1
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
New product development in the digitalage
Jari Salo,Professor of Marketing (Digital Business & Marketing)
Head of doctoral programAdjunct Professor (Aalto University School of Business)
Associate Editor of Journal of Information Technology ResearchOulu Business School
University of OuluDepartment of Marketing
Agenda
• Digital marketing – organizing framework
• New product development
• The digital age
• Examples and cases (Starbucks, Dell,Threadless, Volvo, Lush, Dominos Pizza, UKIarchitects, Apple)
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
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Research:
• Industrial marketing (innovation, services, relationships,digitization)
• Digital retailing (Facebook in clothing retail, click streamanalysis – big data, e-newsletters, FB addiction)
• Advertising and branding (industrial/digital context)
• Role of technology in marketing (e.g. avatar creation, virtualworld spending behavior, mobile advertising)
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
Company references
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Simula, Lehtimäki, Salo, & Malinen 2010
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
Commercializing new B2B products
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P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
Digital Marketing – OrganizingFramework
A working definition for digitalmarketing
• Digital marketing aims at creating, demonstrating, documenting,
communicating and delivering value in digitized way to customers (B2C
and B2B) and for managing customer relationships in ways that enhance
digital joint value creation of customers, organizations and stakeholders.
(Journal of Digital Marketing)
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Value
Value equation = Benefits (tangible/intangible) –Costs (price, total costs)
+ CALT (comparison of alternatives)+ Over life time evaluations (e.g. CLV)
Holds for all people - organizations, individualsand employees
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
Digital Marketing Framework
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
SCM
CRM
INNOVATION & NPD
Online
metrics
BusinessStrategy
CustomerStrategy
BusinessStrategy
CustomerStrategy
Valuecreation
Value co-creation
Value capture
Valuecreation
Value co-creation
Value capture
Performanceassesment
process
a) Shareholderresults
b)Performancemeasuring
c) KPI
Performanceassesment
process
a) Shareholderresults
b)Performancemeasuring
c) KPI
Multichannelintegration-FB, Instagram
Twitter-YouTube-Email &
newsletters-Companywebsites
SEO/SEA…Web advertising-Blogs, pods, -
Vpods, webcasts-Mashups, widgets
-Location basedservices
e.g. tabletcomputers
Multichannelintegration-FB, Instagram
Twitter-YouTube-Email &
newsletters-Companywebsites
SEO/SEA…Web advertising-Blogs, pods, -
Vpods, webcasts-Mashups, widgets
-Location basedservices
e.g. tabletcomputers
Information systems- Data storaging & mining
- Front & back office applications- Big data and cloud applications
Information systems- Data storaging & mining
- Front & back office applications- Big data and cloud applications
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New product / service development(NPD/NSD)
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
NPD phases
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
Basics:- Two strategies: Acquisition ordeveloping (traditional)
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NPD vs. innovation
Incremental Radical
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
?
NPD vs. innovation
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Level/type of innovation / NPD
• Product
• Process
• Technology
• Business model
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Business model innovation
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The digital age
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
Trends
1. User generated content (UGC) – source ofinformation
2. Social media – communities3. Virtual worlds4. Crowdsourcing5. Interacting with customers
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1. UGC: From broadcasters toaudience driven content
19Turban et al
1. User generated content (UGC)
Places to share content and publish your own content
• Webopinions• CNN (iReport)• YouTube, Vimeo• Flickr (photo management and sharing)• Helsingin Sanomat, other magazines (send a picture)• Creating a blog (see e.g. blogs.com)• Twitter• Slideshare (consulting, teaching – demonstrating
experience)• FB etc.
Digital Marketing - Salo20
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2. Social media, communities andNPD• Social media and online communities provide new ways for companies
to digitize business:• Front end of Innovation - ideas• NSD/NPD• Testing
• Creating own communities (Philips healthcare) / participate establishedcommunities• Inform about new products• Ask review and recommendations
• Competitions and games
• Press events & education virtually21
2. Taxonomy of communities (Salo & Härkönen 2009)
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YouTube MySpaceFacebook
Second LifeLinkedInClassmatesservices
Flickr
Social orientation
Low
Hig
h
High
Con
tent
crea
tion
and
shar
ing
Low
Habbo Hotel
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2. Case Starbucks (2012)
• Starbucks created a platform “My Starbucks Idea”
• The site allows users to submit suggestions to be voted on by Starbucksconsumers, and the most popular suggestions are highlighted andreviewed. Starbucks then took it a step further and added an “Ideas inAction” blog that gives updates to users on the status of changessuggested.
• By empowering their exceptionally web savvy consumer, Starbucksstrengthens their campaign to add a personal touch to coffee.
• Thinking of ways to build your company are great, but directly askingyour consumers what they want, is better. Acting on that information anddoing it publicly is key to the success of this campaign.
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
2. Case Starbucks
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2. Case Starbucks
• 70,000 Suggestions from Starbucks clients
• The top idea received over 95,000 votes and over 1,000comments
• Starbuck has over 28 million fans on Facebook
• The Facebook fans mostly engage in applications such asevent calendars, discussions and notes
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
http://www.slideshare.net/kholzapfel/social-media-success-stories
2. Case Dell
• Dell has developed and is cultivating a cross-platform community.They’ve created multiple Twitter handles, a network of blogs, and arevery active on Facebook and are used to provide additionalinformation
• Dell claims that Twitter presence led them to three million dollarsales, that can be tracked down on their efforts on the platform. Thismight not be huge, but it is above the costs of Dell’s presence at theplatform
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P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
2. Case Dell
• The most active user has already posted over 20,000 replies.All of this for no cost for dell as he is not an employee. Hisposts have been read over 2 million times which led toadditional sales and huge savings in tech support
• Dell is also one of the few companies to publicly state thatthey created a return on investment from Twitter. Apparently,Dell’s social media efforts help create “$1 million in revenue”
• Social media isn’t all about ROI, but it is possible. Creatingcross-platform strategies can lead to the most success,especially when your demographic is already Internet andtechnologically savvy.
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
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3. NPD and Virtual worlds (WOW)
Digital Marketing - Salo29
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3. NPD and virtual worlds
• Coke: Virtual Thirst ”send ideas for portable virtualvending machine”
• Steelcase: ”design new innovative executive chair”
• BMW: BMW series 1 Use Facebook applicationgraffiti wall to design new and customize your BMW1. Over 10.000 participated and 600.000 voted for abest design
Kohler 2008
Virtual world marketing (Tikkanen et al 2009)
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Virtual world marketing (Tikkanen et al 2009)
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Virtual worlds views from industrialcompanies
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Generations online 2010
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
One of the leastused activities
4. User driven innovation
Use for innovation• Observation of consumer behavior - generating new ideas and
improving products, retail store layouts etc.
• Evaluation of the new product ideas
• Actively generating new ideas
• Concept testing and design
Digital Marketing - Salo36
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4. Crowdsourcing
• Simply defined, crowdsourcing represents the act ofa company or institution taking a function onceperformed by employees and outsourcing it to anundefined (and generally large) network of people inthe form of an open call.
• This can take the form of peer-production (when thejob is performed collaboratively), but is also oftenundertaken by sole individuals. The crucialprerequisite is the use of the open call format andthe large network of potential laborers. (Howe, 2006)
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
4. Crowdsourcing
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4. Threadless - T-shirts
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
5. Interacting with customer in the innovationprocess – three archetypes
1. “Listen into” the customer domain
2. “Ask” customers
3. “Build with” customers
Piller et al., 2011+Könkkölä
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“Listen into”
• Products are designed on behalf of thecustomers
• Firms use existing customerinformation from diverse channels toidentify customer needs
Piller et al., 2011+Könkkölä
“Ask”
• Firms explicitly ask customers for input for acompany innovation process
• (In the early stages of the innovation process)customers’ needs are identified
• Pilot customers/beta users
Piller et al., 2011+Könkkölä
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“Build with”
• Active integration of customerparticipation in innovation
• Customer co-creation/openinnovation with customers
• “Active, creative and socialprocess, based oncollaboration betweenproducers and consumers”
Piller et al., 2011+Könkkölä
“Build with” (cont.)
• User idea contests• Consumer opinion platforms• Toolkits for user innovation• Mass customization toolkits• Communities for customer co-creation
Piller et al., 2011+Könkkölä
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Typology of customer innovation
Piller et al., 2011
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Simula, Lehtimäki & Salo 2008
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Illustrative case and examples
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
Use of technology to innovate: Data richenvironments: Industrial perspective
• Trucks• Busses• Dumpers (e.g. used to carry iron ore in mines)
• Autonomous vehicles• Telematics (outsourced e.g. to Volvo)
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Process innovation:retailingexample
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
• Lush sales team can change thelayout of their stores in response toreal-time sales data.• "Not only has this helped to tap in to the ambitious spirit of staff -
competing over which store can do best in terms of sales andperformance - but it also gives them information to improve thecustomer experience."
• For example, if staff notice a particular bath bomb is selling wellwith a certain shampoo, they can change the store layout so theitems are closer together.
(Source BBC)
Business model innovation ?
• Public and private (company) internal data mashups(data and functionality integrated, possibility tointegrate different apps/functionalities, databases topresent information in one seamless service tocustomer
• Single view Dominos Pizza (Pizza builder forcustomers + mobile apps, Pizza Tracker).
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Process innovation: Context / locationawereness
• Apple's iBeacon technology - in-storeBluetooth location trackers designed tointeract with smartphones - enablesretailers and app publishers to identifypeople individually the moment theyenter a shop
• iBeacon available with many vendors
• Similar to iJack service developed byTeliasonera in early 2000 which theyabandoned in 2004
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
Sales/deals80%
Content relevant to interest/Location 62%
Swirl 2013
Process perspective•Last month, Urban Research, a fast-growing and popular fashion, home andlifestyle retailer, launched an experimentin Tokyo’s Parco Ikebukuro.•Allows customers to stand in front ofone of two 60-inch screens, selectclothing items they want to try on andsee themselves dressed in the productswithin seconds.•Customers’ movements arerepresented fluidly on the screen in 3Dand customers can use an integratediPad to take pictures of themselves andshare them with friends on socialnetworks.
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Case Apple
Music players and Itunes
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Stage of the business – late 1990s
• Few clumsy hard drive music players• Designed by and for technical experts – geeksChallenges:- Memory capacity limited- Difficult to use- Extremely expensive- In order to use you have to be expert
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Apple gathers information on musicbusiness – late 1990s early 2000s• Mixed methods and netnographic approach
(Kozinets)• Newsgroups, discussion and bulletin boards
are used as information source• Analyzing these information sources• Identifying influential groups and boards• Identifying lead users – appreciated experts• Analysis• And collection other related information
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
Enter iPod and iTunes
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Commercialization time line 2001-2012
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Case: UKI architects
Using 3D 1:1 virtual cave environment forhospital design
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Project parties
• UKI architects (architect company) www.ukiark.fi
• Ludocraft (technology partner, 3D and virtualworld expert, builds realxtend virtual worldtechnolgy- platform) www.ludocraft.com/
• Intercircum – business partner (our company)
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
Construction business
• Customers and users have differentexpectations
• Multiple technological and architectural options
• Varying business models and governmentinvolvement
AS a result 3D Valo™ was born
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
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• Case SeinäjokiHospicaseY Y-house
• Target: Seinäjoki Centralhospital extension
• Multiple users• Many agents (city, hospital,
government rules etc.)
• Idea: User involvement, usercentered design, functionaldesign
• Valo™ utilized
Intercircum Ltd.
Virtual 3D 1:1 design and presentationtool for architects – Valo™
• Customer, user and architect and construction team experience the
space in virtual environment
• Helps customers and users alike to experience the building before
it is even built with 3D 1:1 design
• Changing solutions in the design are cost effective as the design is
virtual and house is not actually build yet
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
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Virtual 3D 1:1 design and presentationtool for architects – Valo™
• Spaces are user designed for and
with users
• In future if needed all parties
involved can be in different places
assuming they have connection via
relevant technologies to the virtual
design environment
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
Illustrative video clip
• http://www.youtube.com/watch?v=smC-rvzSph4
• YouTube search – “UKI Architects - user-orienteddesign - Seinäjoki Y-hospital emergency center”
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
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UKI architects
• 3D virtual 1:1 design tool Valo™ is also used ininternally and also in different types of customerprojects
• New hospital project in Tampere• Valo™ is now commercially available to
construction business
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
To summarize
• NPD/NSD/ Innovation is a group level activity wheremultiple organizational units, customers other stakeholders and even competitors are involved.
• Digital age offers wide array of possibilities to collect,disseminate, analyze information, test “innovation” andharness that to create wisdom.
• Digital tools (online communities, social media sites,blogs, big data, internent of things, industrial internet,virtual worlds, mobile technologies etc.) provide suitabletools to enhance effective ”innovation”.
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
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Comments / questions?
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
[email protected]@aalto.fi+358 50 4675154
Task 1: Personal DM + NPD mind map
1) Take a sheet of paper and pencil
2) Think - What comes to your mind from DM+NPD ?
3) Write your topics into boxes and form ahierarchy i.e. mind map.
4) Save the sheet of paper
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
DM &NPD
4
3
2
1
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Task 2: Sharing the personal DM & NPDmind map
1) Pair up with any student in the class
2) Share your thoughts with each other on thesimilarities and differences in the mind maps
3) Group similar issues under a theme and writethose into individual sticky notes
4) As a group lets draw unified map !
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