Business Innovation and Commercialization: Essence Drinks Case Study

This report delves into the critical aspects of business innovation and commercialization, focusing on the importance of the commercial funnel and new product development (NPD) processes. It uses Essence Drinks as a case study, highlighting the challenges the company faced due to increased market competition. The report explains the commercial funnel's stages—awareness, interest, decision, and action—and how NPD can revitalize a business. It suggests a new product, Chocolate Flavoured Lassi, assessing its market opportunity, target customers, pricing strategy, and distribution plan. Furthermore, it outlines methods for accessing funding, including internal applications, business plans, existing product line revenue, and TV shows like Dragon's Den, alongside promotional tools and techniques for testing the new product's effectiveness using Six-sigma. The report concludes with a budget for the innovation, emphasizing the need for continuous innovation and market scrutiny for sustained growth.

Business Innovation and Commercialization
Assignment 2

Table of Contents
1. Explain the importance of the commercial funnel and the application of new product
development (NPD) processing for commercialisation of innovation.......................................2
2. Build an innovation business case for an organisation, including ways to access funding.. .4
References..................................................................................................................................8
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1. Explain the importance of the commercial funnel and the application of new product
development (NPD) processing for commercialisation of innovation
In the present century it is imperative that one understands the business policies and methods
before engaging themselves in an entrepreneurship. Knowledge about the commercial funnel
and New Product Development (NPD) are the basics to understanding market and evaluating
the business and development of it (Akgun et al., 2017). Let us discuss what these terms
really mean and signify in the present scenario.
Company Background: The Company Essence Drinks was founded by Mr. Akshay Kumar a
couple of years back as a back. It was a solution to the problem of lack of health drinks
available in the market, which taste good. Mr. Akshay Kumar introduced the Mango Lassi, a
healthy drink that also tastes good. The product was introduced on a very small scale but it
received a rapid response from the market. For two years, the sale went on going high. In the
third year, many companies came up with similar solutions to cater to the customers, this
made the competition go up, and the business of Mr. Akshay Kumar started to face a
downward curve.
Commercial funnel: commercial funnel is a combination of four steps.
1. Awareness: This particular term refers to a process where the sale or the idea starts with
identifying a large number of potential customers by recognizing a problem that he customers
have realized and have started a search for its solution.
2. Interest: the company starts to think about finalizing an innovative project that can
serve as a solution to the problem that has surfaced in the market. This results in a lot
customers asking for more relevant information on the project that that the company is
planning. A certain number of formerly prospective buyers are going to back out on. But the
possibility of sales goes up (Bianchi et al., 2014).
3. Decision: once the company has successfully registered themselves in the market, they can
finally think about the production and come to a decision about what they can offer. This
needs proper market evaluation. Even in this process a minor fall in the customer density can
be noted.
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4. Action: the company, having gone through the previous stages, can finally put their
thoughts into reality and start the production.
New Product Development: Having understood the commercial funnel, we can now move
on to NPD. This means bringing a completely new product to the market. These products can
be of two kinds. Tangible or something that has concrete structure or Intangible or
something that cannot be touched but comes in the form of a service, experience or belief
(Bouncken et al., 2017). To understand the need of the process of New Product Development,
it is important to look into the matter that has happened in Essence Drinks. To address this
problem, the company must follow these steps and dig deep into roots of the problem.
 Identifying the market demand of the market and evaluating the probable needs.
 Evaluating the customer needs
 Planning a solution to the question.
Follow measures can be taken in order to solve the problems.
 It is imperative that the company sets goals for itself and takes important steps to meet
the goals. This will need an understanding of the market and the understanding
regarding the consumers want the company to produce (Cheng, and Huizingh, 2014).
 One of the most important things the company must consider are the risks of
production. This includes the chances of loss of money and the consumer acceptance
related problems. The consumers may find the solution provided by the company to
be unnecessary or inadequate to meet the need. In that case, the consumption of the
newly presented product will fall and the company might face a loss. If the company
resolves to increase the production without renewing their technological faculties,
there might be a problem of limitation of ability (Griffin et al., 2014).
Frugal innovation is one of the ways the company can achieve many goals and at the same
time lessen the number of risks that are involved in the process. One can discuss what Frugal
innovation is and how can it effect the production innovation of the company (Ellis et al.,
2014).
1. Frugal innovation encourages productions made of easily available raw materials. This will
lessen the company’s cost of expenditure in the raw materials.
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2. Since the products are made from primarily homegrown materials, the company doesn’t
have to spend a lot on technological upgradations (Gavira et al., 2016).
3. Frugal system is also one of the most innovative ways of production, so if the consumer
likes the product, then there remains a chance that the consumer might promote it by referring
to their acquaintances about the product (Vanhaverbeke, 2013).
The need of commercialization of innovation is a multi-faceted area of development that
needs constant scrutiny of market and product details. If the company grows a continuous
habit of implementing different methods of innovation and commercial funneling, the
company will continue to thrive.
2. Build an innovation business case for an organisation, including ways to access
funding.
Essence Drinks must come up with a new product in order to survive in the present UK
market so that they can overcome their competitors and get back their lost market. An
innovative product suggestion with ways to access funding is presented here.
Product idea and Product Details: The product that is to be presented by the company can
be a Chocolate Flavoured Lassi. Lassi is a product made out of yogurt, which is mixed with
sugar and water in a mixer. What the company had made before is a mix of lassi with mango
flavor. Since fruit flavor has already been introduced, other companies might introduce
different fruit flavors to bring in a variety in the market. Therefore, the company should move
away from the fruit flavors to a new kind of taste that the consumers already like. Therefore,
chocolate lassi should mark a new statement for the company. Mixing lassi with chocolate
and some added sweeteners may help the company meeting the goals.
Assessment of Opportunity in The Market: the reason of proposing such drink flavour lies
in the fact that chocolate has always been one of the most consumer-pulling product in the
world for ages. People from all the ages love the flavor of chocolate. Chocolate has been also
been identified as one of the most used stress busters around the world. A health drink with
chocolate flavors is bound to grab attention even in the market full of competitors. The
company can also take assistance from PESTLE, SWOT, Porter’s Five Forces and BCG who
do market analysis for companies.
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Target Customers: when launching a new product in the market, an organization must have
knowledge of the consumers for whom they are making it. However, this product is not
strictly restricted to any particular age or ethnic group. Chocolate being one of the most
consumed products will be in attention of every one.
Market breakthrough Analysis: The Company must evaluate the competitors and the market
details in order to understand the specific problems that are existing in the market. Hence,
that while introducing their product they do not have to face any competition or as less
competition as possible. Chocolate lassi has not been introduced I the market before and
therefore, it must not face any strict competition.
Pricing Strategy: The organization must always keep in their mind while producing this
product is that this product is going to target a large number of people and therefore the
pricing should be kept as affordable in reference with the present GDP of the nation as
possible (Zandoval Bonazzi and Ari Zilber, 2014).
Distribution Plan: Twenty first century marketing depends a lot on the online or web
marketing policies. Essence Drinks should try to explore the online Marketplaces as much as
possible.
Accessing Funds: Following are they ways of Accessing funds for the project.
1. Application to the board of directors for financial aid for the project.
2. Placing propositions of business plans to certain finance organizations and banks.
3. Drawing money from existing product lines.
4. Certain TV shows as Dragon’s Den provide finance solutions for business entrepreneurs.
This is how the company can draw funds for their new innovative production.
Promotion tool for the product
Following are the promotional tool that are suggested for the product promotion.
 Social media advertising
 Advertising in television channels by developing commercials
 Promotion through funding different events
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 Using billboards for promoting the product in the local market.
Techniques for testing the effectiveness of the new product
For testing the effectiveness of the product, the company can evaluate the quality of the
product using Six-sigma as a quality testing and management framework.
Fig: Six-sigma for quality and effectiveness testing
(Source: Author)
Budget for the innovation
Expense Costs
Initial Product develop cost £10,000
Social media cost £2000
Content development cost
Costs associated to
advertising materials
£2500
Free sample cost £5500
Total £20,000
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References
Akgun, A.E., Keskin, H., Ayar, H. and Etlioglu, T., 2017. WHY COMPANIES GO
POSITIVE MARKETING INNOVATIONS: A NEW THEORETICAL PROTOTYPE FOR
4PS OF INNOVATION.
Bianchi, M., Frattini, F., Lejarraga, J. and Di Minin, A., 2014. Technology exploitation paths:
combining technological and complementary resources in new product development and
licensing. Journal of product innovation management, 31(S1), pp.146-169.
Bouncken, R.B., Fredrich, V., Ritala, P. and Kraus, S., 2017. Coopetition in new product
development alliances: advantages and tensions for incremental and radical innovation.
British Journal of Management.
Cheng, C.C. and Huizingh, E.K., 2014. When is open innovation beneficial? The role of
strategic orientation. Journal of Product Innovation Management, 31(6), pp.1235-1253.
Ellis, S.C., Gianiodis, P.T. and Secchi, E., 2014. Advancing a typology of open innovation. In
Open Innovation Research, Management and Practice (pp. 39-85).
Gavira, M.D.O., Portilho Ferro, A.F., Simm Rohrich, S. and Quadros, R., 2016.
Technological innovation management: Analyzing the application of the innovation funnel in
a consumer goods organization.
Griffin, A., Noble, C. and Durmusoglu, S., 2014. Open innovation: New product
development essentials from the PDMA. John Wiley & Sons.
Vanhaverbeke, W., 2013. Rethinking open innovation beyond the innovation funnel.
Technology Innovation Management Review, 3(4), p.6.
Zandoval Bonazzi, F.L. and Ari Zilber, M., 2014. Innovation and Business Model: a case
study about integration of Innovation Funnel and Business Model Canvas. Revista Brasileira
de Gestão de Negócios, 16(53).
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