ITP 800 : Technology Commercialization

Course offered: Prof. Choi Munkee, TA: Bitrus Group: Erdenebold, Edwin, Riri

Case Study Chapter 11 Developing a new Product for the teeth whitening market Case Study Questions 1. Should munich gases invest 10 million Euro in this new product project I believe that the decision should be taken by considering company’s strategic plan in the near future. Investment decision of 10millions Euro also means analyzing the ROI in which this case study does not provide enough information. 2. What other factors may yet decide the fate of this project Safety related issue may determine the fate of this project, if it is chemically unsafe to use. Also for real consumer testing may influence .Another important factor that is not described in case study is the competitor action towards the new technology. If competitor speed­up their R&D and outranked Munich Gases in it, then the project might be postponed or even canceled. 3. Which market should munich gases select? The consumer product or professional/business market? Both market are feasible. So the decision will be whether Munich Gases wants to diversify its product range or not. Choosing the consumer products means Munich Gases wants to leverage its value chain. Professional market on the other hands means it wants to strengthen its core business as chemical company. Both market will offer high profits according to the case study. 4. Sketch out five different possible business models. Of these, determine which is the most profitable and which is most likely to succeed. To propose business model, we are using guidelines in p.412 Business Model 1 Consumer Market Co­branding with top­tier market leader in teeth whitening company.

Target Customer : Teeth Whitening customers, Business Model 2 Consumer Market Co­operation with retailers across the continents to help selling the products. Business Model 3 Professional Market Focus on Entering professional market such as Dentist, Health care etc. Business Model 4 Licensing Fee of technology Licensing fee of plasma technology means that no more extra budget need to be allocated and Munich gases can obtain royalty from this licensing fee. Business Model 5 Consumer Market Manufacturing the technology This BM will be the most risky among all options. The decision to manufacture the technology and sell the whitening products need deep consideration. Extending the range of products can be beneficial if Munich gases can assure the public about the safety of the products. 5. How will the powerful toothpaste brand owners react The new innovation in plasma for teeth whitening can be considered as disruptive innovation as in there are few known products that can offer easiness of use. I predict Most brand owners will react by : ­ Increasing their R&D to develop plasma for their products enhancement ­ Offering co­branding with Munich Gases ­ Attacking the safety issue of using plasma as whitening agent. 6. Should munich gases secure an entry into the market with one of europe’s leading multiples? Yes. Having business agreement with europe’s leading retailers will assure access to customer and also will lower the uneasiness of new customers with the help of retailers brand name. 7. Should munich gases secure the endorsement of one of europe’s leading toothpaste brands before entering the market Yes Munich Gases should secure endorsement of one Europe’s leading toothpaste brand before going to market. Securing endorsement will bring positive impact to Munich Gases. It would be easy for Munich Gases to sell their products through already established channels

such as leading toothpaste brands.This will lead to a win­win situation for all parties involved. 8. How can the firm reassure uneasy consumers about the safety of plasma in their mouth? Munich Gases should invest a significant amount of its budget on public education and awareness creation on the benefits of using plasma for its tooth whitening product. They should adequately highlight and address misconceptions the public may have about having plasma in their mouth through thoroughly thought through adverts that can resonate with the public in order to reassure them that there are no dangers involved in having plasma in their mouths.

Discussion Questions 1. If there was a strategic alliance between competitors for the development of a new technology, then what are the strategic issues for the firms once that technology becomes available? Each firm will have to: Establish a go to market strategy Decide which time to go to the market Have revenue sharing agreements among the firms Conduct continuous R&D for product improvement at the firm level Agree on inter­firm support mechanisms for the technology 2. Apply the notion of product platform to service industries. How relevant is it to financial services or to hotels? What are the issues that would need to be investigated if an idea emerged in a firm in those industries for a novel platform that had no connection with what was done before in that industry? A product platform is a set of platform elements and architectural rules that enable a group of planned product offerings. Key characteristics of a product platform include: (1) Architectural rules/standards governing how technologies and subsystems ("platform elements") can be integrated; (2) Defines the basic value proposition, competitive differentiation, capabilities, cost structure, and life cycle of a set of product offerings; and (3) Supports multiple product offerings from a single platform, permitting increased leverage and reuse across the product line. Within the financial services industry, a bank can standardize the architecture rules and/or underlying technology that supports how accounts are opened, how loans are issued or contracted, how interest rates are applied to loans, how accounts are audited and so on. By standardizing the underlying technology, the bank is able to support multiple product offerings (such as easily rolling out and selling new insurance policies) all from the single platform i.e. the underlying technology, thereby allowing the bank to leverage and reuse the technology across multiple product lines and increasing its bottom line as a result. In the case of a hotel, a single technology platform can be implemented to handle accommodation bookings or reservations, conference room booking and reservations, payment processing for both accommodation and conference bookings and so on. Issues that would need to be investigated if an idea emerged in a firm in those industries for a novel platform that had no connection with what was done before in that industry includes: How will this new idea differentiate us from the competition What new capabilities will accrue to us as an organization if we implemented this idea What cost structure should we use to stay ahead of future competition, What is the life cycle of the products offerings to be developed from this new idea

3. Would you agree that product portfolio analysis is too simplistic to be much of value? No, we don’t agree that product portfolio analysis is too simplistic to be of much value. A product portfolio is the collection of different items or products currently being sold by a company, or a collection of products/items being evaluated by a company to determine which among them the firm should invest in. Within the product portfolio, each product is expected to make different contributions to the firm’s net income or bottom line. The evaluation process for a portfolio of products on which investments are to be made typically involves a complex mix of analysis of consumer behavior to determine how the firm can expand its market size with the new products and how to improve overall organizational profitability with each new product in the portfolio which is being evaluated. Through this process which involves the use of both numeric models (such as NPV, IRR) and non­numeric models (such as Product Line Extension, Comparative Benefit, Sacred Cow, Operating Necessity, Competitive Necessity) a firm is able remove underperforming or money­losing products from its portfolio. Undertaking this endeavor is not as simple as it may seem, therefore we do not agree that product portfolio analysis is too simplistic to be of much value. 4. Trace the connections between differentiation strategy, core capabilities and positioning strategy. How are they relevant to new product planning? New product planning requires input from both R&D and also market . this activity is done before the substantial resources are applied to a project. Product strategy expresses how to organization seeks to differentiate itself. There are at least 2 strategies that are being discussed in chapter 11 : differentiation and positioning. Differentiation will be effective if the strategy is rooted in organization capabilities, while positioning strategy needs to built upon and consistent with differentiation strategy it can also be inferred that : ­ Differentiation strategy must be created at the same time of planning activity. ­ Core capabilities must be assessed to know organization strength and weakness. ­ Positioning strategy will help in putting the product on the market as in deciding business model. 5. Are brand extensions as relevant in industrial markets as in consumer markets? Do they have a strategic role or are they short­term tactical exercise? A brand extension can be defined as the usage of an existing brand name on a new product in the same field. This strategy aims to take advantage of potential carry­over effects from original name.

In consumer markets, brand extensions can bring benefits the producer and can be considered as relevant . Consumer products are easily distinguished from one another. For example when P&G use brand extension to market their new product such as perfume line. It will not dilute their existing product line. However,in industrial markets, this strategy might create possibilities of cannibalization on existing products. Industrial market is also known as a B2B market in which an industry products sold to another industry. Using brand extensions might jeopardize a company’s image of a certain product. 6. It seems toyota has been successful at recalling some of its cars for modifications, without damaging the toyota brand. How has it achieved this?

Toyota has succeed in building its brand. When they are forced to recall its product, Toyota quickly engaged in managing the crisis because it understand that the crisis can threaten its reputation. This shows that strong branding has somehow bring benefit in the long rung.

7. Apply CIM to the case study

For the Cyclic Innovation Model (CIM) apply to the case

Entrepreneurship: Munich Gases R&D department entrepreneurships are planned to developing a new product for the teeth whitening Technological Research: Munich Gases R&D department, chemical technologically use of plasma a cleaning agent. Plasma is fourth matter which can be either solid, liquid, a gas or a fourth type. Product Creation: For the past year a research team at Munich Gases has been exploring the viability of incorporating plasma for cleaning and whitening teeth. Artificial plasma has can be created when energy is added to a gas, perhaps using an electrical field or a laser. Market Transitions: When Munich Gases established uncovered patent and its possibilities that they quickly established a team of researchers to explore whether the idea could be a viable business opportunity and further could be transit to market. Market study around 90% completed. Scientific exploration: Munich Gases quickly established uncovering of a patent submitted by the University of Southern California (USC) in 2009, which claimed scientists used plasma to sterilise teeth and one of the side­effects was a whitening of the teeth. 8. Examine whether it is only the launch of technology intensive products that can benefit from the use of blog buzz or whether all product launches could benefit? It is better to launch of technology intensive products like Apple iPod HiF. In all the products launching case, if there is any issue occurs with one product may affect to other products market share like Toyota all three models failure.

Case Study Chapter 12 Launching innocent into the growing fruit smoothie market Case study Questions 1. Innocent are very clear about the image it wishes to project to the public. This is one based on being different, fun­loving and having a carefree approach to life this hippie­style image has helped the brand become acceptable to the young urban professionals at which it is aimed. But beneath the surface of this image, there is evidence of a business that could be characterised as a single­minded,profit driven and very business oriented. Where is the evidence of the latter?. The fun­loving, hippie­style carefree approach portrayed by Innocent clearly resonates well with its target market, young urban professionals leading to the company being successful with respect to the intended audience. Beneath the surface, however, Innocent’s image could be characterized as a single­minded profit driven and business oriented company because all the co­founders are of privileged backgrounds. Their backgrounds therefore does not reflect the rags to riches story the company seeks to tell.

Secondly, the single­mindedness approach of Innocent is portrayed in its NPD process, right from their business idea creation to screening all the way through evaluation and product development.

2. The success of the business is partly based on extremely good communications with retailers. How is this achieved? The three founders managed to have their first product launched within local sandwich group and believing that smoothie runs well with sandwich and local delicatessens. Furthermore, Innocent created unique communication by using newspaper to its retailers which included product information and fun stories. The design of the copy was also considered very well with intention to break down the barriers between manufacturers and customers. 3. What type of financing did innocent secure? Equity financing through venture capitalists was type of finance methods that Innocent chose. This decision resulted in having the fourth shareholder with 20% of innocent equity worth $250,000. However, this case study provide no information on what kind of support Maurice Pinto give besides hard cash.

4. Would you sell the company to coca cola for $400million? As one of the shareholders you could pocket tens of millions of pounds. If not, why not? We choose yes because of the following : ­ Innocent product is lack of differentiation strategy. ­ Product is easily to copy by competitor ­ Harsh competition in Food & Beverage industry 5. Innocent benefited from a key advantage. What is it? Constant innovation and refusal to compromise. This key advantage is crucial to keep innocent products sell on the shelf. Innovation is needed when a product is in red­ocean market, in which failure to develop new concept will lead to a decrease in market share. 6. How is innocent ‘virtual’ and how is this different from traditional food and drink manufacturers? What advantages and disadvantages does this provide? Weakness of the product is that Innocent doesn’t have its own, manufacturing and supply chain. So they use the other companies products such as bottle, packaging for the smoothie based on the contracts comparing with other manufacturers. Other aspects: Quality, reliability, leakage of intellectual property from contractors to other manufacturers, control of the brand and its value is less secure if there is too much reliance on others. 7. Use cim to illustrate the innovation process CIM is made up of the following cycles

Natural sciences cycle

This involves the development of a fruit smoothie product based on purity.

Integrated engineering cycle

Coming up with an appropriate brand for ‘innocent’ and a winning product was critical for its success in the heat of competition. New manufacturing techniques were required due to emphasis on an organic healthy drink and ensuring that the drink remained fresh for some time without preservatives.

Differentiated Services Cycle

‘innocent’ focused on the creation of a brand image that would sell and enable them to compete with existing competitors in the market. ‘Innocent’ wanted to come up with a

product that is unique such that consumers would be willing to change to their product. The founders emphasised on developing an organic smoothie that did not have preservatives. The packaging through the bottle design was also eye catching to the consumer it that it portrayed a hippie fun, car free and hippie lifestyle that the target market could easily relate to. Innocent also ensured that their smoothie had an excellent taste to ensure consumers are loyal to the brand and willing to buy again.

Social sciences cycle

Throughout the development of the product ‘innocent’ relied on customer feedback to continuously improve the product. The founders would make smoothies from soft fruits at home and enjoy them together. In addition to that as the three founders planned their business, they tried different recipes on their friends and at one point they tested their drinks on visitors to the Jazz festival. Based on this one can see that, innocent applied the social science cycle and based on customer insights to continuously improve their fruit smoothie product. Communication with retailers was through regular newsletters, and fun stories was also a critical application of social sciences. Entrepreneur

‘Innocent’ was established by three business minded and committed entrepreneurs (Richard Reed, Adam Balon, and Jon Wright) with excellent academic background and requisite skills for business such as advertising and management consulting. The three founders actively participated in all the different phases of product development from research, product development, enhancement using market transitions and customer insights until product launch.

Discussion Questions 1. Explain why the process of new product development is frequently represented as a linear process and why this does not reflect reality. The activities involved in the process of new product development (NPD) platforms focuses on simultaneous and overlapping activities, and their ensuing external and network interactions. NPD process is also viewed from the financial perspective in most organizations whereby cash outflows precede inflows. In reality, each industry has its own process. Figure 12.10 explains how the cash flow is actually more to cumulative instead of linear . In early stage, there are barely cash inflows, while at the very end of stage NPD process, the cash inflows is stacking as a cumulative result from previous stages. 2. Explain why screening should be viewed as continual rather than a one­off activity. Screening in NPD process is one of the way to maintain quality of the products. In each step of NPD, screening is needed to rule­out ideas that don’t fit with the overall concept of new product. 3. Discuss how the various groups of NPD models have contributed to our understanding of the subject of NPD

NPD Model Explanation

Departemental­stage ­ Early stage of NPD models. ­ Each department is responsible for certain tasks ­ Each department will carry out their task before giving it to the next department ­ Weakness : ­ Hinders the development of new product ­ Need of re­working and consultation between functions ­ Possibilities of misunderstanding of product concepts. ­ Does not provide feedback loop

Activity­stage models and concurrent engineering

­ Similiar with previous model ­ Provides iteration of activities with feedback loops.

­ Not suitable for technology­intensive business where teamwork is crucial

Team ­ Having dedicated team that represents each department functions ­ Emphasizes on project management and interdisciplinary teams ­ Requires fundamental modification in an organization

Decision­stage ­ Represents NPD as a series of decision that need to be taken in order to progress the project

Stage­gate ­ Divides the effort of NPD process into time­sequenced process by management decision gates

Conversion­process ­ Views NPD process as a numerous inputs into a black box where they are converted into outputs

Response ­ Focus on individual or organization’s response to a new project proposal.

Network ­ Emphasizes the external linkages coupled with the internal activities that contributes to successfull product development.

4. To what extent has BMW repositioned the Mini? BMW has acquired the Rover group with Mini in 1994. And 1999 Mini was kept original design, but BMW designed and manufactured since 2000 a new Mini and Mini cooper as its brand name. And successfully implemented and 25,000 units in 2001 to 200,000 units in 2006. Extent was the brand name of car combination with re­design configuration. 5. Examine the concept of a multi­dimensional product; how is it possible to create a new product by modifying the price dimension? Based on the concept, a product is multidimensional including level of service, technology, brand name, quality specifications, features, packaging and price. If we accept these

dimensions, then it must follow that it is theoretically possible to label a product ‘new’ by merely altering one of these dimensions, for example price.

Based on the concept picture above, if modify the price dimension, it can be possible to modify level of service or features. 6. The software industry seems to have a very flexible NPD process enabling changes to be made to the product at any time. Consider whether this approach could be applicable for a car production line or mobile phone handset products. The software (SW) industry to show that having an agile NPD process enables the firm to adapt to changing markets, and SW projects applies agile methodologies, such as Scrum, eXtreme Programing (XP) and Feature Driven Development (FDD). This approach could be applicable for mobile phone handset production, because of these days smartphones market is skyrocketing and many new brand, version are R&D and releasing to the market that comparing with car production. Car production line is consists of Ford firstly introduced assembly line with standard parts, so it is actually process is standardized and fixed for each parts for the assembly, so it cannot be applicable flexibel NPD to car production line. 7. Explain why time to market may be less important than a flexible NPD process.

The process of NPD commences with idea generation, idea screening, concept testing through to monitoring and evaluation. In a linear NPD model, these activities are more important than time to market of the new product.

8. Discuss the strengths of network models of NPD

Using network models, NPD is often viewed as a knowledge­accumulation process requiring inputs from a variety of multiple sources. The strength of these models lies in their ability to combine internal activities with external linkages that ultimately leads to successful product development. Existing literature suggests that through external linkages, an organization is able to tap into additional knowledge flows which can significantly enhance the product development process. This is a key strength or advantage of using network models.