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Management of Technology & Innovation MKTG5603 &
Biotechnology Commercialisation MKTG5604
Workshop 2 Part B: Market
Research and NPDProfessor Tim Mazzarol – UWA Business School
UWA Business School MBA Program
M Biotech Program
[email protected] MKTG5603
BC MKTG5604
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Ref. G. Moore (1996) Rogers (1995)
MAINSTREAM
MARKET
EARLY
MARKETThe
Chasm
Early Stage
Commercialisation
Mainstream Production
Crossing the Chasm
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Key Questions for Technology
Commercialisation
• What is the relative advantage of this innovation over
existing technologies?
• Is the new technology compatible with existing
systems used by the customer?
• How complex is the innovation to understand and
use and what impact will this have on cost and risk?
• Can the innovation be subject to trials by the
customer prior to purchase or are their existing trials
that have been independently assessed?
• How observable are the benefits that this innovation
offers?
• What steps can be taken to reduce risk and
uncertainty surrounding the adoption?
Source: Rogers (1995)
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New ValueCurve
What factors should be reduced well below the industry standard?
Reduce
What factors should be raised well beyond the industry standard?
Raise
What factors should be created that theindustry has never offered?
What factors should be eliminated that theindustry has taken for granted?
Eliminate Create
Source: Chan Kim & Mauborgne, 1996
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Shifting the Focus of Strategy
The conventional
boundaries of
competition
Industry
Strategic group
Buyer group
Scope of product
& service offerings
Functional emotional
orientation of an
industry
Time
HEAD TO HEAD COMPETITION
Focuses on rivalry within its
industry
Focuses on competitive position
within strategic group
Focuses on better serving the
buyer group
Focuses on maximizing the
value of product and service
offerings within the bounds of
its industry
Focuses on improving price –
performance in line with the
functional – emotional
orientation of its industry
Focuses on adapting to external
trends as they occur.
CREATING NEW MARKET SPACE
Looks across substitute industries
Looks across strategic groups
within its industry
Redefines the buyer group of the
industry
Looks across to complimentary
product and service offerings that go
beyond the bounds of its industry
Rethinks the functional – emotional
orientation of its industry
Participates in shaping external
trends over time.
Source: Chan Kim & Mauborgne, 1996
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Perf
orm
ance
Time
Current performance of potentially
disruptive technology
Expected trajectory of
performance improvement
Performance improvement
required by mainstream market
Source: Bower & Christensen, 1995
How to Assess Disruptive Technologies
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Davies-Craig EWP Problem
• Conventional water pumps
slaved to engine
• Draw excessive power
• Don’t work well at idle or in
high ambient temperatures
• Coolant flow rates fall to
around 20 litres per min at idle
and rise to 180 litres per min at
speed
• Inefficient due to poor flow
control rates leading to higher
engine wear and low power
output
Source: Davies-Craig, 2003
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Case Study: Davies-Craig EWP
• Davies-Craig Pty Ltd
• Australian automotive
engineering firm
• Pioneer of electric radiator
fans (1970s)
• $1.2 million invested in new
Electric Water Pump
• More power, lower fuel
consumption, longer engine
life
• Can be retrofitted to existing
vehicles for around $280.
Source: Davies-Craig, 2003
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Low cost, highly reliable,
De-facto automotive standard
but: high torque loss at high
rpm, low flow rate at low rpm
Electric Water
Pump
Belt-driven Water PumpP
erf
orm
an
ce
Time
Low torque loss,
Cools as and when needed,
High cost,
Good, but not excellent reliability
Only to -20degC?
Cope with debris in coolant?
Improved reliability,
Reduced costNiche markets:
Racing cars
Vintage cars
HOW TO ASSESS DISRUPTIVE
TECHNOLOGIES – Davies-Craig EWP
• Initial target markets racing & vintage car owners
• These segments are early adopters
• Racing cars value power over price
• Vintage car owners value engine life over price
Source: Davies-Craig, 2003
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The Fuzzy Front End
Source: Koen et al. (2012)
Commercialisation
New Product DevelopmentFuzzy Front End
The entire innovation process comprises three parts: Fuzzy Front End (FFE); new product development (NPD)
and commercialisation. Divisions between these parts can be vaguely defined.
• Experimental, chaotic, unpredictable,
high level of uncertainty.
• Funding is variable, ‘bootstrapping’,
• Focus on testing concepts & theories
reducing uncertainty & risk.
• Disciplined and goal-focused with a
project plan.
• High degree of uncertainty.
• Funding driven by budgets & targets.
• Measurable milestones with “go/kill”
decision points.
• Product and market have been
validated.
• Planning is focused on marketing &
sales targets, revenue & profit
streams, production processes &
scalability.
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Opportunity Identification
Opportunity Analysis
Idea Generation & Enrichment
Idea Selection
Concept Definition
Engine
New Concept Development (NCD) Model
Source: Koen et al. (2012)
Starting points
¹TSG = Technology Stage-Gate
Influencing factors
Influencing factors
Government policy & regulation,
laws, competition, economic
climate, distribution channels.
Company
leadership, culture
& business
strategy.
Output to NPD or TSG¹
process
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Listening to the Voice of the Customer
The first challenge is:
• Properly understand customers
explicit as well as tacit (or unstated)
needs.
The second challenge is:
• Translate customer needs into product
specifications that address those
needs and maximise market
opportunities.
• Communication between marketing
and technical staff is particularly
difficult.
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Listening to the Voice of the Customer:
Quality Function Deployment
House ofQuality
Cu
sto
me
rN
eed
s
PartsDeployment
(critical) PartsCharacteristics
De
sig
nA
ttri
bu
tes
ProcessPlanning
Key ProcessOperations
Pa
rts
Ch
ara
cte
ris
tic
s
ProductionPlanning
Work Instructions,
Test Plans, etc
Key P
roc
ess
Op
era
tio
ns
DesignAttributes
Voice ofCustomer
• All aspects of the final product link back to the voice
of the customer
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Quality Function Deployment
• QFD = Systematic approach to New Product Development
• Developed in Japan from 1960s
– “hinshitsu tenkai” (Quality Deployment)
– Used by Toyota and Kobe shipyards etc
• Uses House of Quality to “Listen to the Voice of the Customer”
– Links customer needs to product design attributes
8 key elements:
1. Customer Perceptions
2. Customer Needs
• Basic, Spoken & Unspoken
3. Importance Rankings of needs
4. Design Attributes
5. Relationship between Customer Needs & Design Attributes
6. Costs & Feasibility
7. Engineering Measures
8. Trade Offs
Source: Akao & Mazur, 2003; Griffin & Hauser, 1993
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Customer Needs
• Spoken needs
• Unspoken needs
Relationships
Between
Customer Needs
And
Design Attributes
Design
Attributes
Trade offs
“Engineering”
Measures
Costs & Feasibility
1
2
3
4
5
6
Customer
Perceptions
Importance rankings
Poor Good
Source: Griffin & Hauser (1993)
1 2 3 4 5
The House of Quality
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Tradeoffs(Between design attributes)
Strong negative relationship: XX
Mild negative relationship: X
Mild positive relationship: #
Strong positive relationship: ##
Prio
rity
4 5
3
5
1 3
5
2
3
4
5
4
2Low cost to service
Reliable
Maximise storage space
Quiet
Low energy consumption
Com
pres
sor e
ffici
ency
CustomerNeeds
DesignAttributes
# xx
#
Ow
n Pro
duct
Com
petit
or A
Com
petit
or B
Com
petit
or C
Com
petit
or D
CompetitiveEvaluation
Insu
latio
n ef
ficie
ncy
Noi
se e
mis
sion
s
Vol
ume
effic
ienc
y
War
rant
y pe
riod
Doo
r (re
)ass
embl
y tim
e
4 5 2 5 3 2
12 30 25 15 20 4
Technical difficulty
Target Value/ SpecificationValue
Importance rating
Tec
hnic
alE
valu
atio
n (1.
..5)
5 1 2 4 3 6Importance ranking
Competitor D
Competitor C
Competitor B
Competitor A
3 3 5 4 5 4Own Product
5.8
(rat
ing)
150K
Cal
/mh
degC
30 d
ecib
els
60%
5 ye
ars
< 10
min
utes
Source: DRM Associates (2002)
Customer RequirementsFrom MarketResearch
Customer RequirementsRanked in Priority Order
Product DesignAttributes
Customer PerceptionsRated 1 to 5Against theCompetitor products
The House of Quality Applied
Customer Needs & DesignAttributes Matrix
Costs & FeasibilityAssessments
EngineeringMeasures
TRADE OFFS“Roof Matrix”
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The House of QualityExample: Refrigerator
Tradeoffs(Between design attributes)
Strong negative relationship: XX
Mild negative relationship: X
Mild positive relationship: #
Strong positive relationship: ##
Pri
ori
ty
4 5
3
5
1 3
5
2
3
4
5
4
2Low cost to service
Reliable
Maximise storage space
Quiet
Low energy consumption
Com
pre
ssor effic
iency
CustomerNeeds
DesignAttributes
# xx
#
Ow
n P
rod
uct
Co
mp
etito
r A
Co
mp
etito
r B
Co
mp
etito
r C
Co
mp
etito
r D
CompetitiveEvaluation
Insula
tion e
ffic
iency
Nois
e e
mis
sio
ns
Volu
me e
ffic
iency
Warr
anty
period
Door (r
e)a
ssem
bly
tim
e
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The House of QualityExample: Refrigerator
4 5 2 5 3 2
12 30 25 15 20 4
Technical difficulty
Target Value/ SpecificationValue
Importance rating
Te
ch
nic
al
Eva
lua
tio
n (1
...5
)
5 1 2 4 3 6Importance ranking
Competitor D
Competitor C
Competitor B
Competitor A
3 3 5 4 5 4Own Product
5.8
(ra
ting)
150K
Cal/m
h d
egC
30 d
ecib
els
60%
5 y
ears
< 1
0 m
inute
s
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House of Quality EXCEL Spread Sheet 6
5 ##
4 #
3 xx
2 # # x
1 xx
Ro
w
Impo
rta
nce
Ran
kin
g
Co
mpre
sso
r e
ffic
iency
Insu
latio
eff
icie
ncy
No
ise
Em
issio
ns
Vo
lum
e e
ffic
iency
Wa
rra
nty
perio
d
Do
or
(re
)asse
mb
ly t
ime
Ow
n P
rodu
ct
Co
mpe
tito
r A
Co
mpe
tito
r B
Co
mpe
tito
r C
Co
mpe
tito
r D
Column 1 2 3 4 5 6
Low energy consumption 1 3 4 5 0 0 0 0
Quiet 2 4 0 0 5 0 0 0
Maximise storage space 3 5 0 3 1 3 0 0
Reliable 4 4 0 0 0 0 5 0
Low cost to service 5 2 0 0 0 0 0 2
5.8
(ra
tin
g)
150
KC
al/m
h°C
30 d
ecib
els
60%
5 y
ears
< 1
0 M
inute
s
Technical Difficulty (1-Low, 5-High) 4 5 2 5 3 2
Own Product: 3 3 5 4 5 4
Competitor A:
Competitor B:
Competitor C:
Competitor D:
Importance: 12 30 25 15 20 4
Importance ranking:
5 1 2 4 3 6
Te
ch
nic
al
Eva
luatio
n
(1…
5)
Target Value/Specificationn Value
Customer
perceptions
Customer Needs
Design Attributes
strong positive
positive
none
negative
strong negative
Correlation:
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The House of Quality Summary
• A tool to “negotiate” product specification between
marketing and technical staff
• Marketing staff get insights into technical trade-offs
• Technical staff get insights into the voice of the
customer
• Helps to identify the right priorities
• Achieve better designs
• Improve customer satisfaction
• Reduce product cycle time (get it right first time)
• Concept is very intuitive, hence easy to understand
©Mazzarol 2020 all rights reservedSources: C2CSolutions (2012)
VOC CAGE Model
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Developing a Product Concept
Sources: C2CSolutions (2012)
C A G E
DFB
BF D
How project team
understands the VOC &
defines success before
any real customer
research
D = What Development
Team got wrong.
Excitement Quality
The Givens
B = What Customers
got wrong
F = What both got
wrong
VOC Customer
insights
What all agree on
What customers say
about their needs
VOC research
Bulls Eye – what SELLS
Top 3 causes of NPD failure:1. Missing features or qualities that
differentiate the product, “E”
elements.
2. Lack of understanding customer
needs, “C” elements.
3. Including “D” elements.
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Voice of Customer Research
VoC Method & Example Description
Focus groups to define big
problems with solutions iterations
Run focus group sessions on customers to identify problems, issues &
points of pain. Observe or film the meetings and brainstorm solutions to
problems, then take back to focus group. Customers then vote on
solutions or suggest improvements (Iterative process).
Brainstorming event with
customers
Invite customers for an Innovation Day that includes a set of inverse and
regular brainstorming sessions designed to find creative ways to destroy
the product. Identify three major weaknesses and look for new solutions.
In-depth interviews via customer
visits
Select cross-functional interview teams, visit key customers & conduct in-
depth interviews with customer groups. Use an interview guide with direct
and indirect questions to help customers articulate needs, likes, dislikes
and desires. Allow customers to engage with the product.
“Camping Out” via ethnographic
research
Identify customer sites and spend time there (e.g. full day). Watch them
use a product, discover how they spend their day and use the technology
or services.
Working with lead or innovative
customers
Find early adopters (EarlyVangelists) and work with them to create new
ideas or solutions. Run a workshop and invite them to participate in the co-
creation of the new product.
Crowdsourcing Using in online media get customers to suggest ideas, create content and
co-design products. Select the best and share with other customers for
evaluation.
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Product
Definition
Project Scope
Target Market
Project Concept
Positioning
(plus pricing)
Value
Proposition
Benefits to be
Delivered
Features, Attributes,
Requirements
High Level
Specs
Sources: Cooper & Edgett (2005)
Developing a Product Concept
Is this a single new product ,
family of products or
platform?
Who is the product aimed at?
What will the product be like
and what will it do?
How will the product be
positioned & priced versus
competitors?
What is the CVP that makes
sense from the customer’s
perspective?
What are specific benefits
that it offers to the customer?
What are the product’s key
features, attributes and
performance requirements?
What is the specifications that
the product must have (fixed)
and which ones are fluid?
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Whole Product Model
Consumables
Training
Standards,
Quality
Systems
IT
Package
Back Up
Support
Ancillary
Service
Ancillary
Hardware
BASE PRODUCT
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Core
product
Tangible
product
Augmented
product
Brand
name
Product
features
Package
Credit Service
Warranties
Total Product Concept
Source: Kotler & Armstrong, 1991
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Using the Marketing Mix
TargetCustomers
Positioningstrategies
Products &Services
Pricing
People
Process Physicalevidence
PromotionPlacement
CustomerNeeds & Wants
CustomerPrice sensitivity
Convenience& control
Communication& education
Credencequalities
Reliability& assurance
Responsiveness& empathy
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Group Discussion
Working in teams
• Review the firm’s product concept.
• Identify what is known and what is
unknown.
• Can you employ House of Quality?
• Review the Marketing Strategy
check list.
• Highlight major areas for future
action and focus.
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End of Presentation