total marketing plan.
• For formally launching a New Product, the following decisions to be
taken:
A) When to launch (Timing)
B) Where to launch (Geographic Strategy)
C) To Whom (Target-Market Prospects)
D) How to launch (Introductory Market Strategy)

Criticality of the value proposition


The criticality of the value proposition cannot be overstated in the realm of
business and product development. The value proposition essentially
communicates the unique benefits and value that a product or service offers to
its target customers. Here's why it's so crucial:
1. Differentiation:
In a competitive market, a strong value proposition sets a product
apart from its competitors. It highlights what makes the product unique
and why customers should choose it over alternatives.
2. Customer Focus:
A well-crafted value proposition is centered around the needs,
desires, and pain points of the target customers. It demonstrates a deep
understanding of customer preferences and addresses them effectively.
3. Clarity and Communication:
A clear and compelling value proposition communicates the
essence of the product or service succinctly. It helps potential customers
quickly understand what they stand to gain from choosing the offering.
4. Customer Acquisition:
An effective value proposition can significantly impact customer
acquisition efforts. When customers perceive high value in a product or

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service, they are more likely to make a purchase or engage with the
brand.
5. Retention and Loyalty:
Beyond attracting new customers, a strong value proposition also
contributes to customer retention and loyalty. When customers
consistently experience the promised value, they are more likely to
remain loyal to the brand and become advocates.
6. Alignment with Business Goals:
A well-defined value proposition should align with the broader
business objectives and strategies. It ensures that the product or service
offering contributes to the overall success and growth of the company.
7. Adaptability and Evolution:
The value proposition should be adaptable to changing market
conditions, customer preferences, and competitive landscapes.
Continuous refinement and evolution of the value proposition are
necessary to remain relevant and competitive over time.
8. Foundation for Marketing and Sales:
The value proposition serves as the foundation for marketing
messaging, sales pitches, and other communication efforts. It provides a
consistent framework for conveying the benefits of the offering across
various channels.

Differentiation: Paths to Market Systems of Ideation


Differentiation is a crucial aspect of any successful market entry strategy. It allows
you to stand out from competitors and capture a specific share of the market. However,
developing effective differentiation strategies requires creative ideation. Here are
some potential paths to consider:
1. Value-Based Differentiation:
 Focus on customer needs: Conduct market research to understand unmet needs,
pain points, and desires. Ideate solutions that directly address these issues and offer
unique value compared to existing competitors.
 Innovation: Explore new technologies, materials, or processes to create
breakthrough products or services. This could involve radical innovation (entirely new
solutions) or incremental innovation (improving existing offerings).

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 Benefit differentiation: Identify specific benefits your offering can deliver that are
not readily available from competitors. This could involve superior performance,
convenience, sustainability, or personalization.
2. Experience-Based Differentiation:
 Customer journey mapping: Analyze the entire customer journey, from awareness
to purchase and post-purchase. Identify touchpoints where you can create a
differentiated and engaging experience.
 Emotional connection: Design experiences that evoke positive emotions and build
emotional connections with customers. This could involve storytelling, gamification,
or personalized interactions.
 Convenience and ease of use: Make it easy for customers to find, purchase, and
use your offering. This could involve streamlined processes, intuitive interfaces, or
personalized support.
3. Brand-Based Differentiation:
 Unique brand story: Develop a compelling brand story that resonates with your
target audience and differentiates you from competitors. This could involve your
heritage, values, or mission.
 Authenticity and transparency: Be genuine and transparent in your communication
with customers. This builds trust and loyalty, setting you apart from brands perceived
as inauthentic.
 Community building: Foster a sense of community around your brand. This could
involve engaging with customers on social media, hosting events, or creating loyalty
programs.
Ideation Techniques for Differentiation:
 Brainstorming: Gather a team and generate as many ideas as possible, regardless
of feasibility.
 SCAMPER: Apply the SCAMPER method (Substitute, Combine, Adapt, Modify, Put
to Other Uses, Eliminate, Reverse) to existing products or services.
 Design thinking: Use a human-centered approach to understand user needs and
develop innovative solutions.
 Trend analysis: Identify emerging trends in your industry and explore how you can
leverage them for differentiation.

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Experimentation and prototyping:


Experimentation and prototyping are two powerful tools that go hand in hand in the
process of innovation and design. They are used to explore new ideas, test assumptions,
and learn from failures in order to create better products, services, and experiences.

Experimentation is the act of trying out new things to see what happens. It involves asking
questions, making hypotheses, and testing those hypotheses to see if they are true. In the
context of design and innovation, experimentation can be used to:
 Validate ideas: Before investing a lot of time and resources into developing a
new product or service, it is important to make sure that there is actually a need
for it and that people will be interested in using it. Experimentation can help you
to test your assumptions about your target market and their needs.
 Identify problems: Experimentation can also be used to identify problems that
you may not have been aware of. By testing out different ideas, you may discover
new challenges that need to be addressed.
 Learn from failures: Failure is a natural part of the innovation process.
Experimentation allows you to fail quickly and cheaply, so that you can learn from
your mistakes and move on.
Experimentation Advantages and Disadvantages

Advantages:
 Improved understanding: Experimentation allows you to gather data and
observe real-world outcomes, leading to a deeper understanding of a problem,
solution, or phenomenon.
 Discovery and innovation: Testing new ideas and approaches can reveal
unexpected results and pave the way for innovative solutions and breakthroughs.
 Validation and learning: Experiments can confirm or disprove assumptions,
helping you learn from both successes and failures to improve future efforts.
 Risk reduction: Identifying and addressing problems early through
experimentation can minimize larger risks and costs associated with full-scale
implementation.
 Informed decision-making: Data-driven insights from experiments can guide
better, more informed decisions based on evidence rather than guesswork.
 Increased adaptability: Experimentation fosters a culture of learning and
adaptation, allowing organizations to stay ahead of evolving trends and
challenges.

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Disadvantages:
 Time and cost: Designing, conducting, and analyzing experiments can be time-
consuming and expensive, requiring resource allocation and planning.
 Uncertainty and ambiguity: Experiments may not always yield clear-cut
answers, leaving room for ambiguity and interpretation of results.
 Ethical considerations: Experiments involving human subjects require careful
ethical considerations and adherence to regulations to protect individual safety
and privacy.
 Implementation challenges: Even successful experiments may face challenges
in scaling up or integrating findings into real-world applications.
 Limited scope: Experiments often focus on specific variables or contexts,
potentially overlooking broader or unforeseen factors in real-world settings.
 Human bias: Researchers and participants can introduce bias into experiments
unintentionally, affecting the validity and generalizability of results.

Prototyping is the act of creating a rough model or simulation of a product or service. It is a


way to test out your ideas and get feedback from others before you invest a lot of time and
money into developing the final product. Prototypes can be anything from a simple sketch to
a fully functional product. They are a valuable tool for:
 Getting feedback: Prototypes can be used to get feedback from potential users,
stakeholders, and other experts. This feedback can help you to identify problems
with your design and make improvements before you invest a lot of time and
money into development.
 Testing assumptions: Prototypes can also be used to test your assumptions
about how your product or service will work. This can help you to identify
potential problems and make changes before you launch the final product.
 Communicating ideas: Prototypes can be a great way to communicate your
ideas to others. They can help people to understand your vision and get excited
about your project.

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Prototyping Advantages and Disadvantages

Advantages:
 Early feedback: Get valuable feedback from users, stakeholders, and
others early in the development process, allowing for iteration and
improvement before significant resources are invested.
 Improved communication: Makes complex ideas more tangible and
easier to understand, fostering better communication and collaboration
within teams.
 Reduced risk: Identifies potential problems and flaws early on,
allowing for cost-effective fixes and minimizing risks associated with
later development stages.
 Testing assumptions: Validate assumptions about user needs,
functionality, and feasibility, ensuring the final product aligns with
intended uses and goals.
 Enhanced creativity: Encourages exploration of different ideas and
solutions, potentially leading to innovative and unforeseen
approaches.
 Faster development: Prototypes can streamline the development
process by providing a clear roadmap and direction for further work.
Disadvantages:
 Time and cost: Creating prototypes can be time-consuming and
resource-intensive, requiring careful planning and resource allocation.
 Scope creep: Overly detailed prototypes can lead to feature creep and
scope expansion, potentially delaying timelines and exceeding
budgets.
 Misinterpretation: Users or stakeholders might misinterpret
prototypes as finished products, leading to unrealistic expectations or
disappointments.
 Limited functionality: Prototypes often lack full functionality,
potentially obscuring usability issues or technical challenges present in
the final product.
 Perfectionism paralysis: Focusing too much on perfecting the
prototype can delay progress and hinder the iterative feedback loop.

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 Technical constraints: Creating fully functional prototypes might be


limited by available technology or resources, impacting the accuracy
of feedback and testing.

Experimentation and prototyping are both essential parts of the innovation


process. By using these tools, you can increase your chances of creating
successful products and services that meet the needs of your target market.

Innovation labs

Innovation labs are dedicated spaces within organizations where teams


can experiment, prototype, and develop new ideas. They are designed to foster a
culture of innovation and creativity, and to help organizations stay ahead of the
competition.

There are many different types of innovation labs, but they all share some
common characteristics. They are typically:

 Cross-functional: Teams in innovation labs are made up of people


from different parts of the organization, with different skills and
perspectives. This diversity of thought is essential for generating new
ideas.
 Agile: Innovation labs use agile methodologies to develop and test
new ideas quickly and cheaply. This allows them to iterate quickly and
learn from their mistakes.
 Open: Innovation labs are open to new ideas and approaches. They
encourage experimentation and are not afraid to fail.
 Collaborative: Innovation labs are collaborative spaces where teams
can work together to develop new ideas. They often have open floor
plans and shared workspaces.

Innovation labs can be a powerful tool for organizations that want to stay ahead
of the competition. They can help organizations to:

 Develop new products and services: Innovation labs can help


organizations to develop new products and services that meet the
needs of their customers.

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 Improve existing products and services: Innovation labs can help


organizations to improve their existing products and services by
identifying and solving problems.
 Reduce costs: Innovation labs can help organizations to reduce costs
by finding new and more efficient ways to do things.
 Increase revenue: Innovation labs can help organizations to increase
revenue by developing new products and services that people want to
buy.

Here are some examples of innovation labs:

 Samsung Innovation Lab: Samsung Innovation Lab: Samsung Innovation Lab


is a global network of innovation labs that focus on developing new
technologies and products.
 GE Garages: GE Garages: GE Garages are innovation labs that are located in
GE facilities around the world. They are focused on developing new
technologies that can be used to improve GE's products and services.
 IDEO: IDEO is a design and innovation consultancy that has a network of
innovation labs around the world. They work with clients to develop new
products, services, and experiences.

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