Assessment Weightage: 40%

Total Points: 100

Submission Deadline: On Canvas

General Instructions

The exam consists of two short articles to be used as one mini case followed by a total of 5 questions. Please use the information provided in the articles to develop your responses. External references are not required. However, if you use external information, please cite using APA style referencing.

Please refrain from copying information from other sources verbatim as plagiarism checks will be performed on your submissions. UTS has a strong policy against academic misconduct including (but not limited to) plagiarism to ensure high academic integrity.

Each question / sub-question specifies how many points it is worth and the word limit. Please answer the questions within the word limit. Your response beyond the word limit will not be considered for grading.

Please begin answering right below each question / sub-question OR ensure that you label your responses with the correct question/sub-question number at the beginning of each response.

Article#1: DoorDash food delivery service launches in Australia

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Amid already intense competition and regulatory scrutiny of the food delivery sector, overseas delivery service DoorDash has unveiled its launch into the local market.

The US franchise expressed optimism about its first expansion outside of North America, unveiling its launch in Melbourne on Wednesday (4 September). DoorDash also said that it is building a corporate team in the Melbourne area.

We dove deep into the Australian market and quickly realised two things: restaurants want more from their delivery partners, and not all Melburnians have access to the selection that they should expect, the companys Australian general manager, Thomas Stephens, said.

Weve built a lot of product and expertise to solve these problems in North America. Combining that experience with a tailored approach just for Melbourne, were excited to grow the market here. Weve built a service for Australian eating habits with a simple focus: provide more access to Melburnians favourite foods.

According to its website, DoorDash already has over 350 restaurants, cafs and take-away food outlets in Melbourne already registered on its platform, although some of these are likely to double up in multiple food categories.

A variety of independents are joined by certain locations of well-known chains, including Pizza Hut, TGI Fridays and Muffin Break.

DoorDash also claims to have an exclusive partnership with Il Gusto and Cedar Bakery.

In addition to deliveries, DoorDash said that it will offer a pick-up option for users to collect their food on the go while also offering group orders.

Working collaboratively with restaurant owners of all business sizes, customers and Dashers, our priority is accessibility to a delightful food delivery experience for all, Mr Stephens said.

From Melbourne, we aim to continue our expansion efforts throughout Victoria and Australia through the remainder of 2019 and into 2020.

Nandos CEO, Craig Mason, was quoted in the DoorDash launch announcement as saying that his company had joined the platform to offer our customers even more flexibility.

Meanwhile, Gary Mink, owner of Bay City Burrito, was quoted as saying that it has been refreshing working with the team at DoorDash, who have taken the time to understand my business and set me up for success on their platform to get incremental orders from both their delivery and pick-up product.

Already operating in Australia are food delivery providers including Uber Eats, Menulog and Deliveroo, as well as smaller providers and those servicing particular niches, such as those specialising in pick-up orders or the corporate market. And in recent months, service station giant BP announced a partnership with Uber Eats to offer deliveries of its convenience snacks and pantry items, under a new service called Couchfood.

Meanwhile, German-founded Foodora announced in August last year that it would abandon Australia in favour of higher growth markets overseas.

The launch follows scrutiny of the gig economy, and in particular food delivery operators, amid regulatory concerns about whether drivers are employees or contractors, and also disquiet on their contract terms to delivery drivers/riders.

Regulatory intervention has already seen Uber Eats amend its contracts over fairness concerns, while being cleared by the Fair Work Ombudsman (FWO) over the employee versus contractor debate.

The FWO in June this year abandoned legal action it had launched against Foodora, citing its exit from the local market and the sale of its local assets, which it said resulted in more than 1,000 Foodora delivery workers receiving only 31 per cent of the entitlements owing to them, including the three workers subject to the FWOs legal action.

Article#2: Food delivery giant DoorDash launching in Australia to take on Uber Eats and Deliveroo

Food delivery giant DoorDash is set to launch in Australia next week, creating competition for incumbents Uber Eats and Deliveroo.

Founded in 2013, DoorDash is one of the most popular food delivery services in the United States. In May it raised $US600 million ($888 million), valuing the start-up at $US12.6 billion ($18.6 billion).

The start-up's move into the Australian market has been flagged by advertisements posted on LinkedIn for 12 DoorDash roles in Melbourne, ranging from general manager to recruiter and head of business development.

The advertisement for general manager states "this person will lead DoorDash's business in Australia, and will be responsible for our overall success in the market".

The food delivery start-up has also established a Facebook page in Australia that advertises for driver hire as well as an Australian website that is focused on attracting restaurants to sign up.

A spokesperson for DoorDash in Australia would not confirm the launch but said the start-up is always thinking about extending its mission of "empowering local economies".

"We're continually assessing new opportunities to achieve that mission, and don't have any news to share at this time," the spokesperson said.

439737550927000Online food delivery in Australia is a lucrative market, valued at $1.3 billion for 2019 according to Deloitte's "Future of Food" report. However, it is also highly competitive, with food delivery company Foodora collapsing last year.

204851039116000DoorDash's entry into Australia is likely to attract scrutiny from labour advocates after a New York Times report into DoorDash in the United States revealed the start-up took tips intended for delivery drivers or "dashers" and used it for their base pay.

I think it will be difficult for DoorDash to get traction and recognition.

Ken Burgin, Profitable Hospitality

Chief executive and co-founder, Tony Xu, confirmed last month DoorDash would change its payment model.

"We thought we were doing the right thing by making dashers whole when a customer left no tip," he wrote on Twitter. "What we missed was that some customers who *did* tip would feel like their tip did not matter."

DoorDash now pays delivery drivers from $US2 per delivery and Mr Xu said any tip goes to drivers.

Ken Burgin, founder of hospitality consultancy Profitable Hospitality, said he was surprised DoorDash was entering the "highly saturated" local market.

Doug Williams talks about being a former Deliveroo driver and the hardships that come with the job.

"Why on earth, when there are so many players, would they come to Australia?" he said. "I think it will be difficult for DoorDash to get traction and recognition."

Mr Burgin said it was unlikely DoorDash would take driver's tips in Australia.

"I don't know how much tipping happens here," he said. "I'd say they have learnt their lesson

there."

However, Doordash is confident about its prospects in Australia. In the US, for example, DoorDash enjoys about 56% market share in the US food delivery segment, according to some estimates. Despite entering the market almost ten years after its major competitor, GrubHub and having to build scale from scratch, unlike Uber Eats, DoorDash overtook both in 2019 to occupy the leaders position. Some experts hail Doordashs ability to build and

impressive local networks of end customers, restaurants, and dashers quickly and leverage the network effects effectively to grow and reduce costs via economies of scale even at geographical cluster-level. For example, While GrubHubs early entry allowed it a foothold in north-eastern US, DoorDash has quickly expanded to over 50 cities (vs 17 of GrubHub).

DoorDash has more than 50% share of sales in the two biggest Texas metro areas and almost 75% in Bay Area. As the food delivery market is more favorable to local cluster networks vs global clusters, this strategy has worked well for DoorDash. Moreover, to retain restaurants on its platform, DoorDash has also lowered commissions and launched value added services such as Storefront to help restaurants create their own websites to take pick-up and delivery orders. The service also provides restaurants with customer data, which other third-party delivery aggregators do not typically share.

A spokesperson for Uber Eats declined to comment on the likely impact of DoorDash on the Australian market.

The spokesperson said Uber Eats had been "embraced" by Australians during its three years of operation in the country.

"We place a lot of value on establishing long-term relationships with our restaurant partners and we want their businesses to thrive," the spokesperson said.

Merton Wulfert, managing director of Deliveroo in Australia, also declined to comment directly on DoorDash's launch.

"Australia is one of our most important markets globally and we have strong ambition for growth," he said. "We're proud of our clear differentiation in the market and are focused on offering the widest selection and most reliable service to customers."

Questions

(a) DoorDash has grown rapidly in Australia, and now covers more than 80% of all Australian consumers and has more than 25,000 partners on its platform. According to you, what are the three critical factors for Doordashs success in the Australian market in such a short time and why? (10 points; Max 500 words)

(b) What type of innovation is Doordash? Provide justifications from concepts covered in the subject. (10 points; Max 500 words)

Conduct a competitor analysis for Doordash. How is Doordashs value proposition different from its competitors? (20 points; Max 800 words)

Describe the business model of Doordash using the 5Vs model. (20 points; Max 800 words)

Please describe the marketing strategy of Doordashs Australia launch using the 4Ps framework and how each of the Ps might contribute to its success. (20 points; Max 800 words)

Doordash is planning to launch a new service to deliver pharmacy products to consumers.

If you are the product manager for this new service, would you recommend that the service be delivered via a new digital platform or leverage Doordashs existing platform? Why or why not? (10 points; Max 500 words)

If you are the marketing manager for the new service, how would the 4Ps of the new service compare to Doordashs existing service? Also identify the customer segment you would target for this service. Provide reasons for the same. (10 points; Max 500 words)

Product innovation

Lecture 1

What is strategy

Creation of a unique and valuable position

Helps an organisation make trade-offs

Involves creating a fit between different organisational activities

About choices

Reactive strategy

Defensive strategy

Imitative strategy

Second-but-better strategy

Responsive strategy

Proactive

Organisations can be proactive and initiate change

R&D expenditure

Identifying customer needs and satisfying them through new products

Acquisitions

Alliances

Value creation is not value appropriation

Depends on:

Appropriability of benefits

Patents

Order of entry advantages

Learning curve

Company ethos

Innovation

Second but better

Types of innovation

Textbook chapter 1 The Strategic Elements of Product Development

Invention = refers to the dimension of uniqueness the form, formulation, function of something.

Usually, patentable

Innovation = overall process whereby an invention is transformed into a commercial product that can be sold profitably

New products process = procedure that takes the new product idea through concept evaluation, product development, launch and postlaunch

Product innovation charter = strategy for new products

Ensure that the new product team develops products that are in line with the firm objectives and strategies and that address marketplace opportunities

Product portfolio management = helps the forms assess which new products would be the best additions to the existing product line, given both financial and strategic objectives

On decision = the project will move forward (a conditional go if you will) but the missing information will be gathered, and the project could still be haltered at a later dateLecture 2 - Disruptive innovation (catalytic innovation)

Types of innovation

Radical innovation = The radicalness of an innovation is the degree to which it is new and different from previously existing products and processes.

Makes whatever the current technology obsolete

Incremental innovations = may involve only a minor change from (or adjustment to) existing practices.

Competence enhancing innovation = innovations build on the firms existing knowledge base

Competence destroying innovation = innovations render a firms existing competencies obsolete

Component innovation (or modular innovation) = entail changes to one or more components of a product system without significantly affecting the overall design

Architectural innovation = changing the overall design of the system or the way the components interact

Require changes in the underlying components

Sustaining technologies = Improve Performance

IPOD 1 vs IPOD 2

Some can be Radical or Discontinuous, but most are incremental

Disruptive technologies = Worse Performance at least in the short term, but over a period of time improve performance and will become better than the incumbent technology

Principles/characterisitcs of disruptive technologies

Disruption = describes a process whereby a smaller company with fewer resources can successfully challenge established incumbent businesses.

Entrants that prove disruptive begin by successfully targeting those overlooked segments, gaining a foothold by delivering more-suitable functionalityfrequently at a lower price.

Incumbents, chasing higher profitability in more-demanding segments, tend not to respond vigorously.

Entrants then move upmarket, delivering the performance that incumbents mainstream customers require, while preserving the advantages that drove their early success.

When mainstream customers start adopting the entrants offerings in volume, disruption has occurred.

Companies Depend on Customers and Investors for resources

Small Markets Dont Solve the Growth Needs of Large Companies

Markets that Dont Exist Cant be Analysed

An Organizations Capabilities Define its Disabilities

Technology Supply May Not Equal Market Demand

Business models 5 Vs

Textbook chapter 2 The New Products Process

Agile product development = continuous software improvement

Accelerated product development (APD), or speeding the product to market = Accelerating time to market offers many benefits to the firm

The product will be on the market for a longer period of time before becoming obsolete, it can attract customers early and possibly block competitors with similar products that hit the market at a later time, or it can help to build or support a firms reputation.

BUT can be costly, cutting corners in quality

Lecture 3 Stage gate approach + crossing the chasm

Classical diffusion theory (Everett Rodgers)

When faced with discontinuous innovations, customers fall into five broad categories along an axis of risk-aversion:

Innovators

Early Adopters

Early Majority

Late Majority

Laggards

Technology adoption life cycle (reformed classical diffusion theory for technology)

In high-tech, the categories have been given more specific names (Geoffrey Moore).

Innovators = Technology Enthusiasts

Early Adopters = Visionaries

Early Majority = Pragmatists

Late Majority = Conservatives

Laggards = Sceptics

Crossing the chasm

Failing to cross the chasm is a common barrier to success

Firm takes on more visionaries than it can handle

Cannot take on more custom projects, but no pragmatists ready to buy

Early market becomes saturated, and revenue growth tapers off or declines

Key personnel become disillusioned

Venture capital well begins to run dry

Marketing strategies that lead to success in selling to visionaries actually hinder success in selling to pragmatists

Visionaries want:

New and revolutionary

Unique functionality

Horizontal references

Willing to take risks

Want rich tech-support

Want revolutionary processes

Willing to tolerate bugs

Pragmatists want:

Standard

Third party supporters

Vertical references

Little risk

Great quality of support

Enhanced established processes

Bug free

Strategy to cross the chasm and beyond

The bowling alley

New product gains acceptance from niches and extends through a common platform

Each niche requires expertise in that vertical market

Market coverage propagates to neighbours and extends references

Focuses marketing resources

The tornado

Period of mass-market adoption when the general marketplace switches over to the new technology

Driven by application that provides compelling benefits to mass market e.g. the killer app

Requires strong operational excellence to keep up with demand

Main street

Market growth stabilizes

Focus on cross selling and upgrading to existing customers

Innovation success probability the more you try the more likely you are to succeed

P = 1 - (1 - p)n

P = the probability of at least one success when n new products are launchedp = probability that each new product will succeed

Examples:p = 0.2 for a radical innovationp = 0.5 for a line extension

Use your companys experience to adjust the p values

Stage-gate approach

What we want:

How to know which products to kill stage gate approach

At the end of each development stage, you hold a stage review gate to determine if you should

Continue go to the next stage

Redirect go back to the previous stage

Hold put the project on hold

Kill kill the project

These gates measure a set of deliverables and are a set of criteria on which the project is judged (defined outputs)

Must meet:

Does the project fit our business strategy?

Does it meet our environmental, health and safety policies?

Should meet:

Degree of product advantage

Leverage core competencies

The market attractiveness

Beginning stage

Discovery (Ideas for new products)

Gate 1 Idea Screen

Gentle Screen

Must-meet and Should-meet criteria

Strategic Alignment

Product Advantage

Ability to Leverage the firms resources

Fit with Company policies

Scoping stage 1

Preliminary market assessment

Preliminary technical assessment

Preliminary business and financial assessment

Recommendations and plans for step 2

Gate 2: Second screen

Gate 2 is a second and somewhat more rigorous screening

Additional must-meet criteria

Sales force

Customer reaction

Potential legal, technical and regulatory killer variables

Building the business case stage 2 (also called the critical homework stage)

Target market definition

Delineation of product conception

Specification of product positioning strategy

Benefits to be delivered

Value proposition

Describable product features, attributes, requirements and specifications

Market investigation and MR studies

Competitive analysis

Technical appraisal

Business and financial analysis

Product definition

Product justification and detailed project plan

Stage 3: development

Emphasis on technical work market analysis and customer feedback work continue concurrently prototypes are developed a number of things are done in parallel

Gate 4: go to testing

In house tests

User or field tests

Trial, limited or pilot production

Pre-test market, test market or trial sell

Revised business and financial analysis

Gate 5: go to launch

Final gate opens and full commercialization

Market launch and full production

Final point before the project can be killed

Post launch review

The team is disbanded

Product becomes a regular product

Latest data on revenues, costs and expenditures

Post audit

Lecture 4 Creativity and innovation what is it?

Systems as the foundation for creativity

Think about the renaissance systems allowed for the creation of some of the best artists through the medici family

Domain e.g. mathematics is a domain

Field = individuals who act as gatekeepers to the domain

Person = individual who brings change

Creativity is an act, an idea, or product that changes an existing domain or that transforms an existing domain into a new one and a creative person whose thoughts or actions bring these changes

The process of creativity

Traditional approach

Period of preparation

Period of incubation

The Aha moment

Evaluation

Elaboration

The five stages in reality are not exclusive but typically overlap and recur several times before the process is completed

To be creative you must be involved in doing what you love to do

Flow theory

Actively engaged in an activity where the skills possessed are balanced to the challenge of the activity, s/he can approach an optimal state of experience called flow

Mix between challenge and skill (finding the middle)

Motivated by the enjoyment that comes from confronting challenges

Having clear goals every step of the way

Immediate feedback of ones actions Give feedback to yourself if not available

Having a balance between challenges and skills

Ability to judge problems

Medici Effect Franz Johansson

Associations

Creativity requires diversity

There are no new ideas

Quality and quantity are correlated

Not good at predicting success

Failure is good

Enlightened experimentation

How to exorcise the curse of knowledge

Knowing your customers understanding how they do things. For truly creative new products & services we need to uncover hidden insights by understanding the psychological drivers.

Expose yourself to a range of cultures

Learn Differently

Reverse Assumptions

Take on Multiple Perspectives

Lecture 5 Discovery or ideation

Obstacles to idea generation

Group think:

We think we are being creative, when in reality we are only coming up with ideas that our group will find acceptable.

Targeting error:

We keep going back to the same simple demographic targets (for example, the under-35 or under-50 markets).

Poor customer knowledge:

Lavish research spending doesnt guarantee that customer research was done well.

Complexity:

Creative types within organizations, as well as senior management, often think that the more complex the idea, the better it is (or the smarter and more promotable they seem).

Lack of empathy:

These same managers are also well-educated, high-income individuals accustomed to an upscale lifestyle. They may simply not understand the typical customer.

Too many cooks:

A small new product team works fine, but large companies especially are prone to internal competition for power and influence.

Barriers to firm creativity

Cross-functional diversity.

A diverse team means a wide variety of perspectives and more creative stimulation, but also can lead to difficulties in problem solving and information overload.

Allegiance to functional areas.

The team members need to have a sense of belonging and to feel they have a stake in the teams success. Without this, they will be loyal to their functional area, not to the team.

Social cohesion.

Perhaps a little unexpectedly, if the interpersonal ties between team members are too strong, candid debate might be replaced by friendly agreement, resulting in less innovative ideas.

The role of top management.

If senior management stresses continuous improvement, the team might stick with familiar product development strategies and make only incremental changes. Top management should encourage the team to be adventurous and try newer ideas.

The role of management to stimulate creativity

Remove the barriers to firm creativity

Recognize individuality

Be tolerant of mistakes

Be supportive under stress

Techniques include:

Competitive teams

Idea bank of unused ideas for possible reuse

Encourage interaction even in how offices are laid out

Allowing researchers free time to work on creative projects (Google Gmail; 3M Post-It Notes)

Deep dive innovation (IDEO)

What is a product concept?

A product concept is a claim of proposed customer value.

It can be a verbal and/or prototype expression that describes need, form, and technology (at least two of these) and how the customer stands to gain (and lose).

It should clearly relate the products form and technology to the customer benefit delivered.

Rule: You need at least two of the three inputs to have a feasible new product concept, and all three to have a new product.

Required inputs to the creative process

Form (the physical thing created, or, for a service, the set of steps by which the service will be created)

Technology (the source by which the form is to be attained)

Benefit/Need (benefit to the customer for which the customer sees a need or desire)

Technology permits us to develop a form that provides benefit.

Patterns in concept generation

Customer need firm develops technology produces form

Firm develops technology finds match to need in a customer segment produces form

Firm envisions form develops technology to product form tests with customers to see what benefits are delivered

Note: the innovation process can start with any of the three inputs.

Sources of ideas

Problem bases concept generation

Gathering the problems

Internal records (routine contacts with consumers)

Direct inputs from technical and marketing departments

Problem analysis with customers (ask the what are the problems with the current product, not what they want)

Methods for idea generation

Brainstorming

Lead users

An important source of new product ideas

They have the best understanding of the problems faced and can gain solutions to these problems

Customers associated with a significant current trend

In many cases, they have already begun to solve their own problems or can work with product developers to anticipate the next problem in the future

Crowdsourcing and prediction markets

At a basic level, it is obtaining ideas and predictions from the market

A prediction market is a collection of people speculating on future events or outcomes

These events include but arent limited to; elections, sales of a company, price fluctuations of commodities, even changes in the weather and just about any event or outcome that can be objectively verified ex-post

Conditions required for this to work

Diversity of opinion

Independence

Decentralization

How the wisdom is aggregated

Pros and cons of crowdsourcing

Wisdom of the crowds: sheer numbers suggest a few fantastic ideas will emerge

Especially useful if solutions can be obtained easily (crowdsourced ideas for new baby products were more novel and offered more benefits than those from new product professionals).

Most likely to generate modest product improvements rather than new-to-the-world products.

Typical users less likely to come up with ideas that are easily developed into real products.

Professionals or experienced users may have a more realistic view of what is feasible.

Open innovation

The use of purposive inflows and outflows of knowledge to accelerate internal innovation and expand the markets for external use of innovation respectively

Concept

Spanning firm boundary

Collaboration inside and outside the organisation

Managing the external process of innovation

Inside

Employees across divisions, locations, functions

Outside

Suppliers

Customers

Consumers

Partners

Universities & research institutes

Retirees

Anybody

The process by which a firm searches for research, innovation, technologies, and products.

Increasing the speed of research and innovation cuts risks and generates new innovative ideas.

Viewed by some as the dominant innovation model of the 21st century.

Inputs can come from internal sources (marketing, strategic planning) and external ones (customers, market information, etc.).

Sources such as inventors, startup companies, or university laboratories are actively sought out.

Assumptions of closed innovation stage gate approach

If we discover it, we will find a market for it

If we discover it first we will own it

The important technologies we will need can be anticipated in advance

The best people in the world work for us

If we just adapt our internal processes better and plan accordingly we will reach our innovation goals

Tutorial 5 notes 3M case study

The logic of lead user

Identification of functionally novel products and service concepts should be done at the leading edge of markets and applications.

Evaluation of commercial potential should be done at the means of markets and market segments.

The functional source of innovation depends upon the functional relationship between innovator and innovation:

An INNOVATION is anything new that is actually used (enters the marketplace) whether major or minor.

An innovation is a USER innovation when the developer expects to benefit by USING it;An innovation is a MANUFACTURER innovation when the developer expects to benefit by SELLING it.

INCLUDEPICTURE "https://www.researchgate.net/profile/Kathleen-Diener/publication/272566648/figure/fig1/AS:622232124530689@1525363107732/Lead-user-vs-traditional-approach-according-to-von-Hippel-2005.png" * MERGEFORMATINET

Lecture 6 Concept evaluation

The new product planning process

Concept evaluation steps:

Step 1: Market Analysis

Understanding the market

What is the potential for a product in the marketEvaluation of market attractiveness

Actual and potential market size

Market growth

Market profitability

Cost structure

Distribution system

Trends and development

Key success factor

How to understand the market looking at the competition

Define the competitive set / identify the set of products our brand competes with

Mis-definition of competition is dangerous

It is consumers who decide the definition of a category and the products that a target brand competes with

This is often done narrowly e.g. do laptops compete with only other laptops or also with desktops, smartphones and tablets

Important to define competition on a continuum rather than a discrete way

Step 2: User needs-and-wants study (Segmentation, Targeting and Positioning )Market segmentation

Dividing a market into smaller segments of buyers with distinct needs, characteristics or behaviours

Market targeting

Evaluating each market segments attractiveness and selecting one or more market segments to enter

Positioning

Based on competition e.g. Avis

Based on attribute e.g. Volvo = safety

Based on use or application e.g. Nyquil = only night time cold medicine

Customer-driven strategy

The process of segmentation and targeting focused on building the right relationships with the right customers

What customers will we serve and how can we serve them best?

Who is our target market?

What is our value propositionCustomer value CV = Benefits costs

Value V = Benefits / Price

Step 3: Competitive Analysis

Define competition

Inward Looking

Product form

Product Category

Outward Looking

Outside the Company

New Ideas

New Competitors

Knowledge as a source of competitive advantage

Two dimensions of knowledge

Competitor intelligence

Customer intelligence

Strategies

Inside the Box Strategy

Low COI and CUI

Reactive Strategy

Low COI and High CUI

Low CUI and High COI

Oblique Strategy

High CUI and COI

Competitive position and profitability

Porters 5 forces

INCLUDEPICTURE "https://upload.wikimedia.org/wikipedia/commons/thumb/2/2b/Elements_of_Industry_Structure.svg/350px-Elements_of_Industry_Structure.svg.png" * MERGEFORMATINET

Competitor benchmarking mckinsey ge matrix

INCLUDEPICTURE "https://speakingnerd.com/uploads/blogs/8/18/ge-mckinsey-matrix.jpg" * MERGEFORMATINET

Competitive advantage

Cost advantage

Variable cost

Marketing expenses

Operating expenses

Differentiation advantage

Product differentiation

Service quality

Marketing advantage

Distribution

Sales effort

Brand advantage

Step 4: Detailed Technical Assessment

Purpose of protocol

To determine what marketing and R&D groups need to do their work.

Think concept life cycle: this is more than a simple concept statement, yet less than we will have when the first prototype is available.

Try to identify the key deliverables at this point

To communicate essential to all players and integrate their actions, directing outcomes consistent with the full screen and financials.

To set boundaries on development process or cycle time.

To permit the development process to be managed (i.e., what needs to be done, when, why, how, by whom, whether).

Contents of product protocol

Target market

Product positioning

Product attributes (benefits)

Competitive comparison

Augmentation dimensions

Timing

Marketing requirements

Financial requirements

Production requirements

Regulatory requirements

Corporate strategy requirements

Potholes

Quality Function Deployment (QFD)

A technique designed to insure that customer needs is focused on throughout the new product project.

First step is the House of Quality (HOQ): gathers desired attributes from customers and translates them to engineering characteristics.

Requires inputs from marketing and technical personnel; encourages communication and cooperation across the functional areas

QFD house of quality

Benefits in QFD example

Compatibility

Print quality

Ease of use

Productivity

Technologies in QFD example

Postscript compatible

Resolution

Edge sharpness

Duplex printing

Hours training required

Speed (text)

Speed (graphics)

Step 5: Concept Testing

What is a Product concept statement?

A statement about anticipated product features (form or technology) that will yield selected benefits relative to other products or problem solutions already available.

Example: A new electric razor whose screen is so thin it can cut closer than any other electric razor on the market.

Purpose of concept testing

To identify very poor concepts so that they can be eliminated.

To estimate (at least crudely) the sales or trial rate the product would enjoy (buying intentions, early projection of market share).

To help develop the idea (e.g. make tradeoffs among attributes).

Step 6: Financial and Business Analysis

Difficulties of Financial Analysis for New Products

Commonly used Forecasting Techniques

Risk and Return Assessment

Scoring Model

Step 7: Launch Plan (For the Group Project 4Ps)

Product

Price

Place (distribution)

Promotion

Lecture 7 Conjoint analysis

Different perspectives, different goals

Buyers want all of the most desirable features at lowest possible price

Sellers want to maximize profits by:

minimizing costs of providing features

providing products that offer greater overall value than the competition

The demand side of the equation

The typical market research role is to focus first on the demand side of the equation

After figuring out what buyers want, next assess whether it can be built/provided in a cost-effective manner

Breaking the problem down learning what customers want

If we learn how buyers value the components of a product, we are in a better position to design those that improve profitability

Ask Direct Questions about preference:

What brand do you prefer?

What Interest Rate would you like?

What Annual Fee would you like?

What Credit Limit would you like?

Ask direct questions about the importance

How important is it that you get the; band, interest rate, annual fee, credit limit that you want

But there is low discrimination in what is important (customers say everything is important)

What is conjoint analysis?

Measures how buyers value components of a product/service bundle

The value equation

Products are bundles of attributes providing benefits

Example - products in the Toothpaste category possess the following attributes:

Brand name (Crest, Aquafresh, Colgate, etc.)

Therapy (cavity protection, tartar control, whitening, gum care, multi-benefit)

Flavor (regular, regular mint, other mint, cinnamon)

Package (tube, stand-up, neat squeeze, pump)

Size (small, medium, large)

In choosing between competing items, consumers do not form preferences for each individual item, but instead evaluate the underlying attributes that describe each item in a category.

Some common decisions

Pricing Decisions

New Product Development

Which Product to Introduce

Brand Equity

What if Analysis

Change Price

Change Positioning

How does conjoint analysis work?

We vary the product features (independent variables) to build many (usually 12 or more) product concepts

We ask respondents to rate/rank those product concepts (dependent variable)

Based on the respondents evaluations of the product concepts, we figure out how much unique value (utility) each of the features added

(Regress dependent variable on independent variables; betas equal part-worth utilities.)

Why is it good?

When respondents are forced to make difficult tradeoffs, we learn what they truly value

Create an attribute list

Attributes assumed to be independent (Brand, Speed, Color, Price, etc.)

Each attribute has varying degrees, or levels

Brand: Coke, Pepsi, Sprite

Speed: 5 pages per minute, 10 pages per minute

Color: Red, Blue, Green, Black

Each level is assumed to be mutually exclusive of the others (a product has one and only one level level of that attribute)

Rules for forming attribute levels

Levels are assumed to be mutually exclusiveAttribute: Add-on featureslevel 1: Sunrooflevel 2: GPS Systemlevel 3: Video Screen

If define levels in this way, you cannot determine the value of providing two or three of these features at the same time

Levels should have concrete/unambiguous meaning

Very expensive vs. Costs $575

Weight: 5 to 7 kilos vs. Weight 6 kilos

One description leaves meaning up to individual interpretation, while the other does not

Traditional conjoint: card sort method (six attributes)

Conjoint analysis outputs

Utilities (part worths)

Importances

Market simulations

Undertake market simulations removing and adding different attributes

Steps in the design of a conjoint analysis

Understand using qualitative techniques the different aspects of consumer decision making process (Generally done using focus group, personal interviews etc).

Using a content analysis identify different attributes that might be used by consumers/ subjects to make decisions.

A preliminary survey is usually used as a precursor to a Conjoint analysis. This will help in designing the conjoint questionnaire. Information such as the importance of the attributes as well as the levels of the attributes is sought from the respondents. Data is analyzed using cross tabs, chi-squares and regression analysis.

Once the subsample of the important attributes have been identified from the preliminary survey, a questionnaire is developed using an experimental design (either a full-factorial or a fractional factorial design).

Last of all data collected is analyzed using anovas and/ or regression.

Lecture 8 Concept and evaluation

The Evaluation System

A-T-A-R model (profitability analysis/ assessment)

A method of assessing profit based on diffusion of innovation

Profits = Units Sold Profit Per Unit

Units Sold = Number of buying units

% aware of product

% who would try product if they can get it

% to whom product is available

repeat measure (what is the average number of units bought per person per year, including repeats)

Number of units repeaters buy in a year

Profit Per Unit = Revenue per unit cost per unit

ATAR model definitions

Buying Unit: Purchase point (person or department/buying center).

Aware: Has heard about the new product with some characteristic that differentiates it.

Is the buying unit sufficiently informed to stimulate trial (are they knowledgeable enough)Available: If the buyer wants to try the product, the effort to find it will be successful (expressed as a percentage).

Can they find the product easily?

Can be the percentage of outlets carrying the product, or ACV (all commodity volume) which is the percentage of the market that has access to the product in local distribution channels

Trial: Usually means a purchase or consumption of the product.

Can be an actual in-home trial, on-site trial, or vicarious trial (tries to share results with non-triers, depending on the product type

Usually requires some expense to get the trial supply and enough time to decide whether the product was any good

Repeat: The product is bought at least once more, or (for durables) recommended to others.

Is actually a measure of how successful the trail was and how pleased the buying unit isCan be the actual repeat rate or a proxy could be a statement of satisfaction level or how likely the buying unit would recommend it to others

ATAR model application

Points to Note About A-T-A-R Model

Each factor is subject to estimation.

Estimates improve with each step in the development phase.

Inadequate profit forecast can be improved by changing factors and doing a what-if analysis.

If the profit forecast is inadequate, look at each factor and see which can be improved, and at what cost

In our example, could retail margins be increased to increase distribution? Could more advertising spending lead to more awareness?

Consider qualitative issues as well (advertising theme or execution)

Concept testing: Fit with product innovation charter

PIC eliminates most new product ideas even before they are developed into concepts.

Ideas of the following types are excluded:

Ideas requiring technologies the firm does not have

Ideas to be sold to customers about whom the firm has no close knowledge

Ideas that offer too much (or too little) innovativeness

Ideas wrong on other dimensions: not low cost, too close to certain competitors, etc.

What Is a Product Concept Statement?

A statement about anticipated product features (form or technology) that will yield selected benefits relative to other products or problem solutions already available.

Examples:

A new electric razor whose screen is so thin it can cut closer than any other electric razor on the market

A copier that has twice the speed of current models

Recall the importance of getting responses to product concepts and not simply ideas (Chapter 4)

Purposes of Concept Testing

To identify very poor concepts so that they can be eliminated.

To estimate (at least crudely) the sales or trial rate the product would enjoy (buying intentions, early projection of market share).

To help develop the idea (for example, make tradeoffs among attributes)

Procedure for a Concept Test

Prepare concept statement

Clarify specific purposes

Decide format(s)

Select commercialization

Determine price(s)

Select respondent type(s)

Select response situation

Define the interview

Conduct trial interviews

Interview, tabulate, analyzeSome Key Issues in Concept Testing

Concept statement: narrative, drawing, model?

Respondent group: Lead users? Large users?

Response situation: Where? How?

Interviewing sequence: Is the concept understandable? Believable? Important? Interesting? Realistic? Would it work? What problems do they see? Would they buy?

Test procedure, change and implement, study findings.

Types of Concept Statements

Noncommercialized concept statement (stripped description): just facts, can be in bullet points.

Commercialized concept statement (embellished description): sounds like the way the product would be promoted or advertised.

Both are commonly used.

A commercialized statement might produce more realistic customer evaluations, but the quality of advertising copywriting can bias results

Some prefer noncommercialized statements since it is the concept being tested, not its advertising

Can also do a compromise: a gentle sell that keeps it simple and doesnt oversell the concept.

Concept test verbal description and sketch

Concept Test Other Types

Focus group with early-batch production or 3D-printed prototype

Two or three different versions of a new package can be 3D printed, then passed around at focus groups to obtain reactions and preferences

Virtual reality (VR)

Steelcase uses VR to build three-dimensional images of office furniture concepts and allow customers to walk around rooms and visualize from any angle

Concept Testing Cautions and Concerns

If the prime benefit is a personal sense (aroma, taste).

If the concept involves new art and entertainment.

If the concept embodies a new technology that users cannot visualize.

If concept testing is mishandled by management, then blamed for product failure.

If customers simply do not know what problems they have.

Consider: how useful would be the concept test results for the Ferris wheel? The first microwave? Diet fast food burgers?

Lecture 9 Design Driven innovation

What is design?

Has been defined as the synthesis of technology and human needs into manufacturable products.

In practice, design can mean many things, ranging from styling to ergonomics to setting final product specifications.

Design has been successfully used in a variety of ways to help achieve new product objectives.

One thing it is not: an afterthought; prettying up a product that is about to manufactured!

Beautiful is not enough. The product must be useful. Design includes the whole human interface. (Ken Munsch of Herman Miller)

Design-driven innovation

Design introduces a bold new way of competing. Design-driven innovations do not come from the market; they create new markets. They dont push new technologies, they push new meanings. (Design expert Roberto Verganti)

In design-driven innovation, design itself has the leadership role (unlike market-pull or technology-push innovation).

Product functionality is as important to excellent design as is appearance or aesthetics.

Design thinking

Three ways to bring certainty to innovation

Establish Human-Centred Design capabilities

Starts with framing (understanding the problem)

Use How might we

Discover

Go out in the field and find out about the target segment and what needs arent being fulfilled

Interviews, field work

Insights

Find patterns from interviews and speaking to customers

Create

Turn an opportunity into a concept, then create a prototype then testing

Deliver

The final product and trying to scale it

Enable innovation across the organisation

Transform the way you go to market

Lecture 10 Emerging Tech

We are in the fourth industrial revolution

Why digital platforms

Product life cycle is shorter