Innovation & commercialisation assignment : Essence drink

Innovation and Commercialisation

Table of Contents
INTRODUCTION...........................................................................................................................1
1) Analysing the importance of commercial funnel and assess the application of new product
development processing for commercialising innovation...........................................................1
2) Building innovative business case for an organization inclusive of methods of funding.......2
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Innovation is stated to be one of the best technique that can help a company to increase its
reach and visibility among customers. The report will introduce new flavours of low fat
milkshakes for Essence Drinks. It will help the organization to analyse that whether all the
important aspects have been taken into consideration while launching new product or not. It will
help in comprehensively describing importance of commercial funnel and applying new product
development concept to the newly introduced product. The report will then discuss regarding
methods of funding and estimated product for new product.
1) Analysing the importance of commercial funnel and assess the application of new product
development processing for commercialising innovation
Commercial funnel plays an important role in launching new as well as innovative product
in the market in a manner that maximum profits out of it can be generated. It plays a substantial
role in selecting useful products which can then be used in getting them to the right platform.
Commercial funnel is also known as purchase funnel which demonstrate the journey of
consumer behaviour towards purchasing a product or a service. There are basically five steps,
that are involved in commercial funnel (Barczak, 2012). These are, awareness, opinion,
consideration, preferences and purchase.
Essence drink is a health drink company, which functions in UK. The company have been
able to come up with a single health drink, that is, low fat mango milkshake, in last two years.
Due to high degree of innovation capacity and capability of large distribution, it has been able to
give rise to large amount sales of that period for those two years. However, when the enterprise
entered into third year, its sales decreased drastically as the consumers likes to drink low fat
milkshakes of various flavours. Hence, it has been decided by essence drink that, Essence drink
will get involved in offering various other flavours of low fat milkshakes in the coming period. It
has also decided that the quality offered to customers will also be superior than the other ones
which are actually available in the market or were actually offered by Essence Drinks itself
(Bently and Sherman, 2014). There will be following features of new drink:
 Low fat milkshakes to be made available in various other flavours.
 Superior taste
 No taurine and caffeine
 High in nutrients and natural
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There are various other risks that a company may face when it is planning to introduce any
type of health drinks. Due to hike in the competition, it has become quite important for the
company to come up with various other flavours of low fat milkshakes. Applying the concept o0f
commercial funnel, it can be stated that, it is important to analyse each and every aspect of it so
as to introduce it effectively in the market. It will help in ensuring that the customers are
appropriately being aware of what are they planning to offer and the same is ultimately reached
to them. If the customers are aware of what is actually offered by Essence Drinks, they can try to
bring the product in their preference list as well (Ernst, Krafft and Krieger, 2011).
Since the first step of commercial funnel is awareness, where it is quite important to make
the customers aware that there is some product like that of low fat milkshake, introduced by
Essence drink, that is present in the market. Then, moving towards second step, it is necessary to
gather their opinion which can help in understanding that whether it is required by them or not. It
also plays a substantial role in understanding the requirement and importance of introducing a
particular product in the market and whether it will be able to gain adequate presence or not. The
next step of commercial funnel is consideration, where the input and analysis, being made on
customers, is assessed so as to come up with the product that helps in fulfilling the needs and
requirements of customers. Further, introducing the products helps in adding them to preference
list of customers. In the end, the ultimate purchase is made by customer, of introduced product
(Fiedler and Welpe, 2011). Commercial funnel always helps in increasing visibility of the
product and thereby increase market share of the company.
In order to gather, what actually has been expected by essence Drink, it is important to
analyse value of the product in the market. It helps in assessing that whether it will be able to
generate adequate amount of profits out of it or not. Every company aim to reduce overall cost of
the product. To perform this function, Essence Drinks can remove all the unnecessary feature,
that a product may carry. It will help in reducing the cost and enhance overall profitability
aspects of the drink as well (Lee and et.al., 2010).
2) Building innovative business case for an organization inclusive of methods of funding
Essence Drink can pick up some innovative ideas that can help it in boosting its sales. The
company can involve in personalising the drink, being innovated and introduced for the
customers and ship it to their door steps as well. In order to perform his function, company may
also come in direct contact with the customers with the help of digital media. It will help in
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advertising low fat flavoured milkshakes to right kind of customers. It will help in attracting
large number of customers towards it. They can even order it from home and get it at their
doorstep at minimum possible prices acts as Unique Selling Proposition (USP) for the company
and its products. It also helps in increasing overall presence in UK, even if store is located at one
location only (Lilien and et.al., 2010).
If the company wants to launch something new, then it can opt for introducing it in different
flavours. The health drink is itself an interesting concept that can help in attracting large number
of customers towards it. However, making the customers aware about it and increasing its
visibility is an important aspect that is connected to introduction of new product or segregation
of new product in the market.
There are various types of promotional tools that can be taken into consideration by Essence
Drinks. One of the best out of all is advertising (Rasmussen, 2010). Advertisement can be a paid
and non-paid promotion that can help in increasing communication aspects of the product. It is
important for Essence Drinks to make five decisions, such as, a mission, money, message, media
and measurement. Advertisement can elp in attracting large number of customers and making
them aware about the new product. Promotion can be initiated in various types, such as, print
media, direct marketing internet and broadcasting media. Based on suitability and budget, the
company can opt for any of the available methods (Schiele, 2010).
Essence drink can involve in environment testing so as to test the effectiveness of new
product. It will help in estimating the amount of profitability, the company will be able to gather,
through introduction of the new product and services to customers (Wang, Vanhaverbeke and
Roijakkers, 2012). In order to develop innovation business case, it is important to estimate entire
budget of introduction of new flavours of low fat milkshakes apart from mango, which was
already introduced 2 years back.
Estimation of total expenses of Essence drinks has been discussed as under:
Type of expenses Cost
Manufacturing expenses $ 600
Raw material expenses $ 500
Labour expenses $ 550
Management expenses $ 400
Marketing expenses $ 250
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Total $ 2300
Estimated total revenues of the company has been mentioned below:
Name of the product Price of the product ($)
Quantity of the
product
Revenue
generated
through single
type of product
($)
Mango Low Fat Milkshake 2 250 500
Orange Low Fat Milkshake 2 200 400
Pineapple Low Fat Milkshake 3.5 150 525
Litchi Low Fat Milkshake 3 250 750
Vanilla Low Fat Milkshake 1.5 400 600
Total Revenue $ 2775
Therefore, estimated profit from the introduction, gained by Essence Drinks may be
Total Revenue – Total Expenses
$ 2775 - $2300
Estimated Profits = $ 475
Hence, it can be stated that, the company will be able to generate the profits of $ 475
within 3 months of introduction of new products. The company can involve in getting funds in
the form of bank loan and venture capital so as to fulfil the requirements of its investments
(Williams, 2013).
CONCLUSION
It can be concluded from the above report that, it is important for the organization to
constantly bring innovation in the products so as to ensure that adequate amount of profits can be
generated by it. The report outlines regarding important of commercial funnel and
implementation of its elements to the new flavours of low fat milk shakes introduced by Essence.
The overall estimated expenses are, $ 2300 and on the other hands, estimated revenues are, $
2775. In the end, it has been estimated that the company will be able to generate $ 475, as
profits, from introduction of new flavours of milkshake. In the end, it can be stated that, using
appropriate advertising technique can always help organization in increasing its reach.
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REFERENCES
Books and Journals
Barczak, G., 2012. The future of NPD/innovation research. Journal of Product Innovation
Management.29(3). pp.355-357.
Bently, L. and Sherman, B., 2014. Intellectual property law. Oxford University Press, USA.
Ernst, H., Krafft, M. and Krieger, K., 2011. Customer relationship management and company
performance—the mediating role of new product performance. Journal of the academy of
marketing science.39(2). pp.290-306.
Fiedler, M. and Welpe, I.M., 2011. Commercialisation of technology innovations: an empirical
study on the influence of clusters and innovation networks. International Journal of
Technology Management. 54(4). pp.410-437.
Lee, S. And et.al., 2010. Open innovation in SMEs—An intermediated network model. Research
policy,. 39(2). pp.290-300.
Lilien, G.L and et.al., 2010. Performance assessment of the lead user idea-generation process for
new product development. Management science.48(8). pp.1042-1059.
Rasmussen, B., 2010. Innovation and commercialisation in the biopharmaceutical industry:
Creating and capturing value. Edward Elgar Publishing.
Schiele, H., 2010. Early supplier integration: the dual role of purchasing in new product
development. R&d Management.40(2).pp.138-153.
Wang, Y., Vanhaverbeke, W. and Roijakkers, N., 2012. Exploring the impact of open innovation
on national systems of innovation—a theoretical analysis. Technological Forecasting and
Social Change. 79(3). pp.419-428.
Williams, H.L., 2013. Intellectual property rights and innovation: Evidence from the human
genome. Journal of Political Economy.121(1). pp.1-27.
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