Co-depending Vs Standalone Products

June 27, 2011 § Leave a comment

An aspect that is rarely appreciated by “innovators” when creating a product is the co-dependence of such innovation to other drivers or Base Equipment (or technologies) to guarantee the proper performance. In my particular case, I’ve manage products such as cereals (can be eaten with or without milk), adobo <mix of salt + spices> (can be used to any raw protein or a specific protein) and more recently coffee. The latter, is not any more about the type of coffee (whether its Arabica or Robusta), not even the roasting type, color, etc; but how to prepare such a coffee.

Learning’s from coffee

In the specific case of coffee, we can still see OLD preparation methods like the “dripping coffee sock”, boiled coffee, Turkish coffee, moka-maker coffee, filter-dripping coffee, express coffee… Each type requires a different machine or technology and transform the coffee drinking ritual into a different habit.

In Venezuela, most coffee drinkers prepare a moka (italian) coffee machine every day. Therefore is no strange to see little innovation in the products offered by manufacturers there. However, other <more developed> countries such as UK consume lots of Instant Coffee and Filter-Dripping Coffee. The first is “a stand-alone” product. As it doesn’t require any technology to be brewed, all people can make one (but it is very expensive). The latter, requires a filter machine to make the coffee (co-depending products).

Since the last decade (and I have commented on previous posts) Europe has sustainably innovated the way they drink coffee. Nestlé through Nespresso Brand, has years positioning as a Top-Quality Aspirational coffee. They have achieved this after years of big TV campaigns, Sponsorship (George Clooney) and innovation (New Capsules, New Machines, New flavors). Meanwhile Sara Lee, Kraft, Lavazza and other “more regional” brands have developed other types of “single serve” coffee to ride the innovation wave that Nespresso started.

All this innovations are symbiotic relationships between the coffee brand and the machines. If the overall penetration of the coffee machines improves, it is likely that the overall performance of the coffee brand improves. On the other side, you will only choose a determined type of coffee machine once you’ve tasted its coffee (and liked the brand – or vice versa).

 Nespresso has proved that long-term commitment to support a product innovation is more profitable than small (fast ROI) innovations. They have achieved a great deal of coffee machine penetration by selling the coffee and not the machines (which sometimes they give at very low prices) whereas the competition usually has a second brand such as Phillips, Bosch or Krupps, that require their own ROI and cannot afford to sell at cost production levels. This is why very recently the companies are showing a behavior that breaks all theories on symbiotic relationships as a winning strategy; they are developing products “in compliance with copy write laws and patents” that work on a mature coffee machine system (Private Labels with Senseo’s machine, Sara Lee’s capsules with Nespresso Machines).

 

Standalone products:

There are plenty of standalone products; here some examples: Soft drinks, Juices, Waters (Sparkling or Still, With flavor or mineral), Chocolates, Candys… Non-food: Cristal Cleaners, Detergents, Deodorants, etc.

 

These products will not face the “dependence barrier” that a symbiotic relation builds-up at the beginning of the relationship. The success of a product will depend only in the concept, the performance and of course, it’s consumers.

 

A word of advice to “innovators”

Whenever in the process of creation, we should fully understand the symbiotic processes required with other categories or products. This will enable you to foresee barriers or weaknesses of your design prior to any prototype are produced (saving you money and effort.

 

A little example: A few years ago, during my final Industrial Engineer project, I developed a Solar Oven prototype (the first of its kind in Venezuela – Along with some guidance of Rochester Institute of Technology) that would cook amazingly considering Venezuela’s Climate. The project was not feasible due to the hard competition (gas and electric rates that are subsidized by Venezuelan Government) that is easier to use.

 

PS:Don’t forget that the environment in a third-world country comes relevant only if they innovation is cost-less 
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