Managing Product And Service Innovation

MANAGING PRODUCT AND SERVICE INNOVATION 14 MANAGING PRODUCT AND SERVICE INNOVATION Managing Product and Service Innovation Name of Student Name of University Author Note 1. Introduction Every organisation needs to ensure that the techniques such as innovation are developed to maintain quality of products and services in an effective manner. The importance of product development for Woolworths is such that the company can provide proper customer satisfaction and at the same time ensure that a competitive advantage is gained in the market. New Product Development According to Lin, Lee and Kang

Running head: MANAGING PRODUCT AND SERVICE INNOVATION
Managing Product and Service Innovation
Name of Student
Name of University
Author Note

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Table of Contents
1. Introduction............................................................................................................................2
2. New Product Development....................................................................................................2
3. Factor That Affect New Product Development Framework..................................................3
4. Product Related Factors.........................................................................................................6
4.1 Factor One........................................................................................................................6
4.1.1. Factor One Related to the Company............................................................................6
4.2. Factor Two.......................................................................................................................7
4.2.1. Factor Two Related to the Company............................................................................7
5. Market Related Factors..........................................................................................................8
5.1. Factor Three.....................................................................................................................8
5.1.1. Factor Three Related to the Company..........................................................................8
5.2. Factor Four....................................................................................................................10
5.2.1. Factor Four Related to the Company..........................................................................10
6. Critical Success Factors & Issues Relating to the Company...............................................11
6.1. Strength..........................................................................................................................11
6.2. Weaknesses....................................................................................................................12
7. Recommendations................................................................................................................13
8. Conclusion............................................................................................................................14
References................................................................................................................................15

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1. Introduction
Every organisation needs to ensure that techniques such as innovation are developed
to maintain quality of products and services in an effective manner. Innovation in product and
services can help a company to satisfy customers and provide it with an opportunity to gain
global recognition. The assignment focuses on the importance of product and service
management and the benefits an organisation can receive due to this. The focus is on
Woolworths one of the most famous and reputed retail companies in Australia (Moulaert,
2016).
Woolworths is an Australian retail company with a growth rate of 50% of the
economy of Australia. It was established in 1924 in New South Wales and owns certain
subsidiary companies for its benefits. The company forms a duopoly market with Coles and
contributes to an overall 80% growth of the economy of Australia. The importance of product
development for Woolworths is such that the company can provide proper customer
satisfaction and at the same time ensure that a competitive advantage is gained in the market.
The main competitor of Woolworths in the Australian market includes Wesfarmers
(Woolworthsgroup.com.au, 2018).
The assignment provides the importance of having a new product development and
provides an overview of the process in details. The factors that affect products and markets is
analysed and based on it, the critical success factors of Woolworths is determined. At the
same time, recommendations are provided so that Woolworths can improve their product and
services.

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2. New Product Development
According to Lin, Lee and Kang (2015), the new product development provides an
idea about the importance of introducing a new product in the market. It analyses the manner
in which development of a new product can help an organisation to grow and maintain proper
effectiveness in the market. New products often lead to the increase in the growth of
employment, high standards as well as improvement in technology. In the case of
Woolworths, the number of new products of the company has increased dramatically. After
its establishment in 1924, the company have grown and have managed to develop its market
and products continuously to attain the satisfaction of the customers. With the application and
introduction of the new product development framework, Woolworths can develop and
launch new products that can evolve around the information gathered from a proper
marketing research. Therefore, the factors that affect the New Product Development
Framework can be analysed with the help of a diagram.
The New Product Development that has been focused on is a seafood product, namely
the chilled salmon product of Woolworths. Woolworths is known for manufacturing products
that can help in the satisfaction of the customers. Therefore, the introduction of chilled
salmon product can help the company to engage the customers continuously with the habit of
eating fish. The effects of this new product can help Woolworths increase their customer base
and gain popularity in areas beyond the local markets of Australia. However, the company
needs to keep in mind that the food product is healthy for the consumption of the people.
3. Factor That Affect New Product Development Framework
The New Product Development Framework provides an importance about introducing
new products in the market and assisting customers to gain quality products. It helps in the
growth of companies and provides profits for it so that it can expand into the market. One of

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the characteristics of the new product development is that it helps in the growth of the
economy and therefore, helps in the growth of customer satisfaction in the market. As stated
by Adams et al. (2016) the NPDF differs from one industry to another. Hence, the application
of the process in the case for Woolworths can be analysed.
The stages of the NPDF can be linked with the development of Woolworths and the
manner in which it can be implemented for further promotion of the company can be
analysed.
Figure: New Product Development Framework
(Source: Schedin, Chirumalla & Jackson, 2017)
New Product strategy: This helps in linking the process with the objectives of the
company. The development of the chilled salmon product can be made so that Woolworths
can ensure satisfaction of the customers. The objective of Woolworths is to improve the stock
turns and optimise the efficiency of its network all the way while ensuring the satisfaction of
the customers (Woolworthsgroup.com.au, 2018). The initial step of the NDPF provides a

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proper guideline about the manner in which screening criteria for the promotion of the
product can be conducted.
Idea generation: At this stage, the managers of the company can search for new
product ideas for its development. For example, the chilled salmon product can be developed
depending upon the response of the customers and their requirements (Anderson, Potočnik &
Zhou, 2014). This can help Woolworths to provide its customers with the type of products
that they expect from the company.
Screening and evaluation: Woolworths can formulate an initial analysis of the
success of the chilled salmon product. This can be done by proper promotion of the product
in the form of providing customers with free samples of it during its promotional method
(West & Bogers, 2014). The promotion of the chilled salmon product can be done within the
premises of the stores. This can help Woolworths to study the merit of the products in a
detailed manner.
Business analysis: This involves further analysis of the product ideas such as its
return on investment (Bain & Kleinknecht, 2016). Woolworths can make a further analysis of
the chilled salmon product and determine its value for the company. The number of sales it
can make and the profit that can be earned can be determined by conducting a proper scrutiny
of the product after its initial launch.
Design and development: This stage helps in forming the idea into a reality. For
example, if Woolworths were to make chilled salmon product that can be consumed during
the time of crisis of meat then the company can design the product in a manner that can be
fruitful for it (West et al., 2014).

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Testing: This can help in conducting experiments that can be used to verify earlier
business decisions. As stated by Barrett et al. (2015) Woolworths can test the responses of the
customers as an experiment for the launching of the product in a mass manner.
Commercialization: This is regarded as the final stage in which the product is finally
launched. For Woolworths, the launching the food product that can be consumed any time
will be considered as final after analysing the responses of the customers and the profit it may
incur for the company.
4. Product Related Factors
4.1 Factor One
4.1.1. Factor One Related to the Company
Raw materials
Raw materials can be considered as one product factor that can be related to the
manufacturing of products. According to Bernstein (2015), the raw materials have an impact
on the type and quality of the products. The product factor can be related to the first stage of
the NPDF. The impact of the raw materials can be analysed by the various pathways that are
followed by an organisation. In the case of Woolworths, the raw materials are important as
the company aims to provide fresh products to the people and aim to develop a sustainable as
well as a healthy society in the country.
Some of the factors that can be considered for understanding the raw materials of the
product include its renewable capability, ability to remain fresh and the ability to recycle it
after use. For a company like Woolworths, the raw materials of the company need to be fresh
so that it can help in satisfaction of the customers (Bernstein, 2013). The advantage of the
company is that it is the main source of its raw materials. The raw materials required for the

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manufacturing of the chilled salmon product are produced by Woolworths and rely less on
the suppliers. Therefore, the added cost of purchasing the products is reduced.
At the same, the sustainability of the materials, need to be considered by the company
(Camisón & Villar-López, 2014). Woolworths need to ensure that the raw materials that are
used can be recycled so that it does not affect the environment. The company uses fresh
products so that it can gain a competitive advantage in the market and ensure that the
customers remain satisfied with the company. The use of raw materials by Woolworths is
done in a manner that it provides a competitive edge in the market (Chesbrough,
Vanhaverbeke & West, 2014). The raw materials are stored in the inventories and proper care
is taken so that it is not wasted or degraded.
Therefore, it can be said that Woolworths need to comprehend the sources of raw
materials so that it can provide a proper analysis of the market. The use of raw materials in a
sustainable manner is one of the strengths of the company and Woolworths uses it to promote
a healthy lifestyle for the people of Australia. However, Christensen, Raynor & McDonald
(2015) stated that it might not be possible to make a substitution of the raw materials as it
provides excess value to the company. In this case, an innovative tactic is required so that
Woolworths can promote a healthy lifestyle and live up to its reputation.
4.2. Factor Two
4.2.1. Factor Two Related to the Company
Manufacturing
The second factor that can be considered is the manufacturing of the company. This
can be an idea generation stage as the ideas for the product development is based on this
stage of the product development factor. This factor of a product may have a significant

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impact on the manner in which the customers can be satisfied. The popularity of the products
is gained by its proper manufacturing and the raw materials used to make the quality viable
for the people. As observed by Drucker (2014) the raw materials and the manufacturing
factor are interrelated to one another as without the other it can be impossible for a company
to continue its success. Therefore, for a company like Woolworths, this can be a major factor
for its improvement in the market of Australia,
The manufacturing of products by Woolworths depends on the raw materials used by
the company. For example, the use of agro-processors for manufacturing raw materials may
require the use of excess raw materials so that quality of the products can be enhanced.
Therefore, the impact it has on the environment can be considered so that Woolworths can
remain true to its culture and the manner in which it can promote its products (Dutta, Lanvin
& Wunsch-Vincent, 2015). Hence, like the use of raw materials, Woolworths need to
consider the sustainability factors that are involved in the manufacturing of the products.
Woolworths can consider the manufacturing of the chilled salmon product based on
the demand of the customers. As stated earlier, if Woolworths is to consider manufacturing a
product that can be consumed at any time then it needs to ensure that the product is healthy
and therefore maintain its quality. The process of manufacturing can be considered as an
important factor for the promotion of the product in the market. Therefore, it is necessary that
the company take proper steps so that it can manufacture the products using the resources
available to it (Etzkowitz & Ranga, 2015). As already stated Woolworths develop, the raw
materials required for the manufacturing of the products. Therefore, the company can ensure
sustainability in the environment.
According to Gawer and Cusumano (2014), manufacturing excellence refers to less
wastage of products and development of more quality. Therefore, it is necessary that

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Woolworths maintain superior competencies over its rivals by the manufacturing of the
products. At the same time, the interests of the customers also need to be considered so that
Woolworths can ensure that customer satisfaction is attained. This implies that the
manufacturing of the chilled salmon product needs to comply with the needs of the
customers. It can be said that the factors related to products are important for the further
expansion of the company in the Australian company and in the international market.
5. Market Related Factors
5.1. Factor Three
5.1.1. Factor Three Related to the Company
Government
According to Johnston and Marshall (2016), Government can be considered as a
factor that may have a significant impact on the market. This mainly because the influence of
the Government in the free markets of a country can be considered as an important factor for
the success of a company. Business analysis stage of the NPDF can be applied as a relevancy
to this particular factor as proper research need to be conducted to identify the external
environment of the market. The economic policies that the Government develops have a huge
impact on the success of a company and the manner in which it can relate its products and
services. The purchasing power of the customers is also taken into consideration so that the
customers can remain an important stakeholder of the companies. In the case of Woolworths,
the company can get assistance from the Government of Australia.
As seen from the records of Woolworths, the company covers at least 80% of the
market share in the county. Therefore, it can be concluded that the support from the
Government received by the company can help it to thrive in the business. Therefore, it is

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needed that Woolworths make proper use of the support and develop products and services
that can benefit the customers as well as the economy of Australia. As observed by Smith et
al. (2017) the recession in Australia had a severe impact on the country particularly in its
business markets. Hence, it is necessary that such negative impacts be prevented so that the
company can continue its business properly and maintain the support it receives from the
Government.
Woolworths need to consider the fiscal and the monetary policies of the economy.
The increase and decrease of the purchasing power of the customers are mainly due to the
fluctuations in the economy of the country. Therefore, the financial factor of the company
needs to be considered. Woolworths can obtain the support from the Government in the case
of expansion into other countries. This is because proper political ties with the Government
of foreign countries can help Australia to maintain trade business. In the case of an economic
crisis, the support from the other Governments can be obtained to steady the flow of income
of the country as well as the companies involved (Kleinknecht, 2016).
Therefore, the support of the Government is important for Woolworths mainly
because it can maintain its business in other foreign countries. Kogan et al. (2017) are of the
opinion that the manner in which Woolworths can comprehend the support of the
Government can be related to other factors of a market. The satisfaction of the customers may
depend upon the freedom provided by the Government to continue business and manufacture
products of the company.
5.2. Factor Four
5.2.1. Factor Four Related to the Company
Supply and demand

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According to Lusch and Nambisan (2015), supply and demand of products and
services instigates the push and pull dynamics that exits in the price of a commodity. The rate
of prices changes with the changes in the supply and demands. However, prices may fluctuate
with the stability in the supply of products. The screening and evaluation of the products can
help in the development of popularity among the customers. This in turn can dictate the
demand and supply factor along with other variables involved in the market. Therefore, this
forms one of the most important factors that every business enterprise needs to consider. The
stability in the market is mainly based on the units sold and the demand made by the
customers. In the case of Woolworths, this is another interesting factor for the growth and
expansion of the business.
The supply and demand factor can be related to the stages of the New Product
Development Framework. As stated by Manzini and Coad (2015) the stages of the NPDF are
related to the type of product that can be sold in the market and the response that it may get
the people. Woolworths can identify the demand and supply of the new product that it ought
to promote and based on it the prices can be set. The application of the theory of supply and
demand for Woolworths can help it during its initial promotional plan of the chilled salmon
product.
It is to be noted that the demand and supply of products cause both short-term as well
long-term fluctuation in the market. As established earlier the Government of Australia can
play a major role in determining the demand and supply of the products. Therefore,
Woolworths need to ensure that this factor is dealt with in a manner that can be useful for the
promotion of the company. Woolworths have managed to minimise the gap between demand
and supply by setting up stores all across the country and ensuring that products are available
at every place. However, with the introduction of the new product, it can be difficult to create
a proper balance between the demand and supply.

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As stated by Moulaert (2016) the supply and demand can be dealt with by following
any type of charges introduced by the Government. Woolworths can consider this one of the
option to mitigate any type of gap that may exist between the supply and demand.
Lowinterest rates can be a cause of creating a balance between the two factors that are
important for the growth of the company. At the same time, proper feedback from the
customers can help Woolworths understand the manner in which the demand and supply of
the company can be improved.
6. Critical Success Factors & Issues Relating to the Company
6.1. Strength
According to Parker and Van Alstyne (2017), the strength of Woolworths is that the
company is the leading retail market in Australia. With over 80% of the market share,
Woolworths enjoys an excellent competitive advantage in the Australian domestic market.
The leadership quality that the company has helps in exploring the various market of the
country. In this case, it can be said that in the modern world, the technical factor plays a key
role in the success of the organisation.
In the modern world, the technical factor is important as the companies try to gain a
competitive advantage in the market. Hence, developing a strong human resource with
technical expertise can help in enhancing the potential of a company. In the case of
Woolworths, a strong human resource may get the company to continue its business in the
market and ensure that the company remains competitive in the domestic retail market of
Australia. As observed by Shalley, Hitt and Zhou (2015) strength of Woolworths is the fact
that the application of the resources is affected by the external conditions, which plays a
crucial role in the development of the industry.

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The strong brand name of the company helps it to maintain its position in the market
and ensure that it remains competitive in the market. The reputation of the company is that it
is one of the oldest retail companies in the market and the manner in which it maintains the
quality of the products proves as a factor of strength for the company. In the case, it can be
said that the quality of products of the company is, one of the important factors that
customers praise and due to this reason, the success of the company has reached its potential
level.
6.2. Weaknesses
The major weakness of the company is that Woolworths has a negligible global
presence as compared to its competitors. According to Tukker et al. (2017), companies like
Wesfarmers are present across the globe including Europe and Asia. However, the popularity
of Woolworths is limited to the Australian market, therefore, the income of the company
remains at risk particularly during the time of economic crisis in the country. Hence, the
company may suffer a considerable loss it the economy does not stabilise itself. Therefore,
maintaining reputation across the globe is important for the success of the company.
As observed by Van Oort (2017) the external environment of the market can cause
hindrance to the company because of the various barriers it may cause. The external
environment includes the Government the intervention of which may cause Woolworths to
lose its business in the market. Therefore, it can be said that the company need to rely on
excessive strategies to overcome the problem and ensure that the strategic development of the
company is based on mitigating the external factors. The reason this being a weakness of the
company is that the formulation of the strategies may be hindered by the excess dominance of
the external factors.

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The Australian Government has restricted the high price of the commodities of
Woolworths mainly because it is in collaboration with Coles. This can be a huge cause for the
loss of revenue of the company as without profit, it can be difficult for it to continue its
progress in the competitive market in Australia and internationally. As observed by Vargo,
Wieland and Akaka (2015) the manner in which the Australian Government poses restriction
to the pricing of the products can act a huge threat for the company and may lead it to
problems in the domestic market of the country.
7. Recommendations
After the analysis of the new product development framework along with the
strengths and weakness of the company, certain recommendations can be made that can help
Woolworths to continue its business in the Australian market and improve its existence in the
international market. For example, it can be recommended that the company maintain proper
analysis of the external factors in trying to cope up with the demands of the customers. The
new product development framework can be implemented in a manner that can help
Woolworths gain reputation in the market. The chilled salmon product needs to evaluate the
demand of the customers through the responses of the surveys and ensure that it can prove as
a major advantage factor for the company.
At the same time, another recommendation that can be presented to the company is
the manner in which it can mitigate the threats from the Government. This can be done by
ensuring that the company remains aware of the policies and rules launched by the
Government and mark the prices according to the demand of the products. The pricing of the
chilled salmon product of Woolworths needs to strike a balance between the economic
condition of the market and the revenue earned by the company in the market.

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8. Conclusion
Therefore, it can be concluded that the application of the new product development
framework can be applied after considering the factors that affect the market. It needs to
consider the external factors and ensure that a company like Woolworths rely mostly on its
strengths to continue its business in the market. Therefore, it can be said that the company
can analyse its weakness and maintain a balance between the factors that affect the external
business environment and continue its production in the business markets of Australia.

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