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...Read More

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.

RISK ANALYSIS
The product development process is always associated with certain
kinds of risks such as:
• The new product may not be in accordance with the customer’s
needs and demands. Therefore businesses need to aware of the
changes in the needs of their customers.
• Operational risks and technical hurdles might be involved in the
product development process that needs to be taken care by the
Company.
• Financial risks associated with the new product development.
Therefore, budget for different parts of the project should be
selected in advance.

RISK ANALYSIS CONTINUE…..
• If the company sticks to only one single development plan, it might lose
other better opportunities for its business. For this, the company needs
to perform regular testing in order to add beneficial features so as to
increase the value of the product.
• Time constraints associated with the product development plan. The
project might start very soon or shall take longer. For this, Essence
Drinks needs to set a time table so as to not rush into the things.

VALUE ANALYSIS USING FRUGAL INNOVATION
Frugal Innovation deals with the delivering of all the essential features and the removal of all
non-essential features of the product so as to reduce the complexity and making it affordable
for the low-income market segments. The following factors needs to be considered :
• Understand the potential customers and their needs.
• Understand where the real problem lies and then make any changes to the existing product.
• The main objective should be remembered so as to come up with a simple, less complex,
affordable solution that can have a huge impact on the customers and the market.
• Key driver is Empathy.
• Affordable design and products for the population.

TESTING THE EFFECTIVENESS OF THE NEW PRODUCT
• Working with the small group of customers in order to have their
feedback about the product. This is form of beta testing.
• The company can done a regional launch of a product before the official
launch of the product. This will help in analysing how a product will do
in regional market and how capable are the marketing strategies.
• By increasing awareness about the product by communicating with the
customers about the benefits of the products.
• By communicating about how to buy products and from where.
• By evaluating distribution channels.
• By evaluating the response of the competitors in the market.
• Obtain high volume of information by conducting online test.

PROTECTING INTELLECTUAL PROPERTY

INTELLECTUAL PROPERTY:
What is Intellectual property?
Intellectual Property is the creation of minds of a particular organization
or we can say that the ideas or products which are owned by a particular
organization.

TOOLS FOR PROTECTING INTELLECTUAL PROPERTY
Copyrights
The right to reproduce the work done is Copyrights. The owner of the
copyrights is considered to be the original work and therefore have the
rights to give others the license to use the work in limited ways.
Trademarks:
The sign or mark used by the company in order to distinguish its products
and services from others is Trade-mark.
Patents:
Patent refers to the limited right granted to the inventor by the
government for 20 years so as to use, buy or sell the invention to anyone
and anywhere.

REFERENCES
▪ Bessant, J., & Tidd, J., 2015. Innovation and Entrepreneurship. Oxford Wiley.
▪ Business Case Studies, 2018. Staying ahead by meeting changing consumer needs. [Online]
Business Case Studies. Available at:
https://businesscasestudies.co.uk/heinz/staying-ahead-by-meeting-changing-consumer-needs/new
-product-development.html
[Accessed: 28 May 2018]
▪ Info Entrepreneurs, 2018. Use Innovation to grow your business. [Online] Info Entrepreneurs.
Available at: http://www.infoentrepreneurs.org/en/guides/use-innovation-to-grow-your-business/
[Accessed: 28 May 2018]
▪ Matthews, C., & Bruggemann, R., 2015. Innovation and Entrepreneurship: A competency
Framework. Routledge London.
▪ Pierre, 2014. Frugal Innovation, Definition and Practical Examples. [Online] Idex Lab Blog. Available
at: https://www.idexlab.com/blog/frugal-innovation [Accessed: 28 May 2018]
▪ Trott, P., 2012. Innovation Management and New Product development. Harlow Pearson.
▪ Valikangas, L., & Gibbert, M., 2015. Strategic Innovation: The definitive guide to outlier strategies.
Pearson FT Press.

THANK YOU