General Assignment Description:

Entrepreneurial Innovation of a Product or Service for a Retail Store

Introduction
Products and services are backbones of an enterprise whether it is large or small. Products and services
become commodities as also competitors put their own products or services in the market. A firm can
avoid this tendency of product or service degradation by updating existing products and services. The
updating can be in the form of an entirely new product, either new to the world or new only to the
company. In the latter case the product or service should have superior features with which it can
differentiate itself in the market.
In order to innovate a unique product or service, that is standalone or easy to integrate with other
products or services, the first step is to list features of an existing product or service. !n the basis of
this list one can look forward to revise and" or add any needed features.
#hat features need to be revised or added is dependent on which market, or group of customers, can
be impressed upon, thus improving the attractiveness of the product or service. These are also called
customer value propositions, or simply $values%.
The identification of values, their rankings for an existing product, and those of competitive products,
can be collected through empirical research with local retail stores for products or retail service
providers. Identification of a suitable product or service can be done in consultation with a willing
retailer. A retailer offering competitive products or services will be a valuable source of information
for carrying out this assignment using I&PA'T software.
The product and/or service
!ne of the first steps in the analysis is defining for which problem the product or service offers a
solution. #hen we describe the problem and define the solution, it is important to define the scope of
our solution space. #hat will we incorporate in our set of competitive products and services and what
not(
The customer
The next step in the analysis is a good definition of the customer or better customer group)s* that we
want to take into our sample. It is often a good approach to start with a wide definition of customer
groups and later. +ubsequently, to refine the definition of customer groups and divide our original
broadly defined group into a few subgroups.
Other staeholders
It is often wise to be aware early in the innovation process which other stakeholders are essential to
make it a success. A supplier, strategic partner, investor or bank may be essential to facilitate
innovation. #hen they are not committed to the uncertain outcome of the innovation process, because
it may not fall within their interest, the innovation may fail. !ften, knowing at the start what makes
them interested means that we only need to ad,ust, though a little, the proposed product or service at
no additional cost to make them happy. -or that reason think further than only the retailers and their
direct customers. Take also into account the internal stakeholders such as the employees. #hen the
ultimate outcome of the exercise is clear, the responsible managers may also have to learn new skills
for achieving this new outcome. In addition they should be in a position to communicate the new
outcome to their potential clients. If the needed new skills are beyond their capabilities the now
product or service will never take off.
-or each of the essential stakeholders, starting with the customers, a value proposition must be made.
In this assignment we will restrict ourselves to the value proposition for the customer only.
!alues
A value proposition refers to the list of values with which a new product is made attractive for each
specific stakeholder. #hen determining the value proposition we always start with the customer, and
preferably the end consumer. &ext the propositions for the other essential stakeholders can be
determined.
#e have distinguished four classes, namely economic values such as low price or low operating costs,
ps"chological values such as fun, pleasure and ease of use, social values such as reputation and image
and last but not least #iological values such as health and safety.
In practice, these contribute to psychological wellbeing of the customer. +afety, utility, comfort, etc
are common values to physical products. .hoice, cost, etc may refer to both products and services. In
order to measure customer satisfaction, one uses +/01'2A3 that is well known in marketing
literature. In the same field of management, building and sustaining brand image is expressed in terms
of functional values that are performance and ,udgment related. Psychological, emotional and holistic
values are feelings related.
Attri#utes
After having identified the important customer values we have to translate these into product attributes
that are able to deliver these values. /xamples of product attributes are functional attributes such as
design, and its interface with the customer, price, weight, etc. Product attributes essentially belong to
the product and are often measurable. The product attributes are the elements with which the
customer will describe product quality. In other words a list of attributes represents the customer
demands.
/ven more important aspect related to customer satisfaction is customer perception. This essential
element at the interface of the product or service and the customer brings into focus target
stakeholders. #hat consumers consider as their $values%, and the corresponding properties or
$attributes%, constitute building blocks for the innovation of a new product or service. These building
blocks may take consumer from the level of basic need fulfillment to the level of excitement needs.
The product or service perception at this higher level is likely to be the resultant of cocreation.
!alue proposition anal"sis
A proposal for a new product or service will consist of quantifying various qualitative perceptions of
values and attributes, and cross relationship among them. +ubsequently a simulation based on 4ouse
of 'uality, a part of 'uality -unction 5eployment, will be used for aggregating values and attributes.
The aggregated outcome will be useful also for positioning of the product or service. The simulation
will place various quantified values and attributes in a perspective that would also make possible a
comparison of competitor%s products or services.
!alidation of the value proposition
The innovation process can be seen as a learning process for a firm about what customers really value
and what make them delighted and decide to buy the new product or service. At the start the
uncertainty is very high. 0esearch has shown that only 6 out 677 ideas become a success. !f course
this figure varies between industries. -or example in the pharmaceutical industry it is 6 in 67.777. In
other industries it may be 6 out of 67 ideas. It is very expensive to develop all ideas into products and
learn only when they are in the market that customers do not like them. In order to avoid this at a late
stage, we constantly check the concepts and prototypes by doing market research. 8arket research
often is expensive9 thus at the start we test the concepts with a limited group of customers. #e go on
with the approved concepts, and develop increasingly more sophisticated prototypes, which are also
tested. !ften what people, and therefore also customers, say and do can be totally different. Thus the
concepts and prototypes often will be tested in increasingly more real life settings. 4owever these
market research tests often are costly and time consuming. Therefore for concept testing after the
definition of the value proposition, we use inexpensive techniques such as interviews, focus groups,
simple surveys or con,oint analysis.
$unctions% functional re&uirements and general re&uirement anal"sis
+tarting with attributes, various functions that satisfy these attributes will be identified. These will
reveal how attribute requirements will be met: how and with what( #herever possible, thus, the
functions are described with a verb and a noun !verall function importance is generated against the
function reali;ation of the existing product or service.
/ven more important for the present assignment is the analysis of various general requirements in
support of these functions for the proposed product or service. These refer to weight, volume, etc of
physical products. Also different issues related to reliability and price are a part of these general
requirements. The latter are valid also for services for elevating the expected customer satisfaction
level. -unctional requirements are specifically needed resources for creating functions. +pecification
of at least a few of these will make clear what resources are needed.
'rand image
$.ustomer values% relate to the success of the product or service in the market. As against these, $brand
values% are focused on brand image and developing or sustaining it. These two different sets of
$values% are related with each other. A balance between the two will enhance the brand image. If
customer values to be created through product value reali;ation support the brand values, then brand
image enhancement, or at least sustainability, is assured. The analysis in this regard also gives the
direction for a firm in building and sustaining an appropriate brand image.
Step-by-step procedure to Assignment (in pdf) can be found in the box Further Reading on the top
of this page.
Demo Case Apple iPhone Next !also in pdf" #ill pro$ide you learning experience of a business
case.
A trial of the case simulation is made easy #ith the help of Demo %ool Apple iPhone Nextl.