INNOVATION

FRONT END INNOVATION
 

Veraxia has extensive experience in mining information from internal and external sources and working with client teams to discover the most innovative solutions. We combine analytical skills with creativity to arrive at insights that impact the bottom line. Typical projects include the following:

 

Customer-Driven Ideation Research

There is a difference between knowing who your customer is and understanding your customer. It is important to know both to be able to develop more innovative and customer-centric products and services. Our holistic method integrates psychographic information, behavioral study deploying ethnographic research and other techniques, and demographic / firmographic data to helps companies to fully understand the market and long term trends.

 

Idea Generation

Virtually all innovation processes include the creation or identification of opportunities and the selection of one or more of the most promising options. The success of idea generation in innovation usually depends on the quality of the best opportunity identified. While many companies utilize the team approach to generating ideas, many studies have shown that this is an ineffective method. Veraxia has found that a hybrid model that incorporates analytics, team workshops, and individual generated ideas produces the best results.

 

Valuation and Prioritization

While companies sometimes lack good ideas, more often their real challenge is to quickly separate good ideas from bad ones and quantify their impact on the bottom line. Traditional approaches to idea prioritization can be highly politicized, and as a result potentially disruptive ideas are often shelved quickly, because they are misunderstood or because no one is willing to risk supporting them. To address these challenges, Veraxia uses an objective and analytical approach to dynamically and rapidly assess ease of implementation, resource requirements, time to market, and economic impact of the idea pipeline. When appropriate and relevant, we deploy prediction markets to generate the desired rank-ordered list of ideas.

 
PRODUCT DEVELOPMENT

New products are a vital part of a company's competitive growth strategy. Most firms cannot survive without introducing new products or modifying existing products to meet changing customer expectations.

 

Sometimes, product development strategies do not always fall neatly into an existing market. They may move a company into markets and towards customers that are not currently served. This is part of the natural growth of many organizations. We believe that customer segmentation is the single most important factor in defining the overall Marketing Strategy. Characterizing customer expectations into meaningful product attributes and developing a practical segmentation platform is the first step in meeting customer expectations. The next most important task is to translate customer needs into product features. This may require the organization to calibrate current products or develop new concepts that will need to be translated into products. The process of articulating customer expectations into concepts and ultimately into products requires science, art, and a great deal of experience. This is an area where Veraxia principals have significant experience

 

Furthermore, the ability to estimate consumer acceptance of new products and resultant market penetration is a critical process and provides vital input into decisions affecting sales, capital outlays, credit, plant expansion, budgeting, inventory control, production scheduling, and financial planning. Sales volumes that are significantly below expectations jeopardize cash flow, profitability & other performance-related criteria. On the other hand, sales volumes that significantly exceed expectations strain manufacturing & service functions.

 

Veraxia helps companies significantly increase profitability and sales on existing products while concurrently helping them rapidly identify and benefit from new market opportunities. The process we have developed balances art and science to calibrate existing products or conceive new solutions. We use advanced analytical techniques and extensive experience to develop products.

 

What Veraxia Offers 

  • Long-term Industry Dynamics for Existing Product Lines: usage trends, industry growth, competitive intensity, product benchmarks, and product substitutions.

  • Long-term Profitability Forecasting for Existing Product:

  • Concept Development: ideation, characterizing customer needs into product attributes, prioritization

  • Product Calibration or new product design: functional design choice models

  • Product Testing: experiment design, live experiments, web-based testing, in-market test and control

  • Generalized Economics: product P&L, market share, capacity requirements, and sales force

  • Business Case Formation

  • Training: ideation workshop, product design workshop, rapid testing techniques workshop

 
EXPERIMENTATION +
PILOT TESTING

The major goal of most test marketing is to measure new product/process/business model effectiveness on a limited basis where competitive retaliation and other market factors are allowed to operate freely. In this way, future sales, productivity, or customer satisfaction, can be estimated through generalized models. An experiment is only as good as the learning it produces. We know, for example, that an effective experiment has to isolate the particular factors being investigated; that it must replicate the real-world environment it's testing, that it has to be conducted efficiently, at a reasonable cost; and that its results have to be accurately measured and used, in turn, to refine its design. These are always complex challenges and we have found that many of them become further complicated when experiments are moved out of a laboratory environment to a pilot market with real employees serving real customers.

 

While experiments are scientific by nature, a great deal of experience and pragmatism are essential to help improve effectiveness and reliability. A major finding over the years is that in-market testing is not easy and failure is commonplace. The failings we have observed form the basis for our methodology, and are outlined below:

 

  • Under-specification of what you are trying to learn:

    • i.e. The exact question was not clearly articulated before the test design

  • Selecting the wrong sample, that can result in one of the following:

    • Data that is not “clean”, due to factors that influence the result

    • Too homogenous a sample, as learning tends to occur at the extremes

    • Too small a sample

    • Too scattered a sample

  • Failure to isolate the information you need to answer the experiment

    • i.e. what metrics are needed to answer the question

  • Failure to set up the collection mechanism

  • Failure to set-up and control the test properly

  • Having inadequate control data that prevents test interpretation

  • Inability to link cause and effect:

    • i.e. Need for a “dial” to clearly link the impact

 

Our methodology is designed to mitigate the above common failings to ensure a robust test that produces insight. The objective of all experiments is to learn what does and does not work. We believe that experiments should be designed not so much to maximize their odds of success but to maximize the information and insights they produce. The rate at which companies can learn by experimentation depends on many factors, some of which will be unique to a given company.

 

What Veraxia Offers

  • Test and Control Market Selection: test and control market evaluation and selection, internal capability assessment for chosen market, competitive intensity and likely hood of retaliation

  • Pilot Test Design

  • Test Management

  • Analysis of Results and Generalized Models

 

 

Please contact Veraxia to see the many ways we can support your product development and validation needs.

 

 
PRICE OPTIMIZATION

One of the most important and complex decisions a company has to make relates to pricing its products. If consumers perceive a price to be too high, they might purchase competitive brands or substitute products, leading to a loss of sales and profit for the franchise. If the price is too low, sales might increase, but overall profitability may suffer. Thus, pricing decisions must be given careful consideration when introducing new products or planning a short or long-term price change for current products.

 

In the short term, pricing does not usually form the basis of sustainable competitive advantage because any price change can be imitated very quickly by competition. In the long-term, a pricing strategy can be a major factor in competitive advantage because it can significantly alter the basis on which companies compete. Pricing is therefore strategically important for several reasons:

  • Impact of price changes on profitability

  • Product positioning: pricing structures and levels may be used to signal more general forms of competitive advantage

  • Value for money impression created about the organization: price needs to be coupled with quality, service, and other aspects of the product

 

The impact of price changes on profitability is often substantial and immediate. Numerous studies have shown that price changes have more than twice the impact on earnings compared with volume changes.

 

Pricing decisions that integrate the company’s costs with the overall marketing strategy, business conditions, capacity considerations, competition, demand, channels of distribution will have a significant impact on the bottom line. Thus, pricing strategies must be continuously reviewed and must incorporate all the dynamics in the market.

 

Veraxia has helped companies craft optimal pricing strategies that maximize value and sustain market share. Through our pricing analytical tools, we examine the impact of pricing structures and levels along with different product features on purchasing propensity. Working jointly with a client team, we define and implement improvements to the pricing strategy and deployment process.

 

What Veraxia Offers

 

  • Competitive Benchmarks from a Customer’s Perspective: customer usage analysis, product mapping of similar products, qualitative market research, quantitative market research, and cross-industry/cross-county benchmarking

  • Relative Market Value of Product: market price analysis, trade-off choice models, propensity modeling, and customer economic analysis

  • Demand Elasticity: trend analysis, elasticity benchmarking, market research design, and elasticity modeling

  • Real Price Elasticity: in-market price experiments, commitment modeling, and correlation modeling

  • Cost Structure Analysis: real product cost structures, product economic modeling, and profitability forecasting

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