New Product Development — Generating Ideas

“If at first the idea is not absurd, then there will be no hope for it.” Albert Einstein.


The next step in the NPD process is to leverage insights in order to generate ideas for new product concepts. A wide variety of approaches may be used to uncover ideas, some of which are described below.

Fulfil Unmet or Poorly Met Needs

An unmet need, or the tension between what is available and what is desirable, opens the door for new product ideas. It is a process of exploration that yields ideas such as the ones listed below:

  • The highly successful Old Spice men’s body wash campaign of July 2010 (“Anything is possible when your man smells like Old Spice and not a lady”), which targeted women, was based on insights gleaned from the observation that “some men do not buy body wash, they use whatever their woman buys for them”. 
  • The Indian shampoo market surged in the 1990s after sachets packs were launched into the sub-continent. The availability of the low cost sachets made it feasible for more consumers to use shampoo, at a time when the majority of the Indian population could not easily afford to buy shampoo bottles. (Observation: Shopkeepers in Indian villages split regular packs of products like detergent powder, into smaller single-use packs that their shoppers could pay for).
  • In 1986 P&G launched the first 2-in-1 shampoo, Pert Plus. Since then a host of 2-in-1 and 3-in-1 products have been launched in categories that range from teas, coffees, and food mixes to thermopads and technology products. (Observation: Washing hair is time consuming. Apply shampoo. Wash. Apply conditioner. And wash again).
  • Diet Coke was launched in 1982 to ease the tension for those who wanted to drink Coca-Cola, but felt it contained too many calories. (Observation: “I like Coca-Cola. But I am cutting down, because it contains too many calories”).
  • Coca-Cola Zero, launched 22 years later, was the Coca-Cola Company’s most successful product after Diet Coke. It initially targeted people who wanted a cola drink that was low in calories and tasted like Coca-Cola. Later it also targeted men who associated “diet” drinks with women. (Observation: “I am health conscious but I don’t like diet Coke because it doesn’t taste like real Coca-Cola, and because dieting is associated with women”).
  • Heinz has a tradition for thick, rich ketchup. Indeed it is so thick that it does not flow easily, a point used to impress consumers in their classic “Heinz anticipation” advertisements that first appeared in the late 1970s (“Thick, rich Heinz Ketchup — the taste that’s worth the wait”). It was through innovation in packaging that subsequently neutralized this dissatisfier — the first squeezable Heinz bottle was introduced in 1983, and it was in 2001 that the upside-down bottle made its debut. (Observation: “Heinz ketchup is so thick that it doesn’t flow”).

  • In 1978 Sony launched the legendary Walkman for people who wanted to listen to music on the go. (Observation: “I would love to listen to my music on the go”).
  • The need to share information across its computers led the U.S. Department of Defence to development of ARPANET (Advanced Research Projects Agency Network) in 1969. At that time, its broader significance may not have been fully appreciated … it took another 25 years for the advent of the World Wide Web. (Observation: [DoD] Keeping datasets across computers incurs waste of resources and time, and may create data inconsistencies.).
  • In recent years cloud computing and software as a service are solutions that address the need for greater flexibility and improved efficiencies for businesses as well as individuals. (Observation: Software applications dispersed across individual devices become outdated and incompatible).

Make Connections


Exhibit 9.3   Tesla’s battery pack stretched across the base of the vehicle.

“All the geniuses here at General Motors kept saying lithium-ion technology is 10 years away, and Toyota agreed with us and boom, along comes Tesla … How come some tiny little California startup, run by guys who know nothing about the car business, can do this, and we can't?” General Motors’ then Vice Chairman Robert Lutz (2007).

 

Linking different sources, whether they are observations, consumer needs and emotions, and/or market trends, can create a potent mix that fuels creative ideas. Take for instance the following examples of products that were conceived by connecting distinct market trends and data patterns:

  • The demand for electric vehicles (EVs) stems from the growing desire for cleaner sources of energy as well as advances in lithium-ion batteries. Tesla’s plan in February 2014 to build their “giga factory” is reminiscent of IBM’s transformation in 1964 from an assembler of computers to also becoming a manufacturing concern that produced the world’s largest quantity of integrated circuits. Tesla’s giga factory will produce more lithium-ion batteries by 2020 than the total global production in 2013, and reduce battery costs by more than 30%.  True to the company’s vision the plant will be powered by renewable sources including wind and solar, and it will have facilities to recycle old battery packs. As the company’s automobile production capacity soars, and as it achieves economies of scale, it is likely to lead a disruption that will affect almost every aspect of the automobile industry and associated sectors (petroleum, battery, auto components, auto materials etc.). The pace of improvements in performance and technology of EVs suggests that Warren Buffet’s prediction that all cars will run on electricity by 2030 might indeed come true. (Observation: People are concerned about the environment).
  • Google Maps exploited the opportunity mix created by the proliferation of mobile devices combined with the convenience of reading maps in a soft copy format.(Observations: Print maps are inconvenient and may get outdated).
  • UP & GO (Australia) nourishing liquid breakfast in a tetra pack targets those who have little or no time to sit for breakfast. Kellogg’s All-Bran is also available in liquid format in a number of countries. Both these products leverage the needs for health and on-the-go convenience. (Observation: “I often skip meals because I am too busy or I am late for work”).

  • Yoplait Go-GURT is another product that connects the trend in health with on-the-go convenience. It is a portable, low-fat yogurt that comes in the form of a squeezable tube. Go-GURT may be held in one hand and eaten without a spoon; ideal for children on-the-go.(Observation: “I want my children to eat healthy. But they like to consume snacks that taste good and can easily be eaten outdoors”).
  • Birds Eye Steamfresh, vegetables packed in a unique steamer pack that meets the need for convenience and health.
  • Tamagotchi, the electronic pet from Bandai connects the growing interest in electronic gadgets with the trend in keeping smaller pets.

  • Pokémon Go, a virtual treasure hunt that complements modern lifestyles, connecting mobile devices that have infiltrated our lives with virtual treasure.

Challenge Conventional Beliefs, Reframe Categories

Creativity is often constrained by strongly held convictions or beliefs, or simply by the way we are accustomed to doing things. Once we are prepared to remove these barriers and cross old boundaries, we often discover new possibilities. For instance:

  • Infant milks have been in existence from the early 1900s for babies up to the age of 12 months. When birth rates began to decline even in many developing countries, and manufacturers began to experience the pressures of their shrinking market, they began to question the boundaries they had set. Growing up milk for toddlers aged one to three years was introduced towards the end of the 1980s. The new segment experienced sizzling growth and soon became larger than the traditional infant milk market. Today, growing up milks for toddlers aged above three and children above six are also widely available. (Observation: “I am concerned about the mental and physical development of my child”).
  • The discovery of pink diamonds in October 1979 posed a challenge for Rio Tinto. At that time, the notion that diamonds could be intense pink was virtually non-existent. It was through branding and marketing that the company imbued the pink diamonds with an alluring mystique about their origin and colour. Described in advertisements as “the most revered diamond in the world”, the Argyle Pink diamonds soon began to command a high premium. (Observation: “I want a precious, rare diamond on my engagement ring”).
  • When Fabuloso, Colgate Palmolive’s floor cleaner was launched into some Asian markets, the advertisements conveyed the product’s long-lasting fresh scent. The floor cleaner that “smells so good” soon became the market leader in many of these markets.
  • Vegemite, an iconic Australian brand (“Real Australians eat Vegemite”) was invented by Dr. Cyril P. Callister, a leading Australian food technologist in 1922. For many years the brand’s managers viewed Vegemite in the confines of the “yeast-based spreads” category (where it commanded over 90% share). The blinkers were removed at a time when Kraft (who currently own Vegemite) was striving to re-invigorate growth. Reframing categories to spur growth was one of their CEO’s top four global endeavours in 2006.

The Vegemite story is still unfolding. Relying far too heavily on social media for research and new ideas, Kraft announced the launch of Vegemite iSnack 2.0 at the revered Melbourne Cricket Ground in September 2009. The response to the launch, which for some days became one of the top three subjects discussed globally on Twitter, can be summed up by the tweet: “So iTried Vegemite’s new iSnack today. It is safe to say iHate it.” The strategy of growing Vegemite beyond the confines of yeast-based spread is undoubtedly sound. Yet what Australians found hard to digest was the dissonance created by the name iSnack 2.0 (later renamed Cheesybite), for a brand that has iconic status. In some ways a repeat of the New Coke saga, it left Vegemite disoriented, still in search of a happy ending.

Discover Benefits

Sometimes an invention or an insight may fail to gain traction because it appears to lack major benefits, or because its intended benefits may not be very relevant or credible. The challenge for such initiatives lies in discovering new benefits that resonate better with consumers, possibly in a different context. The following are some examples:

  • Back in 1968, Dr. Spencer Silver, a scientist at 3M inadvertently created a “low-tack”, reusable, adhesive which did not appear to serve a useful purpose. Later in 1974, Art Fry, another 3M associate came up with the idea of using the adhesive to anchor his bookmark in his hymnbook. The idea was subsequently broadened into the concept that we now know as a Post-it note.
  • Around 2004, a range of food products known as cosmeceuticals (cosmetics and pharmaceuticals) came into existence. These functional foods for the external appearance, which included products such as Borba water, Essensis yogurt, Fuwarinka candy etc., claimed to improve one’s skin, hair or even make you smell better. Though they evoked some interest to begin with, many of these products failed because consumers felt the claims were exaggerated and found them hard to believe.

  • In 1992, conducting clinical trial in a small Welsh town called Merthyr Tydfil, researchers from Pfizer realized that their new drug was not very effective for treating angina, its intended purpose. Moreover, it had many side effects in men: back pain, stomach trouble, and long-lasting erections. What seemed like a failure to begin with turned into one of the firm’s most successful drugs. Shifting focus to the side effect, Pfizer eventually developed Viagra.

Co-creation and Crowdsourcing

“The real revolution here is not in the creation of the technology, but the democratization of the technology.” Chris Anderson.

 

Consumers are connected and empowered, and they increasingly express their views and ideas online for brands that they harbour strong feelings for. Their affinity for a brand can be constructively channelled towards co-creation, a process where brand owners collaborate with consumers in creating brand value.


 

Exhibit 9.4   NIKEiD is a service that allows you to customize your shoes exactly how you want them.

Co-creation is a growing phenomenon; more and more companies encourage consumers to participate in activities for the development of advertising and new products. People are building their own shoes (NikeiD), rings (Blue Nile), designing their own T-shirts, mugs, cards, calendars etc., conceiving their own pizzas (Papa John’s), and developing advertising content for companies as diverse as Coca-Cola, General Motors and Microsoft. These activities, usually contests or games, are helping companies engage with consumers and innovate at low cost.

Crowdsourcing (‘sourcing from crowd’) is the process of securing ideas, services or funding from a crowd.

The Wikipedia approach to content creation exemplifies crowdsourcing. There are also an ever increasing number of instances of the use of crowdsourcing for product development and marketing.


 

Exhibit 9.5   LEGO IDEAS — ideas.lego.com

Take for example LEGO IDEAS, a crowdsourcing programme that invites participants to create a Lego project, share it on the IDEAS website, and seek supporters. Projects that secure 10,000 supporters are reviewed by LEGO for a chance to become an official LEGO product. If the project passes review and is chosen for production, the creator receives 1% of net sales as royalty. As of February 2014 there were 5,563 live projects at LEGO IDEAS and seven co-created products had been launched.

As mentioned earlier (Exhibit 4.2), Kraft’s highly successful “How do you like your Vegemite?” crowdsourcing campaign (2008) generated over 300,000 submissions, resulting in the formulation of a new variant, blended with cream cheese.

Business Marketing Context

A core distinction between business market customers, vis-à-vis consumers of consumer products, is their focus on functionality and performance. They have systems and processes for evaluating their purchases in a fairly rational manner. To succeed, new offerings need to deliver value and suppliers need to demonstrate exactly how the value is derived. This requires a deep understanding of customers and how they derive value from their products.

The analysis of customer transaction data, via customer satisfaction and relationship management methods, can provide an appreciation of customer needs and preferences, leading to ideas of products or services to better serve the customers.

Value-in-Use analysis provides for a comprehensive understanding of the value customers derive from a product or service. Value-in-Use (VIU) is the difference in value minus the difference in price that a supplier’s new offering provides a customer relative to an alternative offering. And value is the economic, technical, service and social benefit net of all the costs incurred in extracting the benefit. To derive VIU requires a thorough understanding of each individual step in the use of the product or service, i.e. all cost elements need to be accounted for to arrive at the total cost of ownership of the offering by the customer. Moreover this varies from one type of customer to another. Activity-based costing (ABC) methods that quantify all expenses related to the use of a product or service, are often used for this purpose.

Customers as a Source of Ideas


 

Exhibit 9.6   US Army’s Signal’s Corps needing miniaturized communication equipment, seized on the idea of PCB, designed, produced it and then sought potential suppliers. (Photo courtesy T/4 Harold Newman, U.S. Army Signal Corps).

Considering the nature of business markets, it is not surprising that the highest proportion of new product ideas originate with customers. Customers however do differ in a number of ways, and some are more innovative than others.

 “Organizations, by their very nature are designed to promote order and routine. They are inhospitable environments for innovation.” Levitt’s observation applies especially to big companies that tend to be process-centric, focusing on streamlining and minimizing costs. Their heavy investments in existing technologies become a burden when disruptions occur in their markets. Big customers therefore can be relied more on incremental innovations that help improve processes, rather than breakthroughs that disrupt the existing market dynamics.

Lead users on the other hand tend to be innovative companies that identify solutions well before their competitors and suppliers. For example the U.S. Army Signal Corps (see Exhibit 9.6), needing miniaturized communication equipment, conceived of the use of the PCB (printed circuit board) in their equipment, designed and produced the required PCBs, and sought potential suppliers.

Leap-Frog users are aggressive companies, possibly new entrants pursuing riskier development strategy. Tesla is an apt example of a leap-frog user of lithium batteries, that changed public and industry perception of what an electric car can be.

Salespeople, suppliers, market research agencies and competitors are also important sources that need to be regularly tapped for new product ideas.

 Importantly, for ideas to flow, it requires the development of systems to encourage sourcing, and facilitate the submission of ideas. Irrespective of whether it was their original idea or sourced from elsewhere, company’s associates need to know how to channel new ideas into the NPD funnel. At the most basic level this requires a destination such as the NPD department, where the ideas may be submitted.

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