management of technology & innovation mktg5603 ... · creating new market space looks across...

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Management of Technology & Innovation MKTG5603 &

Biotechnology Commercialisation MKTG5604

Workshop 2 Part B: Market

Research and NPDProfessor Tim Mazzarol – UWA Business School

UWA Business School MBA Program

M Biotech Program

[email protected] MKTG5603

BC MKTG5604



Ref. G. Moore (1996) Rogers (1995)

MAINSTREAM

MARKET

EARLY

MARKETThe

Chasm

Early Stage

Commercialisation

Mainstream Production

Crossing the Chasm


Key Questions for Technology

Commercialisation

• What is the relative advantage of this innovation over

existing technologies?

• Is the new technology compatible with existing

systems used by the customer?

• How complex is the innovation to understand and

use and what impact will this have on cost and risk?

• Can the innovation be subject to trials by the

customer prior to purchase or are their existing trials

that have been independently assessed?

• How observable are the benefits that this innovation

offers?

• What steps can be taken to reduce risk and

uncertainty surrounding the adoption?

Source: Rogers (1995)


New ValueCurve

What factors should be reduced well below the industry standard?

Reduce

What factors should be raised well beyond the industry standard?

Raise

What factors should be created that theindustry has never offered?

What factors should be eliminated that theindustry has taken for granted?

Eliminate Create

Source: Chan Kim & Mauborgne, 1996


Shifting the Focus of Strategy

The conventional

boundaries of

competition

Industry

Strategic group

Buyer group

Scope of product

& service offerings

Functional emotional

orientation of an

industry

Time

HEAD TO HEAD COMPETITION

Focuses on rivalry within its

industry

Focuses on competitive position

within strategic group

Focuses on better serving the

buyer group

Focuses on maximizing the

value of product and service

offerings within the bounds of

its industry

Focuses on improving price –

performance in line with the

functional – emotional

orientation of its industry

Focuses on adapting to external

trends as they occur.

CREATING NEW MARKET SPACE

Looks across substitute industries

Looks across strategic groups

within its industry

Redefines the buyer group of the

industry

Looks across to complimentary

product and service offerings that go

beyond the bounds of its industry

Rethinks the functional – emotional

orientation of its industry

Participates in shaping external

trends over time.

Source: Chan Kim & Mauborgne, 1996


Perf

orm

ance

Time

Current performance of potentially

disruptive technology

Expected trajectory of

performance improvement

Performance improvement

required by mainstream market

Source: Bower & Christensen, 1995

How to Assess Disruptive Technologies


Davies-Craig EWP Problem

• Conventional water pumps

slaved to engine

• Draw excessive power

• Don’t work well at idle or in

high ambient temperatures

• Coolant flow rates fall to

around 20 litres per min at idle

and rise to 180 litres per min at

speed

• Inefficient due to poor flow

control rates leading to higher

engine wear and low power

output

Source: Davies-Craig, 2003


Case Study: Davies-Craig EWP

• Davies-Craig Pty Ltd

• Australian automotive

engineering firm

• Pioneer of electric radiator

fans (1970s)

• $1.2 million invested in new

Electric Water Pump

• More power, lower fuel

consumption, longer engine

life

• Can be retrofitted to existing

vehicles for around $280.



Low cost, highly reliable,

De-facto automotive standard

but: high torque loss at high

rpm, low flow rate at low rpm

Electric Water

Pump

Belt-driven Water PumpP

erf

orm

an

ce

Time

Low torque loss,

Cools as and when needed,

High cost,

Good, but not excellent reliability

Only to -20degC?

Cope with debris in coolant?

Improved reliability,

Reduced costNiche markets:

Racing cars

Vintage cars

HOW TO ASSESS DISRUPTIVE

TECHNOLOGIES – Davies-Craig EWP

• Initial target markets racing & vintage car owners

• These segments are early adopters

• Racing cars value power over price

• Vintage car owners value engine life over price



The Fuzzy Front End

Source: Koen et al. (2012)

Commercialisation

New Product DevelopmentFuzzy Front End

The entire innovation process comprises three parts: Fuzzy Front End (FFE); new product development (NPD)

and commercialisation. Divisions between these parts can be vaguely defined.

• Experimental, chaotic, unpredictable,

high level of uncertainty.

• Funding is variable, ‘bootstrapping’,

• Focus on testing concepts & theories

reducing uncertainty & risk.

• Disciplined and goal-focused with a

project plan.

• High degree of uncertainty.

• Funding driven by budgets & targets.

• Measurable milestones with “go/kill”

decision points.

• Product and market have been

validated.

• Planning is focused on marketing &

sales targets, revenue & profit

streams, production processes &

scalability.


Opportunity Identification

Opportunity Analysis

Idea Generation & Enrichment

Idea Selection

Concept Definition

Engine

New Concept Development (NCD) Model

Source: Koen et al. (2012)

Starting points

¹TSG = Technology Stage-Gate

Influencing factors

Influencing factors

Government policy & regulation,

laws, competition, economic

climate, distribution channels.

Company

leadership, culture

& business

strategy.

Output to NPD or TSG¹

process


Listening to the Voice of the Customer

The first challenge is:

• Properly understand customers

explicit as well as tacit (or unstated)

needs.

The second challenge is:

• Translate customer needs into product

specifications that address those

needs and maximise market

opportunities.

• Communication between marketing

and technical staff is particularly

difficult.


Listening to the Voice of the Customer:

Quality Function Deployment

House ofQuality

Cu

sto

me

rN

eed

s

PartsDeployment

(critical) PartsCharacteristics

De

sig

nA

ttri

bu

tes

ProcessPlanning

Key ProcessOperations

Pa

rts

Ch

ara

cte

ris

tic

s

ProductionPlanning

Work Instructions,

Test Plans, etc

Key P

roc

ess

Op

era

tio

ns

DesignAttributes

Voice ofCustomer

• All aspects of the final product link back to the voice

of the customer


Quality Function Deployment

• QFD = Systematic approach to New Product Development

• Developed in Japan from 1960s

– “hinshitsu tenkai” (Quality Deployment)

– Used by Toyota and Kobe shipyards etc

• Uses House of Quality to “Listen to the Voice of the Customer”

– Links customer needs to product design attributes

8 key elements:

1. Customer Perceptions

2. Customer Needs

• Basic, Spoken & Unspoken

3. Importance Rankings of needs

4. Design Attributes

5. Relationship between Customer Needs & Design Attributes

6. Costs & Feasibility

7. Engineering Measures

8. Trade Offs

Source: Akao & Mazur, 2003; Griffin & Hauser, 1993


Customer Needs

• Spoken needs

• Unspoken needs

Relationships

Between

Customer Needs

And

Design Attributes

Design

Attributes

Trade offs

“Engineering”

Measures

Costs & Feasibility

1

2

3

4

5

6

Customer

Perceptions

Importance rankings

Poor Good

Source: Griffin & Hauser (1993)

1 2 3 4 5

The House of Quality


Tradeoffs(Between design attributes)

Strong negative relationship: XX

Mild negative relationship: X

Mild positive relationship: #

Strong positive relationship: ##

Prio

rity

4 5

3

5

1 3

5

2

3

4

5

4

2Low cost to service

Reliable

Maximise storage space

Quiet

Low energy consumption

Com

pres

sor e

ffici

ency

CustomerNeeds

DesignAttributes

# xx

#

Ow

n Pro

duct

Com

petit

or A

Com

petit

or B

Com

petit

or C

Com

petit

or D

CompetitiveEvaluation

Insu

latio

n ef

ficie

ncy

Noi

se e

mis

sion

s

Vol

ume

effic

ienc

y

War

rant

y pe

riod

Doo

r (re

)ass

embl

y tim

e

4 5 2 5 3 2

12 30 25 15 20 4

Technical difficulty

Target Value/ SpecificationValue

Importance rating

Tec

hnic

alE

valu

atio

n (1.

..5)

5 1 2 4 3 6Importance ranking

Competitor D

Competitor C

Competitor B

Competitor A

3 3 5 4 5 4Own Product

5.8

(rat

ing)

150K

Cal

/mh

degC

30 d

ecib

els

60%

5 ye

ars

< 10

min

utes

Source: DRM Associates (2002)

Customer RequirementsFrom MarketResearch

Customer RequirementsRanked in Priority Order

Product DesignAttributes

Customer PerceptionsRated 1 to 5Against theCompetitor products

The House of Quality Applied

Customer Needs & DesignAttributes Matrix

Costs & FeasibilityAssessments

EngineeringMeasures

TRADE OFFS“Roof Matrix”


The House of QualityExample: Refrigerator

Tradeoffs(Between design attributes)

Strong negative relationship: XX

Mild negative relationship: X

Mild positive relationship: #

Strong positive relationship: ##

Pri

ori

ty

4 5

3

5

1 3

5

2

3

4

5

4

2Low cost to service

Reliable

Maximise storage space

Quiet

Low energy consumption

Com

pre

ssor effic

iency

CustomerNeeds

DesignAttributes

# xx

#

Ow

n P

rod

uct

Co

mp

etito

r A

Co

mp

etito

r B

Co

mp

etito

r C

Co

mp

etito

r D

CompetitiveEvaluation

Insula

tion e

ffic

iency

Nois

e e

mis

sio

ns

Volu

me e

ffic

iency

Warr

anty

period

Door (r

e)a

ssem

bly

tim

e


The House of QualityExample: Refrigerator

4 5 2 5 3 2

12 30 25 15 20 4

Technical difficulty

Target Value/ SpecificationValue

Importance rating

Te

ch

nic

al

Eva

lua

tio

n (1

...5

)

5 1 2 4 3 6Importance ranking

Competitor D

Competitor C

Competitor B

Competitor A

3 3 5 4 5 4Own Product

5.8

(ra

ting)

150K

Cal/m

h d

egC

30 d

ecib

els

60%

5 y

ears

< 1

0 m

inute

s


House of Quality EXCEL Spread Sheet 6

5 ##

4 #

3 xx

2 # # x

1 xx

Ro

w

Impo

rta

nce

Ran

kin

g

Co

mpre

sso

r e

ffic

iency

Insu

latio

eff

icie

ncy

No

ise

Em

issio

ns

Vo

lum

e e

ffic

iency

Wa

rra

nty

perio

d

Do

or

(re

)asse

mb

ly t

ime

Ow

n P

rodu

ct

Co

mpe

tito

r A

Co

mpe

tito

r B

Co

mpe

tito

r C

Co

mpe

tito

r D

Column 1 2 3 4 5 6

Low energy consumption 1 3 4 5 0 0 0 0

Quiet 2 4 0 0 5 0 0 0

Maximise storage space 3 5 0 3 1 3 0 0

Reliable 4 4 0 0 0 0 5 0

Low cost to service 5 2 0 0 0 0 0 2

5.8

(ra

tin

g)

150

KC

al/m

h°C

30 d

ecib

els

60%

5 y

ears

< 1

0 M

inute

s

Technical Difficulty (1-Low, 5-High) 4 5 2 5 3 2

Own Product: 3 3 5 4 5 4

Competitor A:

Competitor B:

Competitor C:

Competitor D:

Importance: 12 30 25 15 20 4

Importance ranking:

5 1 2 4 3 6

Te

ch

nic

al

Eva

luatio

n

(1…

5)

Target Value/Specificationn Value

Customer

perceptions

Customer Needs

Design Attributes

strong positive

positive

none

negative

strong negative

Correlation:


The House of Quality Summary

• A tool to “negotiate” product specification between

marketing and technical staff

• Marketing staff get insights into technical trade-offs

• Technical staff get insights into the voice of the

customer

• Helps to identify the right priorities

• Achieve better designs

• Improve customer satisfaction

• Reduce product cycle time (get it right first time)

• Concept is very intuitive, hence easy to understand


Developing a Product Concept

Sources: C2CSolutions (2012)

C A G E

DFB

BF D

How project team

understands the VOC &

defines success before

any real customer

research

D = What Development

Team got wrong.

Excitement Quality

The Givens

B = What Customers

got wrong

F = What both got

wrong

VOC Customer

insights

What all agree on

What customers say

about their needs

VOC research

Bulls Eye – what SELLS

Top 3 causes of NPD failure:1. Missing features or qualities that

differentiate the product, “E”

elements.

2. Lack of understanding customer

needs, “C” elements.

3. Including “D” elements.


Voice of Customer Research

VoC Method & Example Description

Focus groups to define big

problems with solutions iterations

Run focus group sessions on customers to identify problems, issues &

points of pain. Observe or film the meetings and brainstorm solutions to

problems, then take back to focus group. Customers then vote on

solutions or suggest improvements (Iterative process).

Brainstorming event with

customers

Invite customers for an Innovation Day that includes a set of inverse and

regular brainstorming sessions designed to find creative ways to destroy

the product. Identify three major weaknesses and look for new solutions.

In-depth interviews via customer

visits

Select cross-functional interview teams, visit key customers & conduct in-

depth interviews with customer groups. Use an interview guide with direct

and indirect questions to help customers articulate needs, likes, dislikes

and desires. Allow customers to engage with the product.

“Camping Out” via ethnographic

research

Identify customer sites and spend time there (e.g. full day). Watch them

use a product, discover how they spend their day and use the technology

or services.

Working with lead or innovative

customers

Find early adopters (EarlyVangelists) and work with them to create new

ideas or solutions. Run a workshop and invite them to participate in the co-

creation of the new product.

Crowdsourcing Using in online media get customers to suggest ideas, create content and

co-design products. Select the best and share with other customers for

evaluation.


Product

Definition

Project Scope

Target Market

Project Concept

Positioning

(plus pricing)

Value

Proposition

Benefits to be

Delivered

Features, Attributes,

Requirements

High Level

Specs

Sources: Cooper & Edgett (2005)

Developing a Product Concept

Is this a single new product ,

family of products or

platform?

Who is the product aimed at?

What will the product be like

and what will it do?

How will the product be

positioned & priced versus

competitors?

What is the CVP that makes

sense from the customer’s

perspective?

What are specific benefits

that it offers to the customer?

What are the product’s key

features, attributes and

performance requirements?

What is the specifications that

the product must have (fixed)

and which ones are fluid?


Whole Product Model

Consumables

Training

Standards,

Quality

Systems

IT

Package

Back Up

Support

Ancillary

Service

Ancillary

Hardware

BASE PRODUCT


Core

product

Tangible

product

Augmented

product

Brand

name

Product

features

Package

Credit Service

Warranties

Total Product Concept

Source: Kotler & Armstrong, 1991


Using the Marketing Mix

TargetCustomers

Positioningstrategies

Products &Services

Pricing

People

Process Physicalevidence

PromotionPlacement

CustomerNeeds & Wants

CustomerPrice sensitivity

Convenience& control

Communication& education

Credencequalities

Reliability& assurance

Responsiveness& empathy



Group Discussion

Working in teams

• Review the firm’s product concept.

• Identify what is known and what is

unknown.

• Can you employ House of Quality?

• Review the Marketing Strategy

check list.

• Highlight major areas for future

action and focus.


End of Presentation

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