ES 010 - 1ST SEMESTER, TERM 2

INNOVATION AND VALUE

PROPOSITION
Lecture 04
 #1
Objectives To define what is innovation

#2
To know how to define a new innovation
and how to classify new products

#3
To define what is an opportunity
recognition

#4
To define what is a value proposition and
how to create one
Innovation

ES 010 - LECTURE 4-1

Innovation
DEFINITION
Innovation is the key to the economic development
of any company, region of a country, or country
itself.
As technologies change, older products/services
decrease in sales and old industries dwindle.
Inventions and innovations are the building blocks
of the future of any economic unit.
Thomas Edison reportedly said that innovative
genius is 1 percent inspiration and 99 percent
perspiration
Innovation
TYPES
Innovation
TYPES
Breakthrough innovation - these extremely unique
innovations often establish the platform on which
future innovations in an area are developed. Fewest
innovations are of this type.
Ex.: penicillin, the steam engine, the computer, the
airplane, the automobile, the Internet, and
nanotechnology.
Innovation
TYPES
Technological innovation - occurs more frequently
than breakthrough innovation and in general is not
at the same level of scientific discovery and
advancement. These are very meaningful
innovations, as they do offer advancements in the
product/service/market area.
Ex.: personal computer, the flip watch for
containing pictures, voice and text messaging, and
the jet airplane
Innovation
TYPES
Ordinary innovation - one that occurs most
frequently. These more numerous innovations
usually extend an existing innovation into a better
product or service or one that has a different—
usually better—market appeal.
These innovations usually come from market
analysis and pull, not technology push. In other
words, the market has a stronger effect on the
innovation (market pull) than the technology
(technology push).
How to define a new
innovation

ES 010 - LECTURE 4-2

Defining a new one
One of the dilemmas faced by entrepreneurs is
defining a “new” product/service or identifying what
is actually new or unique in an idea.
Fashion jeans became very popular even though
the concept of blue jeans was not new.
Sony made the Walkman one of the most
popular new products of the 1980s, although
the concept of cassette players had been in
existence for many years.
Defining a new one
Other old products have simply been marketed in
new packages or containers but have been
identified as new products.
When soft drink manufacturers introduced the
can, some consumers viewed the product as
new, even though the only difference from past
products was the container.
Defining a new one
In the industrial market, firms may call their
products “new” when only slight changes or
modifications have been made in the appearance
of the product.
For example, improvements in metallurgical
techniques have modified the precision and
strength of many raw materials that are used in
industrial products, such as machinery.
Classification of new
products
FROM A CONSUMER'S VIEWPOINT
One attempt to identify new products classifies the
degree of newness according to how much
behavioral change or new learning is required by
the consumer to use the product.
Classification of new
products
CONTINUUM FOR CLASSIFYING NEW
PRODUCTS
Continuum for classifying
new products
CONTINUOUS INNOVATIONS
The other extreme where an existing product
undergoes marginal changes, without altering
customer habits.
Sometimes the customer may not even perceive
these products to be new though the company
may invested a lot of money to improve its existing
products.
Continuum for classifying
new products
CONTINUOUS INNOVATIONS
Examples are annual automobile style changes,
fashion style changes, package changes, or product
size or color changes.
Continuum for classifying
new products
DYNAMICALLY CONTINUOUS INNOVATIONS
Dynamically continuous innovation revolves around
changing technology even though the use of the
basic product does not change.
Examples are products such as compact discs, the
Sony Walkman, and the iPod.
Continuum for classifying
new products
DISCONTINUOUS INNOVATIONS
Technological, product or service innovation in an
industry or market that requires end-users to
change behavior, and thereby tends to suddenly
and dramatically change the dynamics of the
industry, including possibly changes in competitive
dynamics, industry revenue size and growth rate
and pricing.
Examples are cassettes, LP records, CDs, VHS, older
game consoles
Continuum for classifying
new products
DISCONTINUOUS INNOVATIONS
Technological, product or service innovation in an
industry or market that requires end-users to
change behavior, and thereby tends to suddenly
and dramatically change the dynamics of the
industry, including possibly changes in competitive
dynamics, industry revenue size and growth rate
and pricing.
Examples are cassettes, LP records, CDs, VHS, older
game consoles
Classification of new
products
FROM A FIRM'S VIEWPOINT
The innovative entrepreneurial firm, in addition to
recognizing the consumer’s perception of newness,
should also classify its new products on some
dimensions. Others include nanotechnology and
social media.
Classification of new
products
NEW PRODUCT/SERVICE CLASSIFICATION
SYSTEM
Classification of new
products
NEW PRODUCT/SERVICE CLASSIFICATION
SYSTEM
A situation in which there is new technology and a
new market is the most complicated and difficult
and has the highest degree of risk.
Since the new product involves new technology
and customers that are not now being served, the
firm will need a new and carefully planned
marketing strategy.
Opportunity recognition

ES 010 - LECTURE 4-3

Opportunity recognition
DEFINITION
This is proactively brainstorming a new business
venture or expansion idea.
A business opportunity represents a possibility for
the entrepreneur to successfully fill a large enough
unsatisfied need that enough sales and profits
result.
Opportunity recognition
DEFINITION
This is proactively brainstorming a new business
venture or expansion idea.
A business opportunity represents a possibility for
the entrepreneur to successfully fill a large enough
unsatisfied need that enough sales and profits
result.
Opportunity recognition
PROCESS MODEL
Opportunity recognition
PROCESS MODEL
As is indicated, recognizing an opportunity often
results from the knowledge and experience of the
individual entrepreneur and, where appropriate,
the entrepreneurial business.
Each and every innovative idea and opportunity
should be carefully assessed by the global
entrepreneur.
Product planning and
development process

ES 010 - LECTURE 4-3

Definition
The stages in developing a new product

PRODUCT LIFE CYCLE

The stages each product goes through from
introduction to decline.
Major stages:
Idea stage
Concept stage
Product development stage
Test marketing stage
Commercialization
Product life cycle
DEFINITION
Idea Stage
DEFINITION
First stage in the product development process.
Promising new product/service ideas should be
identified and impractical ones eliminated.
Evaluation method used in this stage is the
systematic market evaluation checklist, where each
new idea is expressed in terms of its chief values,
merits, and benefits.
Concept Stage
DEFINITION
Second stage in the product development process.
The refined idea is tested to determine consumer
acceptance. Initial reactions to the concept are
obtained from potential customers or members of
the distribution channel when appropriate.
One method of measuring consumer acceptance is
the conversational interview in which selected
respondents are exposed to statements that reflect
the physical characteristics and attributes of the
product/service idea.
Product development
stage
DEFINITION
Third stage in the product development process.
Consumer reaction to the physical product/service
is determined.
One tool frequently used in this stage is the
consumer panel, in which a group of potential
consumers is given product samples. Participants
keep a record of their use of the product and
comment on its virtues and deficiencies.
Product development
stage
DEFINITION
Third stage in the product development process.
Consumer reaction to the physical product/service
is determined.
One tool frequently used in this stage is the
consumer panel, in which a group of potential
consumers is given product samples. Participants
keep a record of their use of the product and
comment on its virtues and deficiencies.
Test marketing stage
DEFINITION
Final stage in the product development process.
A market test can be done to increase the
certainty of successful commercialization.
This last step in the evaluation process, the test
marketing stage, provides actual sales results,
which indicate the acceptance level of consumers.
Positive test results indicate the degree of
probability of a successful product launch and
company formation.
Value proposition

ES 010 - LECTURE 4-4

Value proposition
DEFINITION
A value proposition is the promise of value that a
customer can expect a business to deliver. It’s more
than just a product or service description — it's the
specific solution that your business provides to a
customer which a competitor can’t offer.
A value proposition should clearly explain how a
product fills a need, communicate the specifics of
its added benefit, and state the reason why it's
better than similar products on the market.
Value proposition
DEFINITION
The ideal value proposition is to-the-point and
appeals to a customer's strongest decision-making
drivers.
Your value proposition goes deep into the
problems you want to solve for buyers, and what
makes your product or service the perfect solution.
Elements of a value
proposition
HEADLINE
The headline of your value proposition describes
the benefit the customer will receive as a result of
making a purchase from your business. The
headline can be creative and catchy, but it should
be clear and concise, first and foremost.
Elements of a value
proposition
SUB-HEADLINE OR PARAGRAPH
The subheadline or paragraph should explain in
detail what your company offers, who it serves, and
why. In this section, you can elaborate on the
information in the headline.
Elements of a value
proposition
VISUAL ELEMENT
In some cases, a video, infographic, or image may
convey your value proposition better than words
alone can. Enhance your message with these visual
elements to capture your audience’s attention.
Value proposition canvas
DEFINTION
A visual tool that helps you position your business’s
product or service around your customers’ needs.
The goal of the value proposition canvas is to
identify how your business provides value within
the market. You can use the value proposition
canvas when introducing a new offer into the
market or when enhancing an existing one.
Value proposition canvas
COMPONENTS
Customer Profile
It consists of three areas:
Customer jobs
Customer expectations
Pain points
Value map
It consists of three specific sectors:
Gain creators
Pain relievers
Products and services
Customer profile
AREAS CONSISTING CUSTOMER PROFILE
Customer Jobs - what is the task your customer
needs to complete or the problem they’re trying to
solve with your product or service? The answer to
this question sums up the “customer job” or the
purpose of your product or service in the eyes of the
customer.
Customer Expectations - in this section, you’ll use
research to explain what your customers expect
from you in order to purchase your product.
Customer profile
AREAS CONSISTING CUSTOMER PROFILE
Pain points - as your customer completes their
“customer job,” what pains do they experience? Do
they take any risks while they do the customer’s
job? Do they experience any negative emotions?
These pain points should be considered so that you
include the most helpful products and services on
the value map side of the value proposition canvas.
Value map
SECTORS CONSISTING CUSTOMER PROFILE
Gain creators - These are features your products or
services have that make the customer happy. Think
creatively about the elements of happiness your
customers experience.
Pain relievers - This section will define exactly how
your business will help them overcome those pain
points.
Products and services - This section should include
the ones that will create the most gain and
alleviate the most pains for your customers.
Example
SAMSUNG GALAXY Z FOLD3 5G
Headline: Get Ready to Unfold Your World
Subheadline/paragraph: This is everything you'd
want in a premium, durable, 5G smartphone. Then
we made it unfold — revealing a massive screen so
you can watch, work and play like never before.
Example
SAMSUNG GALAXY Z FOLD3 5G
Visual element:
Example
CUSTOMER PROFILE
Customer Jobs: Samsung customers are tech-savvy
and follow the latest trends, driven by efficiency
and aspirational lifestyles.
Gains: Customers want an all-in-one way to enjoy
media, work productively, and have a fun
experience all in the palm of their hands.
Pains: Common smartphones have size limitations
that strain entertainment viewing, gameplay, and
work capabilities.
Example
VALUE MAP
Gain Creators: Samsung offers a unique and
expansive design with capabilities beyond that of
an average smartphone, offering the most
advanced technology to help customers perform
tasks to fulfill work and play.
Pain Relievers: Samsung provides a smartphone
that displays content in tablet-like viewing and
displays up to three apps simultaneously.
Example
VALUE MAP
Products & Services: One of Samsung’s most
popular phones is the Galaxy Z Fold3 5G folding 6.2-
inch smartphone with dynamic AMOLED 2X
screens, ultra-thin glass with S Penfold edition, and
super-strong lightweight armor aluminum frame.

MORE EXAMPLES
https://blog.hubspot.com/marketing/write-value-
proposition
How to write your own
STEPS
Identify your customer's main problem.
Identify all the benefits your product offers.
Describe what makes these benefits valuable.
Connect this value to your buyer's problem.
Differentiate yourself as the preferred provider of
this value.
Tactics for an effective
value proposition
STEPS
Conduct research to determine the value
proposition of your competitors.
Explain the value of your products and services.
Describe the benefits your ideal customer will
experience when they choose your product or
service over the competition.
Tactics for an effective
value proposition
STEPS
Develop a unique value proposition for each buyer
persona you serve.
Test your value proposition with your audience
using various marketing channels.
What makes a good value
proposition?
CLEAR LANGUAGE
Your value proposition should aim to address a
primary customer need. This limited focus helps
keep your value proposition clear and easy to
understand. With just one main idea to
comprehend, your audience will be able to quickly
decide whether or not your product or service will
be the best solution for them.
What makes a good value
proposition?
SPECIFIC OUTCOMES
Next, you’ll want to communicate the specific
outcomes your customer can expect to receive
from your product or service.
The specific outcomes will be critical components
of your value proposition as they’ll exemplify exactly
how your customers will use your solution to solve
their problems.
What makes a good value
proposition?
POINTS OF DIFFERENTIATION
Not only are your potential customers evaluating
your business’s offerings based on their own needs,
but they’re also comparing what you offer against
competitors.
As a result, your value proposition will need to
include detailed points of differentiation. These key
points will help customers understand exactly what
sets your company apart.
Get in Touch
Feel free to contact me if you have
any concerns

FACEBOOK
Ruel Rick Villegas Ranay

EMAIL #1
ruelrick.ranay@gmail.com

EMAIL #2
rranay@uic.edu.ph