Innovation Strategy Management Lecture 7

Programme Part 1 – The basis of Innovation Part 1 – The basis of Innovation Part 2 – Innovation and New Product Development Part 2 – Innovation and New Product Development Part 3 – Innovation and Technology development Part 3 – Innovation and Technology development Part 4 – Innovation and Intellectual Property Part 4 – Innovation and Intellectual Property Part 5 – EU Green paper of Innovation Part 5 – EU Green paper of Innovation Part 6 – Innovation policies in different countries Part 6 – Innovation policies in different countries

Part 2 Innovation and New Product Development

Lecture 7: Product strategy I Customer satisfaction Customer satisfaction Capabilities, networks, strategy contexts Capabilities, networks, strategy contexts Environments Environments Different ion and positioning Different ion and positioning

Product strategy The main purpose The main purpose – to generate income!

Customers satisfaction through products or services Customers satisfaction through products or services By developing attractive market offerings By developing attractive market offerings Competition Competition Success or no Success or no Interaction of 3 key factors Interaction of 3 key factors the organizations capabilities the organizations capabilities strategy strategy the environment the environment

Capabilities, networks Capabilities: Capabilities: organizations architecture organizations architecture network of relationships around the firm network of relationships around the firm are changing are changing Networks: Networks: horizontal horizontal vertical vertical

Platforms Product platforms: Product platforms: product family (cars) product family (cars) set of product families (Black & Decker) set of product families (Black & Decker) procurement distribution after sales services procurement distribution after sales services Examples: food, cosmetics, clothing, furniture,...Examples: food, cosmetics, clothing, furniture,...

Strategy contexts Competitive strategy Competitive strategy Product portfolios Product portfolios

Competitive strategy New products are required because they will serve a customer need and an organizational need. New products are required because they will serve a customer need and an organizational need. NPD for the follower can be very different to NPD for a leader NPD for the follower can be very different to NPD for a leader short term strategy short term strategy long term strategy long term strategy

Product portfolios high share / high growth high share / high growth low share / low growth low share / low growth clustering clustering

Environments External dictates what must be done External dictates what must be done (legislation)... (legislation)... access to materials... access to materials... Example: Gillette Sensor Example: Gillette Sensor 1. influence from government agencies, universities, research centres, looking around, market shifts, new entrants, unexpected arrivals (well funded, well managed and with significant innovation) 3. another area 4. customer needs

Differentiation and positioning Differentiation Differentiation could be based on cost could be based on cost on superior quality on superior quality on better service on better service Position is dynamic Position is dynamic become customer expectations change become customer expectations change example carsexample cars

Product positioning Customers evaluation: Customers evaluation: innovative innovative functional functional old – fashioned old – fashioned exclusive exclusive frivolous frivolous fun... fun...

How to do it? How to do it? questionnaire, respondents questionnaire, respondents analysis brand map analysis brand map It helps for decision making! It helps for decision making!

Knowledge base of the organization Utilization of specific core capabilities Selected differentiation strategy for product Product positioning Competitor product Competitor product Competitor product Competitor product External market Internal organizational activities The differentiation strategy links the organizations core capabilities with external competitors