Product Innovation Strategy: A Case Study of Essence Drinks Company

This case study examines Essence Drinks, a company founded two years ago that initially achieved success with its Mango Lassi product. The study highlights the challenges the company faced when competitors introduced similar products, leading to decreased sales. It explores the company's approach to idea generation, screening, scoping (market, technical, and financial assessments), and the use of a commercial funnel. The analysis includes a discussion of risk analysis in product development, the application of frugal innovation for value analysis, and methods for testing the effectiveness of new products. Furthermore, it emphasizes the importance of protecting intellectual property through copyrights, trademarks, and patents. The case study references various sources related to innovation, entrepreneurship, and market strategy.

BUSINESS CASE FOR
ESSENCE DRINKS

COMPANY BACKGROUND
 The company named Essence Drinks was founded by Mr. Akshay Kumar two
years ago.
 The company Essence Drink was initially launched with only one product i.e.
Mango Lassi.
 Due to kits innovative formula, the company achieved huge success in its
initial year.
 The distribution capability of the company made it possible for it to achieve
huge benefits during its first year in UK market.

ISSUES IN THE CURRENT SCENARIO
Due to its innovative formula in the form of Mango Lassi, the Essence
Drinks achieved great success during its first year of operation. However,
soon the competitors also introduced the same formula at competitive
prices in the market and therefore, the sales of the company eventually
got decreased by its third year of trading. The founder of company, Mr
Akshay Kumar wants to come up with the innovative products but do not
want to go away from Lassi’s as it was the first innovative product of the
company.

IDEA GENERATION
 Idea generation is the most challenging and rewarding job.
 After analysing the problem, the solution must be found by generating
several ideas.
 Opportunities for the ideas should be identified by analysing the needs
and requirements of the customers.
 The ideas should be generated keeping in minds the unmet needs of the
customers.
 The main elements of this process are managers or employees who
generate the ideas and the customers and competition based on which
ideas are generated.

IDEA SCREENING
Objective:
• To check the feasibility and future viability of the various ideas
generated.
Winning Criteria:
• Idea’s alignment with the product innovation strategy
• Compatibility degree with the company’s values and principles.
• Market attractiveness
• Project Feasibility
• Advantage over other ideas

The following questions needs to be answered in order to evaluate the ideas:
• What unique and new does the product offers?
• What is different in the product that will appeal the customers?
• Is the idea more superior in comparison to other ideas?
• Does the ideas has the competitive advantage?
• How much longevity does your product have?
• What are the opportunities in the market for your product?

SCOPING
Market Assessment:
• Assess the attractiveness of the market by having an idea about its size,
distribution channels etc.
• Based on the needs of the customers, estimate the possible acceptance
of the product.
• Identify the competitors and their size in the market and their offerings.
In order to do the market assessment information can be collected from
following sources:
• Employees
• Internet Research

• Internal Data
• Lead users and consumers
• Partners
• Consulting and Research Firms
• Competitor’s Advertisements
• Industry Experts
• Trade Associations

Technical Assessment:
In order to assess the technical feasibility and performance objectives,
following questions needs to be considered:
• What are the product requirements and the product specifications?
• Do the firm has technical capability so as to produce the product?
• What are the resources required in order to produce the product?
• What are the technical risks involved in the project?
• What are the intellectual property issues involved and the other
regulatory issues related to the product?
• What are the cost and time constraints involved in producing the
product?

Financial Assessment:
• Strategic and competitive rationale for the product.
• Financial Analysis by identifying the expected sales, cash flow, Cost
required, investment required and the payback period.
• In order to move ahead, the basic knowledge of the above questions is
very important in order to check the financial feasibility of the product.

COMMERCIAL FUNNEL
Commercial funnel is of great importance for the business organizations as
it is considered as the medium through which business sells its products as
well as services in the market.
Matching goals to funding resources
Types of Funding sources:
• Bank Loans: Bank Loans can be a useful resource for the company in
order to get funds.
• Angel Investors: Angel Investors are those who have huge money and
can provide funds to the company in exchange for a share in business’s
equity.
• Venture Capital: Investors who invests large amount of money in the
company in exchange for share in the business equity and gets returns.