Establishing relationship between value proposition and concept validation

Abstract

Fuzzy front-end innovation (FFEI) is the most challenging and unmanageable stage of new product development. This is due to the uncertain and dynamic nature of product, market and consumer knowledge related to innovation. Value proposition creation (VPC) process is a part of FFEI. The scope of the research of this thesis is from VPC kick-off until finalisation of the concept. It involves opportunity exploration, generation, prioritisation, validation of ideas and concepts. Although VPC is being studied in academic and by organisations since decades still organisations are going through a high number of iteration and continual change of scope of VPC process before finalising the concept which is accepted by consumers. The acceptance of the concepts is checked qualitatively and quantitative with consumers. The main reason of the failure of the concept to gain consumer acceptance is the lack of structure of VPC process, lack of understanding of attributes of VPC, lack of understanding of tools and processes required to define the key attributes, and lack of understanding of influence of innovation on these attributes of value proposition (VP). Attributes of the value proposition can be defined as the consumer, market, product, process, and organisational characteristics of value proposition. Furthermore, innovation is considered as the newness to the organisation. Hence, the objective of this research is to prepare theoretical framework showing the relationship between attributes of VP and acceptance of the concept which can be used by managers as a step by step guide to design a sprint of VPC process based on the scope of innovation. Philips is selected for this research to understand the real-life cases which involve VPC process. The initial conceptual model was prepared from literature review and desk research at Philips which is validated through semi-structured interview. Final conceptual model, theoretical framework 1, and theoretical framework 2 are prepared from case study and interview result analysis. Final conceptual model shows the key attributes of VP which influence acceptance of the concept by consumers and their role (independent variable or moderators). These key attributes are unmet consumer need, superior offer, competitive price, involvement of consumer, involvement of multifunctional team, additional cost, emotional appeal and brand influence. Theoretical framework 1 showed step by step method to guide VPC process by identifying above-mentioned key attributes for inspiration (opportunity exploration), ideation, and implementation phase. It further showed the influence of scope of innovation (incremental or disruptive) on the relationship between VP and acceptance of the concept by consumer. Theoretical framework 2 identified the tools and processes essential to define the attributes of VP to generate high concept test score from consumers. This research contributed to academia and practice by identifying key attributes of VP, establishing relationship between attributes of VP and acceptance of the concept by consumers, providing structure to the VPC sprint, defining attributes essential for different innovation type, and identifying the tools and processes needed to define each key attribute of VP.