Hypothesis Ashish Kaushik

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    SYMBIOSIS INSTITUTE OF

    MANAGEMENT STUDIES

    HYPOTHESIS ON:TodayInnovation and corporate social responsibility

    (CSR) drives growth in new product launch and

    consumer products industry.

    Under the guidance of Prof. V. V. Ramasastry

    RESEARCH PAPER :- 1

    SUBMITTED BY:DATE:19/01/2009

    ASHISH KAUSHIKMARKS:

    CLASS 1-A

    COMMENTS:

    ROLL NO. 08

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    Introduction

    Consumer products companies are under increasing pressure to reduce

    time-to-market and the cost of introducing new products. As product

    lifecycles continue to decrease, compressing development cycles and

    accelerating new product introductions are becoming critical. Product

    complexity is also increasing substantially, making development and

    product introduction even more challenging. This report presents the

    challenges the Consumer product industry is facing, as increased

    complexities in the competitive environment are forcing shorter product

    lifecycles and increasing cost pressures. It evaluates the impact that these

    complexities have on the product development process and focuses on a

    few recommendations that Consumer product executives should consider

    to reduce their time-to-market and increase their return on investment for

    new product introductions. This report is based on the challenges and

    leading management practices associated with bringing new products and

    services to market successfully and profitably. Leading consumer products

    companies agree that the key to driving top-line growth is innovation.

    Every consumer goods company is pursuing growth. As such,

    effective innovation represents one of the greatest challenges.

    To be truly effective you need to be able to create and execute

    great new ideas, while protecting and developing the core

    business at the same time

    Alan Harris CMO, Kellogg

    The present world is the customer oriented world. Here the customer is

    the king and its the fundamental duty of any company or organization to

    provide the customers the satisfaction which the customers want. In a

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    nutshell, the organizational pyramid has just been inverted with the

    customers and consumers on the top.

    According to the marketing guru, Mr. Peter F Drucker, marketing and

    innovation are the only two mantras of success in the present business

    environment. In the present market scenario, the competition is so fierce

    that the need gap is narrowing very fast. The competitors are trying their

    best to get ahead of others either by price warfare or by technological

    enhancement in the existing product or by introducing completely new

    product. As Peter F Drucker said, in addition to the 4 fundament Ps of

    marketing i.e., Product, Price, Place & Promotion, PACE is the fifth P

    added to this list, especially in case of the launch of a new product.

    To ensure the success of the new product not only innovation but the

    pace in the development of the new and innovative product is also

    necessary. It is true that always innovation is not necessary, but it is also

    true that without innovation the company cannot grow and go ahead of

    the competitors. Without innovation, the company can fight only in the

    price front. Innovation is not just a clicked idea in the mind of a worker

    and is immediately converted into the reality, but it is a very long process

    which requires funds, patience and an extensive market research. This

    takes long time. And due to the internal and external raw material supply

    chain management, there is some delay in the project. This is one of the

    crucial parts of any companys new venture. The marketing oriented

    organizations are those organizations which never differentiate in what

    have they said and what they are doing, but in specific time frame.

    The importance of being first to market is discussed extensively in

    various sources. Besides the instinctive idea that it is best to be first,

    other measurable benefits are possible for those that get to the market

    sooner with innovative products and services:

    Increased sales through longer sales life The earlier the product

    reaches the market, relative to the competition, the longer its life can be.

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    Increased margins The more innovative the product (that is, the

    longer it remains on the market with little or no competition), the longer

    consumers will pay a premium purchase price.

    Increased product loyalty Getting the first opportunity to attractcustomers, especially early adopters, offers an advantage in terms of

    customer loyalty; customers will most likely upgrade, customize or

    purchase companion products.

    More resale opportunities For components, commodities or

    products that other companies can private-label, being first to market can

    often help ensure sales in other channels.

    Greater market responsiveness The faster companies can bring

    products to market that satisfy new or changing customer needs, the

    greater the opportunity to capitalize on those products for margin lift and

    to increase brand recognition.

    A sustained leadership position Unlike best-selling, fastestor other

    superlative market positions, firstis the market position a competitor

    cannot take away. And repeated firsts establish companies as innovators

    and leaders in the market.

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    Clearly, quick product introduction is a competitive differentiator.

    Accelerating time-to-market supports achievement of just about every

    primary design, sales and marketing goal a company has (or should have)

    in todays increasingly competitive, increasingly global marketplace. And

    the challenge facing manufacturing organizations today is to continually

    accelerate time-to market, while reducing development costs.

    Successful innovation: The perfect product launch

    Successful innovation has become a key driver for revenue growth,

    competitive margins and, in some cases, even survival. The ability to

    bring this innovation to market quickly, efficiently and ahead of

    competition is becoming increasingly important. An efficient product

    launch requires integration and coordination among multiple functional

    areas, including product design, procurement, planning,

    manufacturing/process and sales and marketing. In addition, as

    organizations increasingly leverage core capabilities of other companies,

    innovation has to be delivered through virtual networks, working with

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    partners in a collaborative environment to bring product and services to

    market faster, smarter and cheaper. Consequently, organizations now not

    only need to integrate internally, but also externally with suppliers and

    customers, creating end-to-end supply chain processes and capabilitieswhich differentiate on product and customer requirements.

    Strategies for success

    Launching products and services that best fit customer requirements is

    clearly the top strategy for new product development. Lower introduction

    costs and first-to-market strategies pale in comparison to bringing

    innovative products to market that meet customers wants and needs (see

    Figure 3).

    In accordance with the primary strategy, correct identification of

    customer needs is the most significant challenge for new product

    development efforts for over half of the Consumer product respondents in

    the Value Chain Study, directly followed by remaining competitive (see

    Figure 4).

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    Though best fit customer requirements and correct identification of

    customer needs are Strategies for success but innovation cannot be left

    behind as if you innovate without keeping in mind the customer needs

    and wants then your product will not be a success, no matter how much

    innovative your product is in the market, example: elephantine.

    Below mentioned are various examples to prove and support

    thatInnovation drives growth in the consumer products

    industry and every company is driving towards innovation.

    Apple iPhone

    Innovation: Gee-whiz touch-screen interface and spartan case dial up a

    mobile revolution.

    Benefit: Mac os -simple software offering slide-and-glide access to bright,

    colorful menus sets this cell phone apart from its rivals. The $399 iPhone

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    has taken some criticism for its shortcomings, mainly its lack of 3G

    connectivity, but you can't deny that the sleek handset is innovative.

    Apple made navigating via a touch screen--sure to be a staple in future

    PDA phones and other small devices--intuitive and fun. iPhone's Safaribrowser makes the handset a great mobile Web device (at least when you

    can get a Wi-Fi connection.) And, sure, many phones play music, but

    Cover Flow cranks the iPhone up to 11 as a music player.

    Amazon Kindle

    Innovation: Device takes the e-book to the next level with free EvDO

    connectivity.

    Benefit: Tight integration with Amazon's bookselling site; thoughtfuldesign. Electronic-book readers are not new, and Sony's experience withits Reader shows that sales are not guaranteed. But with its Kindle reader($400), Amazon has brought the e-book into the connected age by

    including free EvDO wireless connectivity to the e-commerce giant.

    IO Gear Wireless USB Hub and Adapter

    http://www.pcworld.com/article/id,133639/article.htmlhttp://www.pcworld.com/tags/Apple+Safari.htmlhttp://www.pcworld.com/tags/Apple+Safari.htmlhttp://www.pcworld.com/tags/Sony+Corporation.htmlhttp://www.pcworld.com/article/id,139829/article.htmlhttp://www.pcworld.com/zoom?id=140663&page=1&zoomIdx=5http://www.pcworld.com/tags/Apple+Safari.htmlhttp://www.pcworld.com/tags/Apple+Safari.htmlhttp://www.pcworld.com/tags/Sony+Corporation.htmlhttp://www.pcworld.com/article/id,139829/article.htmlhttp://www.pcworld.com/article/id,133639/article.html
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    Innovation: USB-speed connections without cable spaghetti.

    Benefit: Presents none of the flakiness and proprietary technology that

    hobbled previous wireless USB products.

    IO Gear's hub and adapter are based on an industry standard that should

    soon be built into laptops and other devices. Setting up IOGear's Wireless

    USB Hub and Adapter ($160) was tricky, but once we had everything

    arranged, our data flew, thanks to its streaming, HD-capable, 250-

    megabits-per-second throughput. Wireless USB will become more

    versatile once it's built into devices.

    Kodak EasyShare All-In-One Printers

    Innovation: The printers are slightly more expensive, but their ink is

    priced more like the no- name stuff advertised around the Web.

    .

    http://www.pcworld.com/article/id,138190/article.htmlhttp://www.pcworld.com/article/id,138190/article.htmlhttp://www.pcworld.com/zoom?id=140663&page=5&zoomIdx=3http://www.pcworld.com/zoom?id=140663&page=4&zoomIdx=3http://www.pcworld.com/article/id,138190/article.htmlhttp://www.pcworld.com/article/id,138190/article.html
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    Benefit: You can print cheaply without worrying that the cartridge will

    burst all over your printer. Kodak's midlevel EasyShare printers (from

    $150) may be a bit pricier at first. But when you combine one with the

    company's paper-and-ink packs, you can print photos for as little as 10cents each (according to Kodak)--about half the industry average. The

    printer's pigment-ink system uses one black-ink cartridge and one five-ink

    tank; replacing them with non-photo-specific inks directly from Kodak

    costs just $10 and $15, respectively. We think most people will appreciate

    the benefit of having one source for affordable, reliable replacement ink

    cartridges.

    Bajaj Pulsar, DTSi and its variants

    Bajaj pulsar DTSi is one of the best examples for the pace and innovation

    in the new product. DTSi was the one of its own kind of technology used

    by Bajaj which means Digital Twin Spark Ignition which enhances the

    mileage of the bike and also increases the speed pick up and

    performance. Going back to the history, when Hero Honda CBZ was in the

    market, Bajaj launched its product Pulsar in competition of CBZ in very

    short time. Its ultimate physical appeal immediately gained popularity.

    Then after that within 2 years, Bajaj came up DTS i model of pulsar.

    Here are some of the innovations in Pulsar:

    1. The Pulsar motorcycle variety, just like any other Indian motorcycle

    in early 2000s, implements an air-cooled, single cylinder, gasoline

    powered, spark-ignited four-stroke engine. The early product

    offerings under the Pulsar brand name featured a single spark plug

    to ignite the air-fuel mixture fed from a carburetor, simple spring

    damper shock absorbers, round headlamp dome and a short

    wheelbase.

    http://www.pcworld.com/article/id,131888-page,1-c,printers/article.htmlhttp://www.pcworld.com/tags/Eastman+Kodak+Company.htmlhttp://www.pcworld.com/article/id,131888-page,1-c,printers/article.htmlhttp://www.pcworld.com/tags/Eastman+Kodak+Company.html
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    2. DTSi - a second generation Pulsar feature: Bajaj Auto decided

    to upgrade a few components on the motorbike and rolled out the

    second generation Pulsar twins. They would feature Bajaj Auto's so

    called "DTSi" technology. Bajaj Auto claims that they are in theprocess of obtaining a patent for DTSi.

    3. ExhausTEC - a second generation Pulsar feature: The second

    version Pulsars also featured "ExhausTEC" systems. Similar to DTSi,

    Bajaj Auto is in the process of obtaining a patent for this technology.

    ExhausTEC stands for Exhaust Torque Expansion Chamber. The

    design of engine exhaust system, as per Bajaj's claims on their

    website, improves torque delivery at low engine speeds.

    Eco-Design of Products(CSR)

    Eco-design means starting off right: Creating products out of

    environmentally friendly materials, using efficient designs that require

    fewer materials, and maximizing reusability and recyclability. Some

    practices in the consumer electronics industry already bring about the

    result of lower environmental impact. Some of the examples of the

    companies who have innovated in its product are:-

    Seiko Epson takes into account the entire life cycle of its printers and

    other products while they are still in the design phase, earning the

    company 13 eco-design awards in two years. For instance, it has created

    its own database of the environmental impacts of chemicals, established

    quantitative metrics of businesses impact on society, and designed its

    own labelling system called Eco Leaf. Epson makes its packaging out of

    trees specifically grown for that purpose, and plants 20% more trees than

    are consumed. Each product comes with a full Ecology Profile that

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    includes recycling information about every component. Printer product

    components are also 85% recoverable.

    The European Unions Restriction of Hazardous Substances (RoHS)

    directive went into effect in July 2006, limiting the usage of five classes of

    materials. Even prior to this directive, Nokia had decided to voluntarily

    omit certain compounds from its products because their safety to human

    health and the environment was in question. Nokias design-for-environment engineers worked with the environmental department to

    remove about 225 additional substances from the companys products.

    In a brilliant example of the cycle of value, Lenovo is driving the use of

    post-consumer recycled material in its products. This recycled material is

    designed inmeaning that the company moves from this fifth

    sustainability practice back the first! And the cycle repeats.

    Lenovos EPEAT Gold monitors have over 25% recycled material in them,

    and this is increasing with the design of each new product. All of Lenovos

    product lines use recycled plastic and metals; the gold, silver and other

    precious metals are recovered from end-of-life products. Using specifically

    postconsumer material has become a keen focus this year for Lenovo and

    is an effective differentiator in the market for the company.

    Energy Efficiency of Products(CSR)

    Products designed to be energy-efficient use less electricity from outlets

    or run longer before needing recharging or new batteries. This efficiency

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    reduces greenhouse gas emissions and hazardous waste and saves

    money. As there is increasing awareness of the consumers companies

    have to innovate newer products to meet the requirements of the

    consumers so as to be in the market and increase their success andprofits.

    Intels new microprocessors use nearly 10 times less power than models

    from just 18 months ago. The Core 2 Duo processor uses 40% less

    energy to do 40% more work than the previous Pentium processor. The

    total energy savings from all the Core 2 Duo products in the marketplace

    is equivalent to taking millions of cars off the road. And the newer Xeon

    processor gives another 3560% efficiency gain over previous products.

    Intel also works to improve the energy efficiency of business data centres,

    which combine many processors.

    Its Eco-Rack design reduces power consumption by 1618%, which, if it

    were used by all servers and data centres in the United States, would save

    the equivalent of the energy used by 986,000 homes. Each Eco-Racksaves about $44,000 in electricity costs. Intel provides employee

    incentives for innovations in energy efficiency: Bonuses are tied to

    efficiency milestones, and the Intel Environmental Excellence Award

    recognizes highly innovative projects.

    Lenovo understands its

    customers interest in energy savings and has stepped ahead of the

    curve. A few years ago, people were satisfied to replace their bulky CRTs

    with flat panel monitors, which use half to two-thirds as much energy. But

    Lenovo goes on to ask how efficient the flat panel can be. Its monitors are

    up to 33% more efficient than other flat panels on the market. And the

    company is leading innovations in light-emitting-diode (LED) backlights,

    which use up to 75% less energy than standard fluorescent backlights

    (while also improving the colour and brightness uniformity).

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    Electricity is consumed by mobile phone chargers that are left plugged in

    after the phone is charged (no-load energy use). Over the last nine

    years, Nokia has reduced the amount of no-load energy in its best-in-class

    chargers by 90%. Nokias newest chargers go even farther, using up to

    94% less energy than the ENERGY STAR requirements in the United

    States, and also meet the highest European Union standards. In May

    2007, Nokia became the first mobile manufacturer to put alerts into

    phones, encouraging people to unplug their chargers. The energy that

    could be saved globally if all Nokia phone users unplugged their chargers

    when not in use would power 100,000 average-size European homes.

    Conclusion

    Consumer product executives realize that business performance and

    growth are directly related to their ability to bring superior products and

    services to market in a cost-effective manner. In this report, i have shown

    that:

    1. High levels of competition, shorter product lifecycles and changing

    market conditions intensify pressures on Consumer product growth.

    2. To meet their business targets, Consumer product companies need

    new ways to deliver value to their customers.

    3. Innovation is dependent on the introduction of new products and

    services to existing markets, while expanding new market channels and

    geographies.

    4. Reducing time-to-market is a key success factor.

    5. CP companies have not yet significantly improved their time-to-market

    and on-budget performance.

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    6. To help shorten time-to-market while reducing development costs,

    companies should adopt a holistic view of the development process and

    involve stakeholders from outside the immediate scope of the process,

    such as contract manufacturers, suppliers and other service providers.

    7. Implementation of point solutions aimed at reducing time-to-market

    might achieve only local improvements, and not provide widespread

    business benefits. New product development objectives and initiatives

    must be tied to corporate strategies.

    8. One of the most critical strategic initiatives in new product introduction

    is: acquiring an explicit definition of customers requirements, in

    collaboration and communication with customers not in an R&D vacuum.

    9. Use of componentization and standards to develop variations on

    products can help companies achieve faster-to-market objectives at

    lower costs.

    Companies also give back to society, creating a cycle of value that

    contributes to global sustainability. A corporations giving-back program

    can help to protect and restore the environment we all share. Some of the

    main avenues for social responsibility are direct giving, social programs,

    or other responsible business practices. At Intel, for instance, 3840% of

    employees worldwide do volunteer work at non-profit organizations, to the

    tune of nearly 1 million hours per year. In many cases, Intel pays the non-

    profit $10 per hour through a company matching program. Panasonics

    employees participate in Walk America, benefiting the March of Dimes,

    and have raised approximately $450,000 for this cause. And in Mexico, 61

    HP employees planted 600 trees as part of a reforestation project. Formal

    corporate social responsibility (CSR) programs have existed for many

    years; recently a number of new developments have occurred. CSR now

    often includes explicit environmental goals, far beyond compliance with

    regulations. In addition, philanthropic efforts have taken on a more

    strategic flavour. For example, several companies offer health care

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    assistance in rural villages where their factory workers live, which helps

    people and also creates a healthy workforce. It is also worth noting that

    nearly all major consumer electronics companies have a dedicated section

    on their website with information on environmental and social benefitprograms. In these ways, CSR is seen not purely as an extra, but as a

    more integral part of operations and communications.

    From the above mentioned facts and study report it is clear that if a

    company wants to succeed and make successful product launch it has to

    do both innovation and CSR for its customer as today customer base has

    become more aware and environment friendly.