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INNO3city ConferenceRandy MerrimanMerriman & Associates Consulting

Austin, Texas (USA)

How to Make Innovative Products Successful in a Global Market

How to Make Innovative Products Successful in a How to Make Innovative Products Successful in a Global MarketGlobal MarketHow to Make Innovative Products Successful in a How to Make Innovative Products Successful in a Global MarketGlobal Market

in·no·va·tion/ˌinəˈvāSHən/ Noun: The action or process of innovating.A new method, idea, product, etc:

"technological innovations".


Innovation is the creation of better or more effective

products, processes, technologies, or ideas that are accepted by markets, governments, and society. (Customers)

Innovation differs from invention or renovation in being a substantial positive change rather than a modest incremental change.


“The way you will thrive in this environnent is by innovating – innovating in technologies, innovating in strategies, innovating in business models.”

Samuel J. PalmisanoChairman, President and Chief Executive Officer, IBM

How to Make Innovative Products Successful in a How to Make Innovative Products Successful in a Global MarketGlobal MarketHow to Make Innovative Products Successful in a How to Make Innovative Products Successful in a Global MarketGlobal Market Success Globally Requires More than an Innovative Product

• Building products/solutions that meet “untapped” customer needs• A key to success globally is identifying a core need or problem that crosses geographic and cultural boundaries

• Selecting and executing the right ideas properly

• Speed to market – getting there first, getting there fast, at right time

• Applying new technologies, strategies, and business models

• Or applying existing ones in new ways

• Reinventing business processes

How to Make Innovative Products Successful in a How to Make Innovative Products Successful in a Global MarketGlobal MarketHow to Make Innovative Products Successful in a How to Make Innovative Products Successful in a Global MarketGlobal Market Sustainable Long-term Success Globally may also Require:

• Retooling the corporate culture to innovation – a “learning culture”• Making changes to organization structure, operations, supply chain, the types of employees you hire, incentive programs, etc.

• A willingness to “look outside” of yourself for solutions

• Becoming a “fast” organization

• Becoming adept at spotting needs and market opportunities

• Ability to respond quickly with new products/solutions

• Ability to “launch” quickly

How to Make Innovative Products Successful in a How to Make Innovative Products Successful in a Global MarketGlobal MarketHow to Make Innovative Products Successful in a How to Make Innovative Products Successful in a Global MarketGlobal Market Success Globally Requires More than an Innovative Product

• Requires innovation in many different areas, not just product

• Requires proper execution in many different areas

• Requires proper timing

• Requires alignment to a true customer’ needs & market opportunities

This is why the best or most innovative products don’t This is why the best or most innovative products don’t always succeed always succeed


Success Globally Requires More than an Innovative Product

“I have innovative thoughts everyday, but until I shape them, put pen to paper, someone prints what I’ve written, someone buys what I’ve written, and someone reads what I’ve written, I’m just like everyone else.”

Ray Bradbury, Author


• No one size fits all answer• Depends on your industry, market, targeted customers, competitive

environment and the nature of your product• Be clear about the type of market you’re in – Global?• Develop formal business, product, and marketing plans & strategies

and be willing to adjust• Most importantly, accurately identify customer’ needs and create the

“best fit ” with your product

What can you do to make your innovative product or solution successful in the global marketplace?


Accurately identify customer’ needs and “fit” your product to customer’ needs and market opportunities

Keys to Success – Identifying Customer’ Needs

Source: IBM Institute for Business, 2009 Value Chain Study


“It isn’t the consumers’ job to know what they want.”

Keys to Success - Identifying Customer’ Needs

Steve JobsLate Co-Founder and CEO

Apple Inc.

Is this True?Product Vision vs. Data

• The customer doesn’t know what they want• You should already know what the customer wants or needs• You should be telling your customers what they need

Courtesy of Apple


Balancing Product Vision with Customer Data (Research)


• The customer doesn’t know what they want?

• Sometimes true, sometimes they just can’t articulate what they want

• Can often describe “pain points,” what they don’t have, what would be better

• Difficult to articulate “wants” for new product types/forms of delivery

• You should already know what the customer wants or needs?

• Trust your instincts about what the customer wants & what will work

• Trust your instincts & vision, but don’t assume you know everything

• Market conditions & customer needs’ change; research can help ID “shifts”


Balancing Product Vision with Data (Research)


• You should be telling your customers what they need?

• Have a product vision, but use customer’ data to help shape & refine it

• You may have to demonstrate your vision to get others to react & share in it

• Remember, “filling” a need is easier than “creating” one




• Utilize all available research, knowledge, and data available

• Market reports and studies – market size, trends, etc.

• Organizational knowledge - development staff, past sales, etc.

• Competitive information – market share, product analysis, strengths, etc.

• Qualitative research – customer surveys, focus groups, etc.

• Qualitative research – research & information from partners (supply chain)

• Qualitative research – usability tests, product pilots, etc.

• Qualitative research – formal & informal customer interviews




• Identify, verify, and quantify the market opportunity

• Market size, revenue potential, and growth rate

- Help you determine “play” or “no play”

- Timing of entry into the market

- Longevity of market opportunity

- Scale product investment to the opportunity (current & future)




• Utilize market-driven research & (customer) data to shape and refine product vision and plan throughout development

• Market-driven & customer-driven not internally-driven

• Utilize valid data to drive decisions, e.g. correct audience , valid sample, etc.

• Willingness to make adjustments to product plan and features

• Plan – Implement – Validate – Revise – Implement - Validate




• Research & data acquisition built into budget & schedule

• Have a clear idea of what information you need to make decisions

• Make research appropriate to targeted markets, customers & product

• Talk to your customers!


A Global Market Plan & Strategy vs. Multi-domestic?

Keys to Success – Evaluating Potential Markets & Strategy

• Can have a bearing on virtually every aspect of your business

• It’s critical that you know the difference – evaluate your options!

• A global strategy & multi-domestic aren’t mutually exclusive• Determine a combination of global & multi-domestic (local) market strategies and activities to create a competitive advantage


A global industry:An industry in which firms must compete in all world markets of that

product in order to surviveAn industry in which a firm’s competitive advantage depends on economies

of scale and economies of scope gained across marketsInternational markets where products are largely standardized.


A global industry:Competition is global. The same firms compete with each other everywhere

A multi-domestic industry:Firms compete in each national market independently of other national

markets.


What is the Nature of Your Industry?Global market or multi-domestic markets?Understand the nature of your target market(s)

What’s Your Strategy? In general businesses adopt a global strategy in global markets and a multi-local

strategy in multi-domestic markets.

How to Make Innovative Products Successful in a How to Make Innovative Products Successful in a Global MarketGlobal MarketHow to Make Innovative Products Successful in a How to Make Innovative Products Successful in a Global MarketGlobal Market Adopting a true global business & strategy involves:

• Competing everywhere

• Understanding that success requires a worldwide presence

• Making the product the same for each market

• Centralized control of product development, strategy, marketing, etc.

• Taking advantage of customer need across international borders

• Integrating and coordinating activities across borders

How to Make Innovative Products Successful in a How to Make Innovative Products Successful in a Global MarketGlobal MarketHow to Make Innovative Products Successful in a How to Make Innovative Products Successful in a Global MarketGlobal Market Adopting a true global business & strategy involves:

• Locating segments & activities that allow for competitive advantage• A global strategy is effective when differences between countries are small and competition is global. It has advantages in terms of:

• Economies of scale

• Lower costs

• Coordination of activities

• Faster product development

How to Make Innovative Products Successful in a How to Make Innovative Products Successful in a Global MarketGlobal MarketHow to Make Innovative Products Successful in a How to Make Innovative Products Successful in a Global MarketGlobal Market Adopting a multi-domestic strategy typically involves:

• Tailoring or customizing products for individual countries

• Customizing “value proposition” & marketing message by country

• Innovation and/or adaptation coming from local R&D or partners

• Decentralizing of decision-making with in the organization

• Local sourcing – manufacturing, sales, marketing, distribution, etc.


Accurately identify customer’ needs and “fit” your product to customer’ needs and market opportunities


Source: IBM Institute for Business, 2009 Value Chain Study


Evaluate your markets & potential business strategy :

Four drivers determine the extent & nature of globalization in an industry:

1) Market Drivers

• Degree of similarity in customer needs & requirements

• Existence global distribution networks

• Transferable marketing




2) Cost Drivers

• Potential for economies of scale & scope

• Transportation cost

• Product development costs

• Sales & marketing costs




3) Government Drivers

• Trade policies e.g. market liberalization

• Regulatory policies

• Compatible technical standards & common marketing regulations




4) Competitive Drivers

• Size of market, revenue potential, and growth potential

• Market penetration • The greater the strength of the competitive drivers the greater the tendency for an industry to globalize


Evaluate your markets & strategy (SWOT Analysis):

• Develop your strategy around strength & opportunities

• Key to success in virtually any market is:

• Ability to match strengths with opportunities

• Ability to convert weaknesses to strengths


Evaluate your markets & strategy (SWOT Analysis):

• SWOT analysis should be more than a list - it is an analytical technique to support strategic decisions

• No point producing a SWOT analysis unless it is implemented

• Anticipate & plan how to turn weaknesses into strengths

• Remember a perceived “threat” often holds opportunity


Case Study – Creating Innovative Product for Market Need

• Worked backward from consumer need to develop innovative

product

• Need for whiter teeth that doesn’t require $600+ dental procedure • Leveraged research & knowledge from multiple internal & external sources – chemistry, engineering, materials science, etc.

• Determined product needed to be under $35 price point• Solution developed collaboratively between dental professionals and “bleaching experts” from P&G Laundry Products Group

Proctor & Gamble – Crest White StripsProctor & Gamble – Crest White Strips


Case Study – Creating Innovative Product for Market Need

Proctor & Gamble – Crest White StripsProctor & Gamble – Crest White Strips

• Used SWOT analysis to determine strengths & weakness

• Threat of brand imitation due to lack of foreign regulations

• Strength: rapid development & just-in-time inventory• Utilized partnerships to overcome weakness including lack of effective distribution, trade barriers, etc. in developing nations • Allowed P&G to gain competitive advantage & reduce threats


Case Study – Innovative Product to Address Global Need

• Identified core need of people at the bottom of the socioeconomic pyramid

• Market growth opportunity & opportunity to have social impact

• 4 billion people worldwide with income of less than $2 per day• Conducted research worldwide on how people live, problems, etc.• PUR water purification system developed by P&G in cooperation with U.S. Center for Disease Control to address bottom of pyramid

Proctor & Gamble – PUR Water Purification SystemProctor & Gamble – PUR Water Purification System


Case Study – Innovative Product to Address Global Need:

• Project almost cancelled after 3 years of R&D due to high costs

• Project shifted to Sustainability Dept. to relieve pressure for ROI

• Shifted traditional business model & marketing strategy

• Began selling product at-cost in U.S. consumer market

• Sale of replacement filters eventually made project profitable


Case Study – Innovative Product to Address Global Need:

• Work with non-profit humanitarian groups to distribute PUR for free

• Non-profit partners provide distribution P&G couldn’t

• Compliance with local health regulations & standards

• Millions of dollars in free publicity & marketing for P&G• Helped build “brand equity” for other P&G products going into the same markets


Case Study – Failure to Adapt Business Model:

• National Geographic licenses programming to educational publishers

• Licenses programs & assets for creation of educational products

• Business model based on amount of licensed material & market

• Business model original established to meet needs of U.S. market

• Model includes additional licensing fees for use of brand

National Geographic National Geographic



• National Geographic licenses programming to educational publishers

• Licenses programs & assets for creation of educational products

• Business model based on amount of licensed material & market

• Business model original established to meet needs of U.S. market

• Additional licensing fees for use of brand

• Deals required approval from NG School Division




• Thomson Publishing approaches ND for content for China

• Video to support TP’s new English Language Learning product

• Educational market in China controlled by People’s Press

• Requires use of Chinese companies to adapt & distribute

• Thompson has long standing relationships with these companies




• Thompson offers different compensation model

• Offers $.05 on every product sold in which NG video is used

• No guarantees or performance clauses & no branding fees

• NG insists on $250k for licensing & $500k for brand

• NG clings to tradition U.S. business model; refuses to adapt




• NG School Division rejects deal for “competitive” reasons

• NG School Division no presence in China or sales channels

• Does not understand or view compensation model as valid

• Didn’t potential partner’s market evaluation or sales estimates• School Division concerned Thompson might become competitor in U.S. educational publishing market




• Result: estimated $30 million in missed revenue in 3 year period

• Alienated potential customer & partners in single largest market

• Currently locked-out of education market in China


Thank You

How to Make Innovative Products Successful in a Global Market

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