Innovation and Commercialisation: A Report on YOYO Drinks

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Innovation and Commercialisation
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Table of Contents
Introduction......................................................................................................................................3
Part A...............................................................................................................................................4
Part B.............................................................................................................................................13
Conclusion.....................................................................................................................................18
Reference list.................................................................................................................................19
Appendix 1.....................................................................................................................................21
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Introduction
In the present scenario, innovation plays a crucial role because it develops a niche in the market.
In addition to that, innovation gives rise to creative thinking among members of management so
that they can produce innovative goods and services in the market. Innovation is considered as
solutions to meet the requirements of customers. In order to innovate new products and service
members of management need to gather quality raw materials. Innovations assist business firms
in improving quality of present products and services so that their competitive position can be
fathomed. The study aims at analysing the importance of innovation within business
environment of YOYO Drinks. Furthermore, to project roles of innovation within business
environment YoYo drinks has been selected.
Further, in the study, the difference between innovation and invention will be projected so that
deeper insights can be gained. Additionally, the importance of innovation within business firm
will also be highlighted in the study. Further, steps of innovation are focused along with their
approaches. In the final stage, application of New Product Development will be highlighted
along with the concept of frugal innovation.
Company overview
YoYO drinks has been launched in the UK market in the year 2016. Additionally, profit margin
of the business firm has moved in upward direction because of quality products. Initially, the
marketing department of the firm produced one product. Therefore, in the fourth year earning of
the venture has witnessed a deficit. However, higher officials of YOYO drinks have decided to
launch organic Energy drink among their targeted customers in order to overcome profit deficit.
Figure 1: YoYo Drinks
(Source: Taken from the support)
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Part A
1. Explanation of the innovation and how it is different from invention.
As asserted by Holmström (2018), innovation is a process that includes activities so that new
products and services can be launched in the market. It also helps to improve the quality of
existing products and services so that customer’s base can be strengthened. As opined by (),
innovation creates opportunities for business firm so that they can withstand market competition.
For instance, management of YoYo drink has decided to launch organic energy drink so that
their targeted customers can live a healthy life. Thus, it is evident that the newly launched
products must fulfil the needs of customers. After launching new products in the market,
accurate information must be provided to targeted customers so that they can analyse its benefits
and challenges. The difference between innovation and invention has been mentioned below:
Unlike invention, in innovation new features can be implemented within the existing products so
that its desire among targeted customers can be improved. As argued by Hossain (2016), through
invention only new services and products can be launched within market. Additionally, through
invention unique products are created so that new customers can be attracted towards the
business firm. However, in innovation new ideas are applied on existing products and services.
In invention, original ideas are infused with theories. On the other hand, in innovation new ideas
are implemented practically. As asserted by Ian (2015), through invention only one product can
be launched within market. However, innovation can bring changes within multiple products. At
the time of inventing new products only members of R&D are involved. However, in case of
innovation, all the members of business venture are involved.
The case of YoYo drinks is termed as invention because they are launching a complete new
energy drink in the market.
Figure 2: Difference between innovation and invention
(Source: Created by the learner)
2. Discuss the value and importance of innovation to organizations and explain how these
can turn a company into a more profitable one.
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The value and importance of innovation with organisations have been discussed below:
Product variety
As per the literary underpinnings of Kralisch et al. (2018), innovation enhances variety of
products so that volume of production can be fathomed. For instance, YoYo drinks have
launched a plethora of fruit drinks so that they can serve maximum customers.
Quality enhancement
As asserted by Martin et al. (2015), through innovation new features can be added to existing
products and services so that customer satisfaction can be maximised. Moreover, through
innovation product line can be improved to boost revenue earning of business firm. For instance,
management of YoYo Drink has decided to invent energy drink in order to improve their
beverage line. However, management of organisations fail to innovate products due to lack of
capital investment. In order to innovate products and services management need to cater the
needs of customers so that rate of profitability can be fathomed.
In order to boost profitability of business ventures management need to innovate products and
services on a regular basis in order to improve customer base Neumann et al. (2017), has
mentioned that strong customer base helps to improve competitive advantage of the organisation
in the market. For instance, CEO of YoYo drinks has decided to launch organic energy drink so
that their product line can be improved. However, it has been noted that earning of YoYo drinks
has witnessed a downfall due to intense competition among competitors. Thus, to stable
organisational position in the UK market, management of Yo Yo drink has decided to implement
innovation on regular basis.
Figure 3: Importance of innovation
(Source: Created by the learner)
3. Provide an overview of the different types of innovation with a focus on disruptive and
incremental innovation, and explore the pros and cons of each approach.
Different types of innovation have been discussed below:
Incremental innovation
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Incremental innovation is commonly used within organisations because it involves existing
technology in order to reduce overall expenditure of business firm. Moreover, existing
technology can be used for innovating designs and features. Furthermore, incremental innovation
can be exchanged within business venture so that customers’ value can be uplifted. For instance,
at the time of launching organic health drink incremental innovation can be used in order to
reduce overall expenditure of the venture. The management of YoYo Drink can use existing
technology in launching the health drink so that all employees can be indulged in the innovation
process.
Disruptive innovation
As opined by Rehm et al. (2015), Disruptive innovation is been implemented within
organisations because they use new technologies. However, Vanhaverbeke et al. (2017) has
mentioned that overall expenditure of business firms are increased after implementing disruptive
innovation. After implementing disruptive innovation within business, firm digital divide can be
created because not all employees have equal capacity to handle new technologies.
Architectural innovation
The concerned innovation technique can be used in different market area so that product variety
can be boosted. This form of innovation helps to attract new customers towards the venture.
However, architectural innovation is most commonly used in medical organisations due to their
high expenditure. Risk involvement in architectural innovation is low due to reliance and
reintroduction of technology.
Radical innovation
Application of radical innovation is very rate in market scenario because it gives birth to new
industry or sollows the existing one. In order to implement radical innovation revolutionary
technology is being used to maintain product uniqueness. For instance, Radical innovation is
being implemented within the aviation industry.
Advantages and disadvantages of Disruptive innovation and Incremental innovation have
been discussed below:
Advantages of Incremental innovation
● It enhances utilisation of existing technology so that quality of products and services can
be uplifted
● It reduces overall expenditure of organisations because no new technologies are being
involved in product innovation (Winterhalter et al. 2017).
Challenges of incremental innovation have been discussed below:
● Digital divide can be created among employees because their capacity of using new
technology varies. Thus, employee turnover rate can be increased.
● It fails to analyse market conditions thus, taste and preference of customers may not be
fulfilled.
Advantages of Disruptive innovation have been discussed below:
● Variety of products produced by ventures may be boosted because management uses new
technology while innovating new products and services.
● Large volume of products and services can be launched within the market during a short
span of time.
Disadvantages of Disruptive innovation have been discussed below:
● It increases overall expenditure of ventures because new technologies are being adapted
while improving product quality.
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● Like incremental innovation it also causes digital divide among employees due to
technological lack backs
● New technology may be inferior in quality as compared to existing technology
● The management of business firms may need a longer time to implement new technology
due to infrastructural issues.
Advantages and disadvantages of Architectural innovation have been discussed below:
Advantages of architectural innovation
● In architectural innovation, employees are trained by management of organisations so
that they can use new technology while innovating products and services
● It helps to increase customer base in the market because they are respective
Involvement of risk is low in architectural innovation because it is based on reintroduction of
proven technology and reliance (Zandoval Bonazzi and Ari Zilber, 2014).
Challenges of architectural innovation have been discussed below:
● It increases overall expenditure of business ventures therefore budgets need to be
prepared beforehand.
● The employees fail to implement the concerned type of innovation within venture due to
lack of knowledge
The advantages and disadvantages of radical innovation have been discussed below:
Advantages of radical innovation
● It expands market because new industry can be launched within it.
● It creates revolutionary technology so that innovation can take place smoothly
Disadvantages
● However, it swallows existing industry
Figure 4: Forms of innovation
(Source: infoentrepreneurs.org, 2019)
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4. Explain the 4Ps of innovation and how this supports capability and management of
innovation. Advise the company which form of innovation they should engage in.
As per the comment of the scholar, innovation mix focuses on the importance of product
innovation so that competitive position of business firm can be fathomed. However,
organisations fail to innovate new products in the market because they lack in funds. Thus, rate
of investment also witness a downfall. At the time of innovating new service customers
preference can be analysed so that their satisfaction level can be catered. The factors included in
innovation mix have been mentioned below:
Figure 5: Innovation Mix
(Source: Created by the learner)
Paradigm
The organic health drinks can boost profitability of the organisation if targeted customers are
accepting them. Moreover, competitive position of the venture cam also witnesses a rise if the
new products fulfil taste of targeted customers. At the time of fixing the price of the health drink,
financial analysis needs to be engaged in so that price offered by YoYo drinks is less than its
competitors are. Moreover, management of YoYo drinks need to analyse their competitors so
that their product lines and suppliers can be predicted. However, the management need to change
their own product line, needs of customers and suppliers so that their position in the market can
be secured (innovationmanagement.se, 2019).
Products
The product innovation needs to be implemented as per the need of targeted customers. For
instance, management of YoYo drinks need to engage customers’ preference so that the health
drinks can be distributed among the right customers. The management of YoYo drinks is
engaged in upgrading their beverage line so that sales forecast of firm can be upgraded.
Position
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The position of the organic health drink can be strengthened in the market by engaging effective
marketing tools such as Social media and website. For example, the marketing department of
YoYo drinks can create an organisational page on social media platforms such as Facebook and
Twitter so that users of social media can come to know about the product. Further, tetra packs of
the health drink will be distributed in shopping complex so that the product can be reached,
maximum customers. Customers discount can also help to position the product in the market.
Process
At the time of launching health drink in the market, management of YoYo drinks can engage
themselves in market survey to point preference level of customers. They also need to engage
themselves in checking services offered by competitors. YoYo drinks can use modern
technology like the one frozen corridors so that longevity of the product can be improved.
5. Discuss how New Product development (NPD) processes and innovation funnel can be
usedby the company to drive new innovative ideas/products to market.
The steps of new product development have been discussed below:
Idea generation
The management of YoYo Drinks need to interact to higher authority and employees so that they
can get an idea regarding product innovation. The idea generation can take place through market
analysis.
Idea screening
After generating the ideas the advantages and disadvantages of new product is being chalked out.
Concept development
The importance of innovation needs to be explained to the employees and management in order
to innovate products.
Marketing strategy
The innovated products need to promoted among targeted customers through social media
channels
Business analysis
The profitability of business depends upon the success rate of the product after launching it in the
market.
Product development
The product will be developed by analysing the test and preference of the customers
Test marketing
The sale of the product needs to be calculated in order to analyse the effectiveness of marketing.
Commercialisation
After testing the usage of product, it is released in the market.
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Figure 6: Product development process
(Source: Created by the learner)
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Figure 7: Innovation Funnel
(Source: Zandoval Bonazzi et al., 2014)
In the mouth of the funnel, idea of innovation is generated. In the mouth of funnel information of
products are being gathered. In narrowing of the funnel, activities of innovation are screened so
that quality of products can be boosted. The last part of the funnel states those innovative
products need to fulfil the objective of business venture.
6. Analyse what is meant by frugal innovation and provide examples of how organisations
are using it. Also, make recommendations on how the company can benefit from this
concept.
Frugal innovation can be defined as ability for generating more business by reducing significant
amount of wastage by using scarce resources. The main ideology lies in “doing more with less”
theory (Radjou and Prabhu, 2015). In a world where customers are cost conscious and eco aware,
frugal innovation is unavoidable. Yoyo drink has been using frugal innovation for a long time.
They initially launched a single product, which gave them many financial benefits. This is
because the product they launched had appeal in mass market. Yoyo has found out basic
requirement of people and their expectation from a drink. They have removed unnecessary
features from the drink. This made their drink good but the price became less. They found out
that people do not like artificial flavours in their drink. Most companies were using flavours,
which were not natural. This gave them a chance to include natural flavours and they added
fruits inside their drinks. They found good suppliers of fruits such as mango, apple, oranges,
which bridged their gap in supply chain. Many raw materials were previously unused and they
used these materials to make their products. This decreased their operational cost at huge level
and as a result, their product price became lower.
Frugal innovation can benefit the company in major way. In a country where there is lacklustre
growth, it will be vital for reducing debts. Demands of frugal innovation will be high in
developed countries. Yoyo drink can deal with many environmental constraints. Lack of natural
resources is a serious global issue and therefore they have to save resources by recycling. This
will not only save their production cost for each new product but will develop their image in
society. Customers tend to support companies, which are contributing to the welfare of
environment. Therefore, frugal innovation should be continued in this organisation to make
positive impacts. This kind of innovation does not makes their products cheap, rather it will give
them an alternate route to make products, which can be defined as affordable excellence. Raw
materials, which were wasted previously, can be used by this method and Yoyo drink will not
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have to purchase it for making bottles. This will shrink their production cost and profit will be
higher from their sales (Bhatti et al., 2018).
This type of innovation will give them an opportunity to eliminate characteristics of their drinks,
which are not required by consumers. Therefore, they will not have to add those features in their
drinks, which will cut production costs. Frugal innovation will give them opportunity to study
customers regarding their choice in drinks. They will be able to offer something extra, which
other companies are not giving. Therefore, their market share can increase from this and business
will be sustained. Therefore, it is recommended for Yoyo drink to use frugal innovation to
innovate new drinks (Khan, 2016).
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