Principles that guide the creation of products for increase in sales and profitability

1. Creating Innovative Products Boladale Kolade

2. What is a product? A product is a good or service that meets customer’s needs and customers are willing to pay for it. Commodities offered for sale.

3. Why Develop Products Desire of the organization to grow Enhance the organization’s position in the market. Optimal use of company’s resources. Cost is spread over several products. Exploits the product life cycle.

4. Steps in New Product Process In turning ideas into products, there are 12 key steps.

5. Idea Generation Ideas are generated : basic research using a SWOT Analysis on the organization. R & D department competitors focus groups employees etc

6. Idea Screening Key decisions are: What is in it for the customer and also the bank? Size of target market & forecast of market share What industry sales and market trends is the product idea based on? Is management willing to commit resources, people & money to the process?

7. Concept Development &Testing Who is the target market and who is the decision maker in the purchasing process? What features must the product have? Consumers reaction to the product? What benefits must the product provide? Production of a cost effective product? What will it cost to produce it? Asking a sample of prospective customers what they think of the idea.

8. Detailed Market Study Market research Competitive analysis Interviews using focus groups Market studies

9. Business & Financial Analysis Risk Assessments Qualitative Business Assessment Market Attractiveness/competitive advantage Cost/benefit analysis

10. Product Development The actual process of product development takes place. PDMU/PRODUCT OWNER/FINCON/OPS

11. In-house Product test Testing the product in-house under controlled Conditions. Is it attractive enough for staff and their relations to buy? Does banking application give the expected end Result in processing the product?

12. Customer Product Test Field trials by consumers in a segmented market Void of competition. Consumer Focus groups to assess product.

13. Trial Sales Test market of product. Selling to limited number of consumer or in a Limited Area. Note. This should replicate a real live environment

14. Trial Production Test production of product. Assessing the number of defects and quality of product. This could be replaced by simulation testing of Financial products.

15. Market Launch A comprehensive launch and marketing plan should evolve.

16. Why products fail 90% of new products fail. Lack of market orientation. Inadequate market analysis, failure to understand customer needs, insufficient attention to the market Place. Underestimation of competitors. Overestimation of target market.

17. Why products fail cont’d Lack of product differentiation A lot of products are based on “me too”. Poor design. Product lack attractiveness Development cost higher than anticipated. Inadequate launch efforts.

18. Lessons for success Understand consumer needs. -Must meet customer need better than other products in the market -Uniqueness of features -Higher product quality than competition. -Solves customer problems with competitive products. -Innovative and novel -Reduce customer cost.

19. Lessons for Success Cont’d Strong Market Orientation Market driven, customer focused process is a key success factor in the development of new product. Strong marketing research International Orientation Products targeted at the world are top performers. Market Segmentation Helps to discover groups of customers whose needs are similar within groups/different between groups

20. Sharp and early product definition Specification of target market Description of product concept and benefits Organizational Leadership Structure of authority Approval and support of new product development Product Champions Sense of ownership and pride infused champions Support of champions efforts with resources

21. Building of cross-functional teams Synergy of ideas from different perspectives can often bring quick solutions to problems Top Management Support Market Attractiveness Market Potential Competitive Situation

22. Speed with quality of execution Assess market timing. Be right on time Anticipate New products success always attract competition. Guard your territory.

23. Features of a winning product Offers customers exceptional utility- identify where and how the new product or service will change the lives of its consumers. Attractive and competitive price Customer convenience Profitability On time delivery

24. Tools in increasing innovation Uncertainties of innovation are high. Three analytic tools to increasing innovation and reduce uncertainties in product creation are: Buyer Utility Map. Price corridor of the mass Business model guide

25. Buyer Utility Map Helps get managers thinking in the right perspective. It outlines all the levers companies can pull to deliver utility to customers as well as the different experiences customers can have of a product or service Six utility levers in measuring Buyers Utility are: Simplicity Fun & image

26. Buyer Utility Map cont’d Risk Environmental Friendliness Convenience Customer Profitability

27. Six stages of Buyer experience cycle Purchase Delivery Use Supplements Maintenance Disposal

28. Buyer Utility map Cont’d

29. Use of Buyer Utility Map By locating a product in one of the 36 boxes on the BUM, managers can see how the new idea creates different utility proposition from existing products. Using a new utility lever at the same stage Most successful innovations create new expectations for a familiar experience.

30. Price corridor of the mass This is the price bandwidth that captures the largest groups of customers. In setting a price, most companies look at the closest product to the idea in the same industry. Market shaping innovations win by creating new customer pools and not just increasing the share of an existing customer pool.

31. Price corridor of the mass Cont’d Different form, same function Successful innovations attract customers from other industries who use a product or service that performs the same function or core utility as new ones but take different physical form.

32. Different form and function, same objective. e.g. Airline and road transport

33. Specifying a level within the corridor This helps in determining how high a price can go within the corridor without inviting in competitors and imitators.

34. Building a profitable Model Successful innovators have lean and profitable Business model and a good business model is itself very powerful against imitations. The business model is a series of questions designed to open up the way production, distribution and pricing is thought about.

35. Business Model Guide Cont’d The questions are: What is the cost target? Can products raw materials be replaced by less expensive ones? Significantly eliminate, reduce and outsource high-cost, low-value-added activities.

36. Business model guide cont’d Who can we partner with? What capabilities are lacking and what companies have those capabilities. Based on cost, quality and speed, should the company be acquired or partnered? Which price model should we use? Direct selling, slice-share or equity payment will create a greater profit pool?

37. Applying Six Sigma to Product Development Five key processes in applying six sigma to product development. Define. Customer requirement, problem, project scope & customer goals. Measure. The current product or process capability. Analyze. What is wrong & identify possible root causes. Improve. Find and test the possible solutions. Control. Implement, monitor & sustain the optimal solutions

38. Thank you