marketing and success factors for product innovation ...portals.wi.wur.nl/files/docs/file/frans...

8/25/2009

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Marketing and Success factors for Product Innovation

Implications for Local Seed Business in Ethiopia

Frans Verhees % Wageningen University

Content

� Who is Frans Verhees?

� Some marketing principles

Break

� Success factors for new products and businesses

Break

� Framework for local seed businesses in Ethiopia

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Frans Verhees?

Frans Verhees?

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Frans Verhees?

Market Oriented Product Innovation in Small Firms

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Assistant professor Marketing at WU

Teaching� Course: Introduction to marketing� Course: Advanced marketing� Course: Marketing simulation� MBA: Innovation in Food� Theses

Research� Entrepreneurship� Market Orientation� Small firms, cooperatives, and agriculture

Frans Verhees?

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Marketing principles

Marketing principles

� What is marketing

�Marketing concept

�The marketing environment

�Marketing management

�Customer value and customer segmentation

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The marketing philosophy/ the marketing concept

� The marketing concept holds that the satisfaction of the customer is the key to prosperity, growth and survival of the organisation

Application to local seed business in Ethiopia

� Who is the customer?

� How can you satisfy the customer?� Needs

� Wants

� demand

� What does it mean for LSB to prosper?

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The marketing environment


� What is the marketing mix for LSB?

� What marketing information do LSB have?

� How do they make plans?

� How do they make sure that plans are implemented?

� How do they learn from past previous plans?

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� What are intermediaries for LSB?

� What are suppliers for LSB?

� What are competitors for LSB?

� What are publics for LSB?


� What is the physical environment of the LSB?� What technologies are available for the LSB?� What is the culture of the LSB?� What social developments are relevant?� What political and legal issues influence LSB?� How do demographics influence the LSB?� How does the economy influence the LSB?

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What is marketing management?

� The art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering and communicating superior customer value

Determinants of Customer%Delivered Value

Customer-delivered

value

Total customer

value

Total customer

cost

Product value

Monetarycost

Personalvalue

Energycost

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� How can LSB deliver value to local farmers?

� How can LSB increase product value?

� How can LSB personal value?

� How can LSB decrease costs for the customer?

Strategic Marketing: The Value Delivery Process

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Why target specific markets?

� Lack of resources to service the entire market properly

� Firm: focus on sub%markets with the greatest potential

� Greater sales and profitability

� Customers: greater product differentiation and variety because firms seek further market opportunities by developing new segments

� Firm: better competitive position

Why target specific markets?

� More effective market programmes

� Firm and Customer: design products that are more ‘fine%tuned’ to the needs of the market

� Firm and customer: greater customer satisfaction

� Firm and customer: More efficient use of resources

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The Customer%Development Process

Prospects

Suspects

Disqualified

First-timecustomers

Repeatcustomers Clients Members

PartnersEx-customers

Creating, delivering, and communicating

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� Does the LSB recognize customer segments?

� Do LSB target specific customers segments?

� How do LSB maintain a relationship with their customers?

� How do LSB communicate with customers?

� How do LSB distribute seed to customers

Thanks you for your attention.

Questions?

© Wageningen UR

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Success factors for product innovation


� Cooper, R.G. (1999), From experience: The invisible success factors in product innovation, Journal of Product Innovation Management, 16(2), 115%133

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Stage1Gate

1

Stage2Gate

2

Stage3Gate

3

Stage4Gate

4

Stage5Gate

5Idea PIR

Ideation Preliminaryinvestigation

Detailedinvestigation

(build businesscase)

Development Testing &validation

Full production& market launch

Initialscreen

Secondscreen

Decision onbusiness

case

Post-development

review

Pre-commer-cializationbusinessanalysis

Post im-plementation

review

A generic stage-gate new product process (Cooper, 1988)


� What ideas do LSB have for new products?

� How do LSB test their ideas for viability?

� How do LSB make (detailed) plans for new products?

� What do LSB do if an idea does not seem viable?

� How do LSB launch their new product?

� (How) do LSB learn from new product successes and failures?

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Critical Success factors (I)

1. Solid up%front homework

2. Voice of the customers

3. Product advantage

4. Sharp, stable, and early product definition

Critical Success factors (II)

5. Well planned, resourced and executed launch

6. Tough go/ no%go decision points

7. Accountable, dedicated, supported cross%functional teams with strong leaders

8. An “international” orientation

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� What does “solid upfront homework” mean for LSB?� What does “build in the voice of the customer” mean

for LSB?� What does “product advantage” mean for LSB?� What does “sharp stable and early product definition”

mean for LSB?� What does “well planned resourced and executed

launch” mean for LSB?� What does “tough go/ kill decisions” mean for LSB?� What does “Accountable, dedicated, supported cross%

functional teams with strong leaders” mean for LSB?


� Henard DH and Szymanski DM (2001), “Why some new products are more, successful than others,”Journal of Marketing Research 38(3), 362%375.

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Determinants of success

Strategy:• marketing synergy• technological synergy• dedicated human resource• dedicated R&D resource

Process:• structured approach• pre%development proficiency• marketing task proficiency• technological proficiency• launch proficiency• market orientation• customer input• cross%functional integration• cross%functional communication• senior management support

Product:• advantage• meet customer needs• price• technological sophistication• innovativeness

Market:• likelihood & intensity of competitive response• market potential

11 dominant drivers of performance:

� Market potential (.54)

� Dedicated human resource (.52)

� Marketing task proficiency (.50)

� Meeting customer needs (.50)

� Product advantage (.48)

� Predevelopment task proficiency (.46)

� Dedicated R&D resource (.45)

� Technological proficiency (.43)

� Launch proficiency (.43)

� Order of entry (.41)

� Technological sophistication (.41)

Source: Henard & Szymanski, 2001

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Combined

• product advantage (product)

• product innovativeness (product)

• marketing synergy (strategy)

• technological synergy (strategy)

• structured approach (process)

• market orientation (process)

• cross functional integration (process)

• competitive response intensity (market)

Explained variance (R2)

.44*

.30*

.26*

.42*

%.07

.27*

%.08

%.15*

.59

Source: Henard & Szymanski, 2001

Thanks you for your attention.

Questions?

© Wageningen UR

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Framework for analysis of LSB and

for improving their business

Increasing the market orientation of LSB

Idea generation

� What benefits are customers looking for when they buy seed?

� What complaints do customers have about the seed they use?

� What new alternatives do our customers have?

� What can suppliers, distributers, and publics offer to help us improve our offer to our customers?

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Idea generation

� How does (new) legislation, the economy, demographics and infrastructure affect our business and our customers? Do we have to respond?

� What technologies are available to reduce seed costs while maintaining seed quality?

� What technologies are available to increase seed quality without increasing seed costs?


Idea generation

� How can the distribution of the seed be improved?

� How can the communication about our seed beimproved?

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Solid upfront homework

� A business plan for the LSB including:

� A description of the customer segment (who are they and what do the want from seed?)

� A description of the alternatives that the customers have (competition)

� A description of the product advantage for the customer segment

Solid upfront homework

� A business plan for the LSB including:

� A description of work that needs to be done to develop the product

� A description of the launch of the product (price, distribution and promotion)

� Tasks and responsibilities for people (organization)

� Financial projections that show the viability of the new product/ LSB

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Tough go/ no go decision points

� Evaluation criteria for the business plan including:� Does the seed offer advantages over alternatives for the

customer segment?

� Are advantages of the seed and is the interest of customers tested with potential customers?

� Do LSB have the expertise and resources to develop the product?

� Is everybody in the LSB taking responsibility to get things done?

� Are the assumptions in the financial projections realistic and does the project make business sense?

Contact information

� Frans J.H.M. Verhees

� Mail:Wageningen University,Marketing and Consumer Behaviour Group (bode 87)Postbus 8130, 6700 EW, Wageningen, The Netherlands

� Visitors:Hollandseweg 1, 6706KN, Wageningen, The NetherlandsRoom 5012, building # 201 (The Leeuwenborch)Phone: +31 317 485041/ +31 317 483385Fax: +31 317 484361www.mcb.wur.nl/uk/www.mcb.wur.nl/UK/Staff/Faculty/Verhees/[email protected]

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