• Identify the difference between invention and innovation and how innovation can be successfully implemented to achieve growth in an industry?
• Demonstrate a critical awareness of the different models of innovation and how they apply to an industry case studies?
• Evaluate the role of systematic risk management in the successful implementation of innovation ?
The main components of a new product development process are a pathway to customers’ needs. The new product concept involves generation of new ideas, scientific research on the new product to be implemented. A study on competitors and representatives is also involved in new product development process. The new product concept must be refined and tested in nature as it is a source of revenue for the company. The new product manager must keep things in line from the development process to analysis of risk. There are risks involved in any business and there must be mitigation strategies developed in order to overcome such risks. The new product developed must be marketed in a way most beneficial to the customers or end-users (Annacchino, 2007).
The Coca Cola brand was a secret formula of an Atlanta pharmacist and a design of an Indiana glass company. The Coca Cola Great Britain is a ground of sustainable development. It has introduced Live positively to include supporting activities, healthy living programmes and sustainable programs of reduce, recycle and reuse. The Company also partnered with FIFA World Cup and London 2012 Olympics to promote sustainable games. There are more than 160 low calories and no calorie drinks in the product range. UK sells 39% low or no calorie drinks. An amount of 1.9 billion servings are provided each day and the 400 plus product range has enticed the world. It is the largest Global beverage and soft drink company that has continued to develop, innovate and provide the world with new experience (Britain et al., 2015).
Critical Analysis Of Main Components Of New Product Development Process
Invention And Innovation
A Harvard economist, Joseph Schumpeter brought about a difference in the terms invention and innovation. According to him, an invention is a large theoretical construct that acts as an evidence to prove its implementation in the real world. On the other hand, innovation happens when the invention is put into practice. Innovation is the conversion of theoretical construction into action that proves useful for a business. Innovation is termed as invention plus execution. Another side of the theory is that invention occurs when a new concept is introduced for the first time, while innovation turns the invention into anything real (Gardener, 2009).
Innovation is considered as a driver for developing growth. Innovation is a focused and purposeful effort in achieving the economic and social potential. Growth can occur in various ways such as improved service quality, cost reduction, increased turnover, cost avoidance and shorter lead times (Sullivan, 2008). Incremental Innovation can be used in attaining growth. Small changes in the company can be made with existing technologies and business models. Breakthrough Innovations can be made for any significant changes.
Critical Awareness Of Innovation Models
Innovation plays an important role in the organization. It adopts several concepts and methodologies to implement a successful innovation. Innovation is about having ideas and understanding of consumers needs. The customer needs can be met by several models of innovations as required. The different models of innovation may be in form of Product innovation, process innovation, service innovation or business model innovation.
Process innovation can be defined as a change in process to carry out a particular job. It implies doing the task in a better way. Process innovation makes it easy, cheaper and quicker way to run a business. It also increases the sustainability of new product and increase the life span in market. For example, CAD software of Computer Aided Software changed its functions to do things. It made its designs more accurate, faster and cost-effective (Bartel, Ichniowski and Shaw, 2005).
Product Innovation is creation of new product in order to meet customer needs and increase profits. The main objective lies in getting customers to buy more amounts of products from the company. Product innovation leads to increase in revenue thereby leading to profitability. This may also be a result of competition with rivals. For example, a new product Coca-Cola Zero was launched as a sugar free coke for men. Several marketing campaigns were designed especially for men that increased sales as a whole (Fosfuri and Giarratana, 2009).
Service innovation is defined as an innovation in service to customers. Services are intangible in nature which makes the selling difficult. Service innovation is complimentary to product innovation. It is an add-on to a particular product which attracts more number of customers. For example, Burberry innovated approach for customer satisfaction by introducing services such as e-commerce and content rich experiences. The social media strategies were adopted by the company giving the customers a sense of personalized version of shopping.
Business model innovation comprises of changing the structure or model of business. The existing business goes through business reconstruction by changing the ways of business work. For example, an American T-Shirt company, Threadless changed the business structure. They outsource design instead of having their own. People from the world submit their designs in the community. The selected designs from customers makes the designers earn an amount for every design getting selected (Sweeney, 2014)
Components Of New Product Development
To develop a new product, the design team goes through few phases of research on the consumer perception and behavior and thus innovation is brought. The stage gate model is the use of stages to define the development process. In this case each stage passes through a gate only after validation and confirmation and then proceeds to the next. Hence, these stages are highlighted here (Biazzo, 2009).
Concept- it is the idea or the thought on the basis of which a product is developed. It provides some specific benefits to the company and help in achieving technical goals. The concept of introducing the Coca Cola zero was targeting those customers who shy away from the product due to its health effects and high sugar content. Thus, the concept was offering to the customer needs and benefits.
Ideation/ Scoping- it is the process where the teams that are involved goes through a rigorous brainstorming process of generating ideas on the methods that would be applied and the innovations that would be needed to benefit the company. The ideas and theories generated are collected and evaluated and the most plausible and effective idea is chosen for further research and application. The idea to develop a zero sugar coke was to make sure that the health conscious people are easily attracted to it and at the same time something innovative is introduced.
Design- is the process of executing the best idea and integrated those minute details that will deliver the desired result. The Coca-cola Zero used a new bottle design and marketing activity that will interest the men in particular and the health conscious people in general.
Test- it is a very important process as the innovation and new concept is tested in a smaller market before it is released officially. The process finds out the efficiency of the product and whether there is a need for refining the product or concept. The test of a small segment market and with the Diet coke was done, so that Coca cola zero gains a positive market.
Release- after the test yields a positive result and confirmation, the product is released and marketed officially among the target audience to achieve sales and business growth.
The innovation and product development is successful only when each gate is passed through. A new product development goes through these specific components but it is also fraught with few risks and uncertainties that must be guessed and addressed so that the company succeeds.
Potential Risks Involved
The new product development process faces a myriad of risks. The several levels of risks are inherent to product, defects in design, manufacturing defects and faults in marketing. The first level risk involves unavoidable risks. The second level implies failure in adherence to new customer needs. The third level includes manufacturing defects. The fourth level comprises of misrepresentation of information or warning about a particular product. The risks involve market risk and financial risk that affect the well being of a company. After summing all these risk factors, the new product development process is initiated and workable solutions are derived. A supply chain risk management may also be conducted to note the faults in the supply chain while reaching the product to consumers (Rainey, 2005).
Role Of Systematic Risk Management
Systematic Risk management is the identification and assessment of risks. A proper risk management strategy consists of speculation of risk and maximizing the value of management. Risk can be managed in three ways, namely modifying the operations. Adjusting its structure and employing targeted instruments (Sadgrove, 2005). Risk can be managed by avoiding them, sharing and accepting them and controlling them. After choosing any of the management procedures, risk may be managed by terminating, transferring, treating or tolerating (Chew, 2008). The risk management strategies allows in identifying the project strengths, weakness, opportunities and threats. The handling of project’s success defines identification mitigating and avoiding problems. Systematic risk management is important so as to make a project successful (Systematic Risk Management for the Innovative Enterprise, 2009).
The systematic risk management is important because it is not just a process but the tracking of risk can be continued throughout the project of innovation. Risk management and analysis is a mixture of judgment and pragmatism. Risk management helps in tracking risks and the tasks associated with it. It identifies the hindrances that maybe caused during an innovation process. It helps in analyzing the threats or competitors in the market (Derval, 2010). The overall response of the customers due to innovation can be taken into account and mitigation strategies can be framed accordingly. Creation of back-up plans helps in minimizing risk and the losses that can occur in the long run. Risk needs to be managed systematically to ensure long term success by prioritizing the areas that need more attention of the management. The risks that can be avoided are accounted for and designed in a beneficial way (Borghesi, Gaudenzi and Borghesi, 2013)
Benefits And Advantages Derived
The Innovation and risk management module provided me with a learning and understanding of the market knowledge. It gave me an idea of the need to address the customers wants. The importance of innovation in the business world to maintain a competitive advantage over other companies is derived. The industrial case study provided me with market knowledge and the challenges faced by companies during innovation process.
Critical Examination Of Coca-Cola
An industrial analysis was conducted on Coca-Cola for its innovative product Coca-Cola Zero. This product was innovated in the market especially for men as unsweetened beverage. The usual Coca-Cola is sweetened in taste that is consumed by both men and women. It is a popular carbonated drink that was repositioned as official Diet Coke for both men and women. A new model was created for attracting a group of young people (Interactive, 2015). The task involved creating a healthy beverage for which they came up with the idea. The risk involved in the Coca-Cola Zero innovation was mainly in the compromise in taste. The risk also consisted of marketing campaigns and communication strategy. People could be confused with the sub-brand names (the Guardian, 2015).
A market research was conducted on the product innovation process undertaken by Coca Cola. A market research on competitors like Pepsi which innovated a similar innovative product was identified. A product positioning was carried if the new product by Coca-Cola satisfied the customers without a compromise in its taste. A study was made if the consumers switched from other beverage drinks to Coca-Cola. The consumer perceptions and behavior with the brand and new product was analyzed. Various differentiating factors like packaging and marketing were taken into account.
Techniques For Research
Research was conducted in both primary and secondary sources. A qualitative research like blind test and quantitative research as survey was conducted in order to get a market review on how successful the product was. The target consisted of several respondents of age 18-35 with middle income class. Questionnaire was conducted on the basis of other competitive products that have similar nature. A new set of consumers were also derived who did not consume Coca-Cola because of its sugar content. Getting the product to a healthier version attracted more consumers. The Research and development Team of Coca-Cola ensured the same taste with better health (Pride, Hughes and Kapoor, 2013). The questionnaire also comprised of questions if they were an existing or new customer.
During this research, I personally had benefits in knowing the market better. I got an idea of consumers’ tastes and preferences and the most preferred brands by them in beverage. I preferred conducting quantitative market research rather than qualitative research as it gave a good way of collecting information from a large number of people. The qualitative research also gave an insight to smaller frames of people. The challenges faced were not all people were willing to share a feedback because of their schedules. Another challenge faced by me was not all respondents were consumers for beverage. Few people did not like the taste of the new product.
Innovation and risk management provides a learning of overall risks in an existing company with risk involvement. The hidden opportunities in a company may be developed. The industrial case study was performed with Coca-Cola. The new product development for Coca-Cola Zero as unsweetened beverage was studied. The risks involved in developing the new product, customer response to the new product and the responsibilities of research and development team was analyzed. The product innovation test went through concept testing on how the team provided a rationale to consumers. Other competitors in the market like Pepsi, Sprite etc were also studied on the basis of similar products.
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