Wednesday, February 08, 2012

Product Innovation Management and Marketing


In my earlier article on Innovation and Successful New Product Development, I had briefly touched upon the marketing as part of new product development activity. Marketing also happens to be a vital activity even in early stage of innovation - as early as in ideation stage - where one is starting to identify an opportunity. Marketing will be needed at all stages of innovation as well, even before the product is released.

Types of Innovation and Marketing

As discussed earlier in "Types of Innovation", there are four main types of innovation: Radical, Incremental, New business models, & New business ventures. Marketing is needed for all types of innovation but different aspects of marketing.

Ideation Stage

In the first stage, one will identify the basic idea for the product, but then that idea has to be validated by the real users, then one needs to identify the volume demand for the innovative product, and finally one needs to validate the pricing model for the product/service. So in other words, once an idea is conceived it must be validated by the market - and that needs market research - which is an marketing activity.

Often times, one gets an idea for a product. For example, one gets an idea to build a mini-windmill that can be hosted on top of the house to generate electricity. Though this idea sounds like a good one, but as a business proposition, is there a market for it? If so what is the potential market size/demand?

In most cases, the innovative idea is often generated to meet a niche need and often has a small niche markets. Marketing at this ideation stage is to understand how the potential product/service will meet the specific needs/wants of the potential market. Understanding the needs of a niche market will need a complete immersion into the customer lifestyle for detailed observation of user needs. This essentially involves an extensive anthropology study of the target market.

In case of incremental innovation on existing products, a detailed anthropology study is essential to identify the hidden needs of the market. Often times customers do not tell what they really need, instead they cover their needs with vague wants. Anthropology study is necessary to identify the real needs and from the stated needs.

Marketing activities done during ideation stage is often done by inventor/innovation teams. In large organizations, members from marketing teams are also used to give guidance and help.

Development Stage

During product development stage, there will be lots of decisions that needs to be made regarding the product specifications which impact how the product is used. Making a wrong choice will hurt the product's acceptance.

During product development, marketing activity must be concentrated towards validating the product design with the target users. This essentially involves creating a lead user group who can be recruited to test and validate the product. This builds credibility and confidence on the product during the launch stage.

Engaging the lead users is a very low profile marketing activity - often times it must be kept secret and protected with legal agreements between the users and product development company.

Engaging customers at this stage has several benefits:

1. Avoid bad user experiences.
For example, Blackberry introduced Playbook tablet PC in 2011. When the final product was released, event the most loyal Blackberry customers were aghast to know that the tablet did not support Blackberry e-mail. Soon customers began to air their negative opinion about the product - and that killed the Playbook.

2. Enhance product usability - by better understanding how people will use the product.
Apple released "Mobile Me" service in 2000, but the service never succeeded. Even with the success of iPhone and iPad, customers were reluctant to use MobileMe. Apple learnt from that mistake, and created a core lead user group while building iCloud.

3. Build product credibility
New products do not have any credibility when launched. Credibility will have to be built slowly with customers using the product and certifying it. By having lead users use the product before the release, product will have built a level of credibility even before the launch. Once the product is launched, these lead users can comment and air their opinions in public, thus building product credibility.

4. Build better products
Identifying and fixing bugs before product release is 1000 times cheaper and better than customers discovering those bugs. Often times, testing/QA process during product development stage uses simulation methods and does not mimic the exact customer use cases. Lead users can provide very valuable inputs and are essentially form as an extended test team.
Today it is common to see an extended "beta" programs - where a select set of users will use the product and provide their valuable feedback.

Marketing in product development phase is a very low profile activity but an intense activity. It involves active two-way communication with customers to make them understand the product and for developers to understand the user needs.

Launch Stage

Innovative products will need extensive marketing during product launch. Customers are typically skeptical about new products and are unaware of the product benefits and uses, companies will have to rely on marketing to build a market awareness for the new product.

The biggest chunk of marketing budget will be used up during the product launch. Microsoft for example spent about 500 Million Dollars for launching Windows Vista.

There is no single marketing plan for launching innovative products - Some companies opt for a low profile launch( E.g.. EMC Ionix, Oracle LDOM) - based on product & market profile, while some may opt for a very high profile launch (Example Nokia Lumia, HP Tablet, etc)

Closing Thoughts

Marketing should be an integral part of innovation and new product development. Marketing activities are essential to get the right inputs for innovation and guiding new product development process. Often times, new & innovative products fail because it failed to meet the market expectations. For every successful new product, there are hundreds of failed products. E.g.: Apple Newton, MobileMe, HP TouchPad, Sony Reader etc.

So if you are working with a limited development budget and want to increase your chances for success - then use the tools of marketing in every stage of innovation and new product development.

2 comments:

Luke Winter said...

Arun,

Very good analysis. I’d further your argument by reiterating not only the importance of marketing’s input into the product development process, but the input of all the departments of the company.

The use of collaborative software can capture the views of employees and external stakeholders. Feed customer data into this - either submitted through a customer portal, or found by crawling social media sites - and you can have a truly representative bank of opinion to sort through and feed directly into a streamlined process. The less barriers between the flow of communication and information on all stages of the process, the more effective communication will become and the better the resulting end product.

Luke Winter
Community Manager
http://www.onedesk.com

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