Prof Göran RoosProf Göran Roos“Manufacturing for the Future” “Manufacturing for the Future” Thinker in Residence, South AustraliaThinker in Residence, South Australia
Chairman, VTT InternationalChairman, VTT InternationalHonorary Professor at Warwick Business School, Warwick UniversityHonorary Professor at Warwick Business School, Warwick University
Visiting Professor, Innovation Management and Business Model Innovation, VTT Technical Research Centre of FinlandVisiting Professor, Innovation Management and Business Model Innovation, VTT Technical Research Centre of FinlandVisiting Professor, Business Performance and Intangible Asset Management, Centre for Business Performance, Visiting Professor, Business Performance and Intangible Asset Management, Centre for Business Performance, CranfieldCranfield University, University, CranfieldCranfield
Senior Advisor, Asia Pacific, Aalto Executive Education AcademySenior Advisor, Asia Pacific, Aalto Executive Education AcademyPartPart--Time Professor, Strategic Design, Faculty of Design, Swinburne University of TechnologyTime Professor, Strategic Design, Faculty of Design, Swinburne University of Technology
[email protected]@intcap.com
World population growth World population growth
Climate change Climate change
Environmental degradation Environmental degradation
Demographic change Demographic change
Rising wealth in emerging markets Rising wealth in emerging markets
Food safety Food safety Food safety Food safety
Health costsHealth costs
Technological change Technological change
© Copyright Göran © Copyright Göran RoosRoos 22011011
HealthHealth
ConvenienceConvenience
IndulgenceIndulgence
Eating outEating out
Ethical foodEthical food
SustainabilitySustainabilitySustainabilitySustainability
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Industry Consolidation and TransformationIndustry Consolidation and Transformation
CustomerCustomer--driven open innovationdriven open innovation
Food production in the emerging marketsFood production in the emerging markets
Association of food and health benefitsAssociation of food and health benefits
Organic foodOrganic food
Ethnic foodEthnic foodEthnic foodEthnic food
Experience economyExperience economy
Interdisciplinary basis for technology based innovationInterdisciplinary basis for technology based innovation
Bigger scale or unique offeringBigger scale or unique offering
Quest for efficiencyQuest for efficiency
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Aiming for “good
enough” quality at
rock-bottom prices
i.e. the
customer/consumer
Extract high margins
by aiming for “high
perceived value”
offerings that the
customer /consumer
ΔΔ DemandDemandHistorical Demand
customer/consumer
perceive no
differentiated value
customer /consumer
perceive deliver
differentiated value
Emerging Demand
Price*Quality Positioning
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ScaleScale--Intensive Intensive Industries [e.g. Industries [e.g.
Skim milk powder]Skim milk powder]
Specialised Supplier Specialised Supplier Science Based Science Based
Digital Digital Manufacturing Manufacturing Industries [e.g. Industries [e.g.
Designed Designed Personalised Food]Personalised Food]
Specialised Supplier Specialised Supplier Industries [e.g. Industries [e.g.
Organic]Organic]
Traditional Traditional Manufacturing Manufacturing
[e.g. [e.g. Jams]Jams]
Dynamic Dynamic Increasing Returns Increasing Returns
Industries [e.g. Industries [e.g. Luxury Branded Luxury Branded Food Products]Food Products]
Variation Intensive Variation Intensive Industries [e.g. Industries [e.g.
Personalised Food Personalised Food Bundles]Bundles]
Science Based Science Based Industries [e.g. Industries [e.g.
Functional Food]Functional Food]
© Copyright Göran © Copyright Göran RoosRoos 20112011
Health and wellnessHealth and wellness
Green, Clean and SafeGreen, Clean and Safe
Food ExperienceFood Experience
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High Value High Value Added to Added to
Green & Green & CleanClean
High High
Luxury and Luxury and Premium Premium Added to Added to
InputsInputs
High High FunctionalityFunctionality
South South Australian Australian
OriginOrigin
Premium Premium Indulgence Indulgence
ProductsProducts
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© Copyright Göran © Copyright Göran RoosRoos 22011011
InnovativeInnovative
Cheap ingredientsCheap ingredients
Ingredient easily integrated into the productIngredient easily integrated into the product
Evidence of health effects of the productEvidence of health effects of the product
No abstract relationships between Effect and FoodNo abstract relationships between Effect and Food
Authentic and credible product / Ingredients Authentic and credible product / Ingredients combination perceived by the consumer to add valuecombination perceived by the consumer to add valuecombination perceived by the consumer to add valuecombination perceived by the consumer to add value
Excellent sensory quality of products, guaranteed Excellent sensory quality of products, guaranteed freshness and high quality ingredientsfreshness and high quality ingredients
Few varieties, especially in the introductory phaseFew varieties, especially in the introductory phase
Small packaging size, correct choice of market timing: Small packaging size, correct choice of market timing: earlyearly--first or midfirst or mid--second quartersecond quarter
Empirical studies have shown feasible Empirical studies have shown feasible average price premiums of 10 to 20% average price premiums of 10 to 20% compared to conventional foods compared to conventional foods
© Copyright Göran © Copyright Göran RoosRoos 20112011
The variables to play with: The variables to play with:
Excellent qualityExcellent quality
Very High PriceVery High Price
Scarcity and uniquenessScarcity and uniqueness
Aesthetics and Aesthetics and polysensualitypolysensuality
Ancestral heritage and Ancestral heritage and personal historypersonal history
SuperfluousnessSuperfluousness
Packaging is one of the most rapidly changing areas over the coming yearsPackaging is one of the most rapidly changing areas over the coming years
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Sources: Charters, C., Lockshin, L. and Unwin, T. (1999); Consumer Responses to Wine
Bottle Back Labels, Journal of Wine Research, Vol. 10, No. 3, pp. 183-195.© Copyright Göran © Copyright Göran RoosRoos 22011011
GrapesGrapes 75%75%
BarrelsBarrels 10%10%
Wine Making MethodWine Making Method 6%6%
Wine MakerWine Maker 4%4%
Winery EquipmentWinery Equipment 3%3%
The Functional Factors The Functional Factors are more important than are more important than Brand and Cost ONLY in Brand and Cost ONLY in 5% of the market 5% of the market [Connoisseurs][Connoisseurs]
Winery EquipmentWinery Equipment 3%3%
Bottling planBottling plan 2%2%
© Copyright Göran © Copyright Göran RoosRoos 22011011
Perceived Value
WHERE HOW WHY WHEN
HISTORY
ASPIRATIONS
LIMITATIONS
Occasion Life Stage Life StylePerceived Value
Actual Total Cost○ ○○ Identity○
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1850 1940 1990
RetailerRetailer
ConsumerProducer
Retailer
ConsumerProducerProducer
Mu
st-Ha
ve
Bra
nd
RetailerRetailer
ConsumerProducer
© Copyright Göran © Copyright Göran RoosRoos 22011011
Ha
ve
Bra
nd
2010
Retailer
ConsumerConsumerSocial
MediaProducer
2015
Retailer
ConsumerProducerProducer
Instantaneous Consumer Insight
+
Personalised Offerings
+
Direct-to-Consumer Sales
© Copyright Göran © Copyright Göran RoosRoos 22011011
Basis of benefit
Organics
Sales volume
Retailers can use clever segmentation or price as ways to encircle
suppliers/manufacturers but the usual way now is via “benefit”.
Premium
CopycatCopycat
LowLow--costcost
Manufacturer’s
ValueValue
Organics
Fair trade
Hypo-alergenics
Functional foods
Low fat / cholesterol / other
Child-oriented
One serving
Other
Price-quality
Sales volume
PremiumPremium
LuxuryLuxury
© Copyright Göran © Copyright Göran RoosRoos 20112011
© Copyright Göran © Copyright Göran RoosRoos 20112011