Knowledge, Innovation and New Product Development - Assignment Example

ORDER: KNOWLEDGE, INNOVATION AND NEW PRODUCT DEVELOPMENT 2MKT650 Question Critically evaluate the importance of a structured approach to organizational capturing of knowledge as a precursor to effective innovation A structured approach to capturing knowledge in an organization is important in that it prevents useful ideas that can aid the innovation process from being lost. This is especially true of tacit knowledge, which is highly personal and often difficult to formalize (Skyrme, 1999). In an era where high staff turn-over is being experienced in many business sectors, such an approach to increasing organizational knowledge has become paramount. In the process of developing its products and services, considerable amount of information is generated by organizations. Such information may include those in applications, specific markets and users. Proper harnessing of these information resources, can contribute enormously to making innovation effective in the organization. Also, organizations partner with others to fulfill specific business goals and objectives. In doing so, invaluable knowledge resources can be created. If a structured approach exists for capturing and sharing these resources, it can aid the innovation process tremendously. It must be added that, a structured approach to acquiring organizational knowledge can by itself be self-financing, in that knowledge is an important source of sustainable wealth creation. It is also cost-effective to the organization in the sense that projects that are unlikely to succeed on the market can be identified on time by the structures created and abandoned. Such an approach sharpens the innovative process and thereby increases its effectiveness. It is also a means to gaining competitive advantage in the market an organization operates. Institution of the needed structures is only part of the process of making innovation effective in an organization. In addition to that, there must be a well defined strategy and also a supportive culture for the process. Question 2: Analyze a market need or want and select appropriate processes to successfully innovate novel solutions to fulfill that need and want. It has been estimated that around 30 percent of western consumers would be aged 50 by 2009. Available reports indicate that this age group would like to maintain youthful looks (Pitman, 2006). Hair care products with anti-ageing properties should therefore be appealing to them. Financially, this category of users is more endowed than their younger counterparts and therefore spends more money on such products. Targeting this category of consumers with naturally occurring hair care products should find ready acceptance with them. Developing a natural hair product for this market would require a seven step processes to be followed. These steps are (i) new product strategy development (ii) idea generation (iii) idea screening and evaluation (iv) business analysis (v) product development (vi) market testing and (vii) commercialization. Many manufacturing companies have a clearly defined new product development strategy that defines the role a particular new product is to help fulfill its overall objectives. Such a policy sharpens the focus of the idea generated for the company. This also prevents the company from dissipating its resources on work that does not help achieve its vision and goals. The naturally occurring hair product with anti-aging properties to be developed is strategically consistent with the company's objective of being recognized as an environmentally friendly. The conception of the idea of producing a naturally occurring hair product emerged from desk research. The researcher came across articles that extolled the properties of some hair care ingredients as well as the emerging trends among male adults to maintain their youthfulness. On the strength of these pieces of information, the idea to manufacture a hair product was conceived. Subsequently, several alternative ingredients were explored. Several product ideas using different ingredients and packaging that meet the requirements of this target group and also harm the environment less were considered. Focus group sessions comprising consumers and also experts were constituted to evaluate the merits of the various ideas developed. Reports from these two groups of peoples enabled the company to select which product concepts to develop commercially. The chosen concepts were analyzed for their financial, marketing and manufacturing requirements. From this analysis the products were further fine-tuned and developed for the market. The products were also test marketed. The favorable feedback received gave the company good grounds to develop the product commercially. Question 3.0: Debate Organizational issues which enable effective innovation and product development to occur Amber (2000) has pointed out that the primary driver of innovation in organization is the strategy developed by its top management for it. This strategy often entails setting of goals, provision of resources and leadership. It is by setting specific goals that innovation can be focused in an organization. In the absence of this, resources can be applied on work that yields little or no returns to the organization. Whilst it is essential for the process to be focused, it is also equally important that adequate room is given for individual creativity to flourish. A study reported by the Economists (2004) attests to the importance of adopting this approach. Of the six sources of innovation studied, it was found that those that emerged from random events or were stumbled upon by chance tended to be more successful on the market than the rest by a factor of 13. The other sources were need spotting, solution spotting, mental invention, market research and trend following. However, maintaining a balance between the two positions can sometimes become a managerial challenge. Adequate resources should be made available to fund innovation and new product development in the organization otherwise it would be difficult to ensure its effectiveness. Some organizations set aside a proportion of their revenue for funding their new products, whereas others do so after all there needs have been considered. Quite apart from the strategy, there should well defined criteria for approving and funding projects. This instrument can be used as a management tool to further sharp the process. Some organizations have set up specialized bodies or units which undertake this task. The organization should also nurture a culture that encourages and rewards creativity and innovation. Such a culture accepts creative ideas of all forms and where possible helps idea proponents to convert them into new products. Often the difficulty in converting novel ideas into useful products is the risk associated with such undertaking. Any measures that help idea proponents handle these risks shall be making innovation creation effective. Team composition, especially with respect to disciplines and experience has also been found to also influence outcomes in innovation and new product development. The organization should also create information systems and processes to facilitate learning and knowledge generation and sharing. Without proper organizational structures it shall be difficult to give practical meaning to the strategy developed. For example, if activities of departments and business units are overly concentrated, it hampers information flow and sharing. The organization therefore would not able to optimize its intellectual assets for effective innovation and product development. It is also important that appropriate metrics be established to periodically measure the extent to which knowledge generated is converted into new products in the organization. Highly innovative organizations often have elements of these factors that influence innovation and product development well taken care of. They do not only have clearly defined strategy, but also a culture and internal processes that facilitate innovation and new product development. Question 4.0: Project development Project - Hair product for male adults (over 45 years) =============================================================== 4.1 Market Audit A market audit that reviews sales, history development, market segmentation, consumers and competitors and the external environment of the company is presented under this section. 4.1.1 Hair care sales Euromonitor (2003) cited by Pitman (2006) estimated the world hair care market as 4.7 billion dollars. At an annual growth rate of approximately 10 percent, the market now is valued at about 6.3 billion dollars. This steady growth has been attributed to favorable condition in developing countries such as Russia and Brazil for the product (Cosmetics design, 2006). As can be expected, the growth in the market has not been uniformly spread. Consequently, production and marketing of hair care products are doing well in some parts of the world, whilst in others sales have been sluggish. Similar trends have been observed with individual products within product categories. 4.1.2 Historical trends The hair care market has witnessed rapid expansion in the range of products developed. Comesticsdesign (2006) has compared the market 15 years ago and now. It pointed out that whereas back then products were restricted to only three hair types, namely, dry, greasy and normal, today there is every conceivable hair care product for every hair-related issue. This development has given consumers wide range of products to choose from. 4.1.3 Market segmentation Four major product markets are identifiable in the hair care industry in Europe. These are (i) Shampoos (ii) Conditioners and treatments (iii) Colourants and (iv) Styling products. It is the intention of this manufacturing company to restrict itself initially to the Shampoo and Conditioners segments. As its fortunes grow, it may consider entering the other product market segments in future. The Shampoo market can be further divided on the basis of the specific function the product performs on the hair of the customer. Consequently, there are shampoos that can be described as (i) Hydrators (ii) Protectors (iii) Medicators (iv) Dandruff removers and (v) Smooth and silky texture imparters. The company shall develop product lines for all the five categories. Conditioners fulfill two functions in the lives of users. They either protect and maintain the condition of the hair and scalp or simply improve them. On this basis therefore, the market can be further broken down into two, namely (i) Protectors and (ii) Improvers. Products shall also be developed to cater for all of these markets. The market can also be partitioned demographically, such as age and sex. There are therefore products for children and adults as well as male and female. The company intends to concentrate only on adult males. 4.1.4 Distribution outlets Hair care products are sold directly by manufacturers to final consumers online or through the use of sale personnel. In between, the two ends of the distribution chain are various intermediaries such as hair dresser shops, boutique shops, health shops, small retail units and supermarkets. 4.1.5 Competitors The major competitive companies in this market are Proctor and Gamble, Unilever, L'Oreal, Easy Group, and Johnson and Johnson. It was not possible for the market shares of these companies to be calculated for lack of access to the needed company data. The information is however readily available from commercial sources that can be purchased. 4.1.6 Consumer Hair care products with anti-ageing properties are patronized mostly by consumers over 45 years and above. The primary motivation of this category of users is for them to look younger and healthy. Bone (2005) cited by Pitman (2006) has reported that around 30% of western consumers would be aged 50 years by 2009. Data monitor (2005) has also established that eight out of ten consumers now believe that improving their health and appearance is important. These developments have widened the opportunities offered by this market. 4.4.1 Demographics Demographically, hair products are patronized by all age groups. However, anti-aging hair products are used predominantly adults. This product is therefore targeted to males in this segment of the market. 4.4.2 Consumer behavior Consumers purchase products that promote health and wellbeing. This is consistent with the present so- called wellness trend (Spring wise, 2006). The target consumers of this product are both buyers and users. They are financially well endowed and can easily afford products of this sort. 4.5 External Environment Hair product is a low cost and basic item. Improvement in incomes of several strata of the society should make even this product more affordable to many more people. The enlargement of the European Union from 15 to 25 countries in 2004 has further widened market opportunities in this region. Except for environmental concerns on packaging, there are no issues that should prevent this product from being marketed successfully. Socially also, interest by consumers in environmentally friendly goods is still high. The company is better placed to serve this market because it has environmental protection high on its corporate agenda. 4.6 Product Development Process It is the intention of the company to develop natural hair products for male adults. This objective shall constitute the basis for the new product development processes to be described. 4.6.1 Idea generation The conception of this idea emerged from a desk research. The idea was further polished through brainstorming and focus group sessions. Various alternatives of naturally occurring ingredients and their combinations were considered. 4.6.2 Concept screening The ideas generated were reviewed for their potential in developing formidable products. Their individual attributes were matched to identified needs and wants of customers. In carrying out this exercise a set criteria were employed. These criteria assessed each concept on the basis of cost, technical applicability, and time to commercialization. Concepts that pass this hurdle were reviewed further in the subsequent step. 4.6.3 Concept development Concepts that show promise were further shaped into products likely to find acceptance with customers. 4.6.4 Concept testing Concept are field tested to identify attributes most acceptable to customers .The strongest and weakest elements were reviewed and weighted. The concept with the highest score was passed for the business evaluation step. 4.6.5 Business evaluation The hair products chosen were critically assessed for their commercial merits. Their financial, marketing and production requirements were then gauged. 4.6.6 Development of marketing mixes The company developed its marketing mixes after reviewing customer needs, competitor positions and its resources. The company intends to differentiate itself from on its competitors on the basis of cost. Its hair product shall be lowly-priced and promoted using television, bill boards and the internet advertising. It shall be sold online from its website and also through retailing units. REFERENCES 1. Amber, T. (2000). Marketing and the bottom-line - The new metrics of corporate wealth, Pearson Education Ltd, United Kingdom. 2. Cosmetics design (2005). World hair care market: Victim of its own success Material retrieved on April, 25th, 2006 from www.cosmeticsdesign.com 3. Skyrme, D.J. (1999). Knowledge Networking -Creating the collaborative enterprise, Butterworth-Heinemann, United Kingdom. 4. Pitman, S. (2006). The simple solution to meeting consumer demands. Material retrieved on April, 25th, 2006 from www.cosmeticsdesign.com Read More