Creating Innovative Products
Creating Innovative Products
Boladale Kolade
What is a product?
A product is a good or service that meets customers needs and
customers are willing to pay for it.
Commodities offered for sale.
Why Develop Products
Desire of the organization to grow
Enhance the organizations position in the market.
Optimal use of companys resources. Cost is spread over several
products.
Exploits the product life cycle.
Steps in New Product Process
In turning ideas into products, there are 12 key
steps.
Idea Generation
Ideas are generated :
basic research using a SWOT Analysis on the organization.
R & D department
competitors
focus groups
employees etc
Idea Screening
Key decisions are:
What is in it for the customer and also the bank?
Size of target market & forecast of market share
What industry sales and market trends is the product idea based
on?
Is management willing to commit resources, people & money to
the process?
Concept Development &Testing
Who is the target market and who is the decision maker in the
purchasing process?
What features must the product have?
Consumers reaction to the product?
What benefits must the product provide?
Production of a cost effective product?
What will it cost to produce it?
Asking a sample of prospective customers what they think of the
idea.
Detailed Market Study
Market research
Competitive analysis
Interviews using focus groups
Market studies
Business & Financial Analysis
Risk Assessments
Qualitative Business Assessment
Market Attractiveness/competitive advantage
Cost/benefit analysis
Product Development
The actual process of product development takes
place.
PDMU/PRODUCT OWNER/FINCON/OPS
In-house Product test
Testing the product in-house under controlled
Conditions.
Is it attractive enough for staff and their relations to
buy?
Does banking application give the expected end
Result in processing the product?
Customer Product Test
Field trials by consumers in a segmented market
Void of competition.
Consumer Focus groups to assess product.
Trial Sales
Test market of product.
Selling to limited number of consumer or in a
Limited Area.
Note. This should replicate a real live environment
Trial Production
Test production of product.
Assessing the number of defects and quality of
product.
This could be replaced by simulation testing of
Financial products.
Market Launch
A comprehensive launch and marketing plan should evolve.
Why products fail
90% of new products fail.
Lack of market orientation.
Inadequate market analysis, failure to understand
customer needs, insufficient attention to the market
Place.
Underestimation of competitors.
Overestimation of target market.
Why products fail contd
Lack of product differentiation
A lot of products are based on me too.
Poor design. Product lack attractiveness
Development cost higher than anticipated.
Inadequate launch efforts.
Lessons for success
Understand consumer needs.
-Must meet customer need better than other products in the
market
-Uniqueness of features
-Higher product quality than competition.
-Solves customer problems with competitive products.
-Innovative and novel
-Reduce customer cost.
Lessons for Success Contd
Strong Market Orientation
Market driven, customer focused process is a key success factor
in the development of new product.
Strong marketing research
International Orientation
Products targeted at the world are top performers.
Market Segmentation
Helps to discover groups of customers whose needs are similar
within groups/different between groups
Sharp and early product definition
Specification of target market
Description of product concept and benefits
Organizational Leadership
Structure of authority
Approval and support of new product development
Product Champions
Sense of ownership and pride infused champions
Support of champions efforts with resources
Building of cross-functional teams
Synergy of ideas from different perspectives can often bring
quick solutions to problems
Top Management Support
Market Attractiveness
Market Potential
Competitive Situation
Speed with quality of execution
Assess market timing. Be right on time
Anticipate
New products success always attract competition. Guard your
territory.
Features of a winning product
Offers customers exceptional utility- identify where and how the
new product or service will change the lives of its consumers.
Attractive and competitive price
Customer convenience
Profitability
On time delivery
Tools in increasing innovation
Uncertainties of innovation are high. Three analytic tools to
increasing innovation and reduce uncertainties in product creation
are:
Buyer Utility Map.
Price corridor of the mass
Business model guide
Buyer Utility Map
Helps get managers thinking in the right perspective. It
outlines all the levers companies can pull to deliver utility to
customers as well as the different experiences customers can have
of a product or service
Six utility levers in measuring Buyers Utility are:
Simplicity
Fun & image
Buyer Utility Map contd
Risk
Environmental Friendliness
Convenience
Customer Profitability
Six stages of Buyer experience cycle
Purchase
Delivery
Use
Supplements
Maintenance
Disposal
Buyer Utility map Contd
PurchaseDeliveryUseSupplementsMaintenanceDisposalCustomer
ProductivitySimplicityConvinienceRiskFun & ImageEnvironmental
Friendliness
Use of Buyer Utility Map
By locating a product in one of the 36 boxes on the
BUM, managers can see how the new idea creates
different utility proposition from existing products.
Using a new utility lever at the same stage
Most successful innovations create new expectations for a
familiar experience.
Price corridor of the mass
This is the price bandwidth that captures the largest
groups of customers.
In setting a price, most companies look at the
closest product to the idea in the same industry.
Market shaping innovations win by creating new
customer pools and not just increasing the share of
an existing customer pool.
Price corridor of the mass Contd
Different form, same function
Successful innovations attract customers from other industries
who use a product or service that performs the same function or
core utility as new ones but take different physical form.
Different form and function, same objective.
e.g. Airline and road transport
Specifying a level within the corridor
This helps in determining how high a price can go within the
corridor without inviting in competitors and imitators.
Building a profitable Model
Successful innovators have lean and profitable
Business model and a good business model is itself
very powerful against imitations.
The business model is a series of questions
designed to open up the way production,
distribution and pricing is thought about.
Business Model Guide Contd
The questions are:
What is the cost target?
Can products raw materials be replaced by less expensive
ones?
Significantly eliminate, reduce and outsource high-cost,
low-value-added activities.
Business model guide contd
Who can we partner with?
What capabilities are lacking and what companies have those
capabilities.
Based on cost, quality and speed, should the company be acquired
or partnered?
Which price model should we use?
Direct selling, slice-share or equity payment will create a
greater profit pool?
Applying Six Sigma to Product Development
Five key processes in applying six sigma to product
development.
Define. Customer requirement, problem, project scope &
customer goals.
Measure. The current product or process capability.
Analyze. What is wrong & identify possible root causes.
Improve. Find and test the possible solutions.
Control. Implement, monitor & sustain the optimal
solutions
