Essence Drinks: Innovation Strategy and Commercialization Report

This report provides a comprehensive analysis of innovation and commercialization strategies for Essence Drinks, a company facing declining sales in a competitive market. The report defines innovation, contrasting it with invention, and highlights its importance for business growth. It explores the roles of organizational vision, leadership, culture, and teamwork in fostering innovation. Various sources of innovation are examined, along with the application of the 4Ps of innovation and the innovation funnel. The report delves into commercial funnels, New Product Development (NPD) processes, and the creation of an innovative business case for Essence Drinks, including funding sources. Finally, it discusses tools for protecting intellectual property and knowledge management within the organization. The report aims to provide actionable recommendations for Essence Drinks to revitalize sales and maintain a competitive edge through strategic innovation and commercialization efforts.

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Innovation and Commercialization
5/22/2019

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Contents
Introduction......................................................................................................................................2
Innovation aspects and compared with the intervention..................................................................3
Role of organization vision, leadership, culture and teamwork in innovation................................4
4P’s used in innovation and the innovation funnel..........................................................................5
Importance of commercial funnel, NPD and innovative business case...........................................7
Commercial Funnel.....................................................................................................................7
NPD.............................................................................................................................................7
Innovation business case..............................................................................................................8
Tools used to develop, retain and protect knowledge and intellectual property...........................10
Conclusion.....................................................................................................................................12
References......................................................................................................................................13

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Introduction
Innovation plays a critical role in today’s business environment as it adds value to the products
which enhances the chances to gain profitability (Schreier, Fuchs and Dahl, 2012). As per the
case in this report, the Essence drinks need to do innovation in the company to increase the sales
of the products. This company wants to produce health energy drink in different flavors. The
importance of the innovation and its comparison with the invention will be included in this
report. Organizational vision, leadership and culture role in maintaining innovation in the
organization will be also discussed. Various sources of innovation will be also included in this
report. The report includes the 4Ps of innovation and also describes the use of innovation funnel
to determine the innovative ideas along with frugal innovations. The report will be discussed
about the funnel used in commercial activities and the proper application of New Product
Development as related to the organization. Intellectual property tools used in the organizations
for the innovation will be discussed in the later section of the report. Several challenges can
come in the process of innovation to the process of overcome the challenges will be also
discussed in this report.

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Innovation aspects and compared with the intervention
Innovation is considered as way in which one is improving the existing thing or is making
significant contribution to the existing products, services or to any process. Improvement or
advancements in the products are generally done for improving the quality of the products or to
enhance its usability (Mueller and Ibert, 2015). At the same time it creates a new space for the
product by adding the value to it.
This is significantly different from invention. This is because in invention there is creation of
totally brand or device. The invented item is totally new for the market which is not in the case
of the innovation where modifications are done in the existing products only.
Basis of comparison Invention Innovation
What it is Development of a new product Adding value to the existing
product
Concept The idea is new and
previously was in theories
only.
Practical advancements in new
or existing ideas.
Skills needed Scientific skills Marketing, strategic and
technical skills
Related to Single process or product Mixture of different processes
and products
Activities Most of things are done in
research and development
cells.
All the units of organization
are involved.
The different sources of innovation
 Unexpected sources: These sources include the market place. It is one of the places
where one can look for several opportunities. Effective managers look for those
opportunities by studying the market carefully. Most of the firms take this source so as
enhance their sales by fulfilling the needs of the market with the help of their innovated
product (Mazzarol and Reboud, 2017).
 The need for process: It is the source of innovation that involves in the process of the
business like identifying the weak spots and then correcting them accordingly. This

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allows companies to increase their strength in the market and at the same time enhances
the capacity of the firm.
 Demographics: There are several changes that occur in an organization as income levels
change, human capital change, etc. (Wallace, et. al., 2016). Innovations that are done
according to the changing demographics ensure higher customer satisfaction.
 The new way of knowledge: Along with the increase of technology there is the number
of opportunities that also develops. Internet is one of the major sources of innovation. It
gives us a better way to do things in a more creative and attractive manner. With the help
of new technologies firms are able to foster the pace of innovation.
 Change in the industry and the structure of the market: there are continual changes
that take place in the market. Good firms should keep a watch on this to be more
innovative in the market. This can be last reason for any organization to follow this as a
source of innovation but still is effective as it ensures a survival of the company in the
existing competition (Vanhaverbeke and Cloodt, 2014).
Role of organization vision, leadership, culture and teamwork in
innovation
Innovation is generally influenced by several numbers of factors. Among these the role of
leadership, teamwork, organizational vision and teamwork is very much critical. Vision that is
made by the organization suggests a pathway in which company will have to move. This acts as
a torch bearer according to which innovations will have to be made (Zsarnoczky, 2016). For
instance if the organization’s vision is to improve the consumer’s satisfaction level then they will
have to improve their product quality at regular intervals for which innovation is highly required.
Leadership again has a critical role in the innovation. This can be understood in terms of the fact
that leadership provides resources and motivation to the people so that they can make innovation
(Borrás and Edquist, 2013). For example if the leadership promotes innovation at the workplace
and provides the freedom and space for everyone to work then innovation can be easily
promoted. This can be understood by the example of Apple which is leader in innovation since
their leadership gives full freedom to their employees to apply their ideas.

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Innovation culture has a critical role in the success of the organization. The organization that is
able to bring innovation culture at the workplace then there is a chance that it can bring
innovation at much faster rate. Due to culture all the resources in the organization starts to work
in the direction of innovation hence promoting new product development.
Team work is another major aspect that plays a critical role in innovation. Team work allows
everyone to put their own ideas which can be judged and then implemented. This makes the
process of innovation faster as well as it also ensures that innovations actually adds value to the
offerings (Zandoval Bonazzi and Ari Zilber, 2014).
An organization like the Essence Drink can foster and develop the environment and culture for
innovation with the help of innovation by stressing on the research work. For this they will have
to give training to the employees and at the same time they need to hire people who have
research backgrounds. Knowledge sharing culture can also promote culture of innovation.
4P’s used in innovation and the innovation funnel
The 4p’s of innovation is a model used to give the new thoughts in the organizational purpose.
4p's of innovation are discussed below-
 Paradigm- This includes the process that what we do in the business to make the
innovative. This can improve the overall strategies of the business.
 Product- This includes what the business offers to the people related to the
innovation. That means the product is made as per the innovative ideas.
Process: This includes the process that how does the business create an offering and how
the communication can be processed (Carayannis, Sindakis and Walter, 2015).
 Position- This includes to set the new targets of the products where the sales can
be easily increased.
Innovation funnel

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The innovation funnel is a type of management process and a famous approach used by many
companies to create innovative ideas. Several ideas are included in the innovation funnel. The
innovation funnel has been used in the organization to make new ideas to generate the innovative
products (Dereli, 2015).The Essence drinks need to produce new products along with the lassi so
the innovation funnel an help in gaining better position in the market.
The Essence drink wants to bring new product for which they will have come up with new idea
which can be from different sources. In this process company must ensure that maximum
numbers of stakeholders can be included. Use of different tools such as surveys, and meetings
can be conducted to take as many ideas as possible (Beard and Burger, 2017). In the next phase
of the funnel, all the gathered ideas need to be screened by Essence product developers so as to
check that whether it fits with the objectives of the company or not. If it fits with it then in the
ideas are started created tested on different parameters especially according to the business
objectives of Essence drinks. At the last stage innovation is brought so as to make the whole
offerings effective.
The concept of innovation by Frugal is the best concept that can be used by business for
innovation in the limitation of resources; such as financial, material or institutional. The
organization uses the frugal innovation for new design and development of the products that can
give better solutions to the problems (Pot, et. al., 2016). Since resource scarcity is increasing
hence Essence Drinks can utilize this innovation model to improve the sustainable growth
chances. By applying frugal innovation Essence drinks can reduce the cost of innovation by
around 70 percent and still manage to not compromise with the quality of the products that has
been developed.
The business includes several activities and functions that can easily measure. Measuring of
innovation is very difficult in the business as it includes the several strategic objectives of the
business and various perspectives of the business (Edquist, 2013). Measuring innovation is a
difficult and it includes various steps to measure the innovation. Statement of the innovation
calculation is a ration of revenue from new ideas is divided by the total average cost of ideas
implementation. The measuring of innovation increases the success of an organization.

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Importance of commercial funnel, NPD and innovative business case
Commercial Funnel
Commercial funnel is also called the purchase funnel and it is used to define the journey of the
consumer towards the product or service. Funnel includes the aim of any product to use the idea
from reality and convert it into a specific product (Pisano, 2015). Commercial funnel includes
five steps, which are opinion, awareness, consideration, and preference of the products. In the
case of Essence drinks create health drinks like mango lassi but after three years the sales of the
company have been decreased so the company needs to make some innovative drinks to increase
its profits (Ferriera, et. al., 2015).
NPD
In this process, several risks have been occurred to introduce a new drink in the market. The
starting of the product takes more time and it increases the cost of a product in the case of the
commercial funnel (Gureva, et. al., 2016). To achieve success in the market the company
follows the NPD process. This process includes the 8 steps which are:
 Making an idea: The idea to bring innovative product in the market i.e. health
drinks and provide home delivery services.
 Define the idea: The Company thinks that it will increase the sales of the product
and manage the growth of the company. In this step the idea will be screened in terms of
the fact that since the health related product’s demands are enhancing in the market hence
this product is feasible.
 Testing and the process of concept: The testing of the product will done in the
home market so as to check the response of the people and the process of concept will
include all the stakeholders of the company.
 Marketing strategy: The Company thinks to utilize digital marketing to advertise
their products. In this case, the company can make health drinks with different flavors so
that customers attract towards the product (Koskela-Huotari, et .al. 2016).
 Identification of business: It will be the business of health drinks which has an
increasing demand in the market.

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 Development of products: The development of product will be done by utilizing
technology as the base of the innovation. More focus will be on quality and meeting
product development deadline. There is requirement of maintaining the ISO 9001
certification.
 Commercialization: In this step the cited firm will have to give consistent support
to the marketing of the developed product. At the same time, it is also to be ensured that
distribution pipeline is filled with products all the time.
 Post launch review: In this process the initial trends related to the health drinks
needs to be accessed along with the fact that what are the possible changes that are
required especially in the areas such as pricing.
Innovation business case
 Mission, Vision of the company: Their mission is to become one of the best
energy drinks company in the market. On the other hand their vision is to
serve the best quality of products by continuously innovate their products.
 The target market: The major target markets are the people that are of
young age and the people that are health conscious.
 The innovative product description: Essence Drink is to provide the health
drinks to the customer and provide them home delivery. The products will be multi-
flavored energy drink available at different prices.
 The probable competitors: Some of the probable competitors include Red
Bull North America Inc., Monster Beverage Corp, Rockstar Inc. etc. are some
of the brands that can give higher competition to Essence drinks.
 Segmentation and positioning: In the segmentation they are using different
segmentation criteria for different types of segmentation. For Geographic
they are segmenting urban areas. In demographic terms they are segmenting
people between the age of 10 to 50 years in both male and female, both
bachelors and married couples are segmented. This also includes people with
both middle and low income with any kind of profession. In behavioral terms

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they are targeting both switchers and hard core loyals and people that are
both regular and non-regular energy drinkers. In psychographic terms they
have are segmenting people that both form mainstream or strugglers and
belongs to all the class in the society. They have positioned their products as
the one that gives energy in different flavors at the reasonable pricing.
 Financial performance indicators: The financial performance indicators
that can be used for this product will be Return on Investment and the profit
margins.
 Ways to access funding: The ways to access fund for this can be through
loans from banks and also from the potential investors in the project.
Estimation of the total expenditure of the company in this innovation
Expenses Cost
Expenditure if manufacturing $700
Labor expenditure $500
Raw material expenditure $ 400
Management expenditure $ 600
Marketing expenditure $ 300
Total $2500
The evaluation of the effectiveness needs to be done with the help of monitoring process. For
this most appropriate technique that is able to test, iterate and improve is the profits that are
generated by the company along with the customer satisfaction. This must be measured through
taking feedbacks from the people about the product and hence making improvement accordingly
(Labunska, Petrova and Prokopishyna, 2017).

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Tools used to develop, retain and protect knowledge and intellectual
property
There are many tools that are used to develop, retain and intellectual property of the
organizations and implement the better innovation in the business. The Essence drinks can use
three fundamental tools.
 Copyright- In case of some creative works related to the computer programs, arts the
copyright is used which is a bunch of rights, and no one can access them (Witell, et. al.,
2016). The copyright is given only to the owner. Essence Drinks can utilize copyright for
the purpose of safeguarding the formulae on the basis of which products are being
developed. It benefits the organization as provides rights to reproduce and right to
authorize their products. Its disadvantage is that it restricts from sharing work and the
same time there is no provision for parody by any other company.
 Trademark- Trademark is a specific source includes an expression, design or sign to
identify the product and service. The trademark includes a logo or brand or caption or
tagline. This will ensure that products will be under certain brand logo and hence
authenticate the quality. Its advantage is that it gives the Essence Drink’s trust behind the
product hence increases the chances of sales. On the other hand its disadvantage is that it
is used by other firms to by just slightly changing to trademark to look similar. This is
threat to the company’s profits (Christensen, Raynor and McDonald, 2015).
 Patent- Patent is used in an invention which is the property right of the inventor and no
one can access this invention. Its advantage for Essence drink is that it improves the
competitive advantage chances over the rivals. Its disadvantage is that the getting a patent
is a time consuming process.
The innovation is the application to provide better solutions in the increasing of the market, meet
the new requirements of the business, and fulfill the market needs in the organization (Mollick
and Robb, 2016). Innovation can be maintained by technology and competition. The business
uses the new way of thinking and also use the internal sources in making the products innovative
so that customer attracts towards the organizational products (Martin, 2013).Essence Drinks uses
the new concept of innovation that is the new way of thinking by making different drinks
including different flavors. This nature can make proper growth in the market and improves the

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profitability of the business. Innovation can implement better solutions and this can improve the
overall concept of the business.
Several challenges affect the organization for innovation. Some of them are:
 Lack of diversity
 Lack of collaboration
 Lack of employee motivation
 Lack of proper strategy of innovation
 Lack of proper methods used in the innovation of business
To overcome the challenges various methods are:-
 Maintain the system of diversity and make the products innovative so that
customer attracts towards the organization.
 The organization needs to collaborate with the customers and employees to gather
new ideas and also for different phases of innovation (Lipkova and Braga, 2016).
 The organization needs to maintain the motivation of the employees by providing
them a comfortable environment so that they can make the innovative products in
the business.
 The organization needs to use the innovation strategy properly in the organization
so that the products become innovative and increase the attraction of the
customers.
 The organization needs to use the proper methods of the organization so that
better management can be attained and increase the innovation of the business.