The Stage Gate activities model of NPD, suggested by Ahmed and Shepherd, consists of 7 time-sequenced stages and 7 gates, which separate stages from each other. It is presumed that gates are special managerial actions that provide reliable Yes/No (or Go/Kill) decisions concerning further development of a product after each particular stage. It is important to note that although the Stage Gate model presents a linear sequence of activities, sometimes activities can be organized in parallel and performed concurrently. The Innocent Drinks’ case study is a good example of how companies can follow the process of new product development from concept to commercialization.
The Table 1 represents results of the analysis of the Innocent case study aimed to evaluate to what extent the company followed the Stage Gate model. One can see that the Innocent Company followed close to the model, although several stages were carried out in parallel (from our point of view). Table 1. The Innocent activities in relation to the Stage Gate model. Stages of the model The Innocent activities related to stages Stage 1. Opportunity identification and concept definition. The clear opportunity to produce and sell healthy fruit smoothie products in the UK market was identified and stated.
The opportunity was confirmed by several factors: a little number of competitors, an increasing consumers’ demand in healthy products, the governmental support, the support of friends and possibilities to find investment among them. The new product concept aimed to specific market audience (young urban professionals like Innocent founders themselves) was developed. The best recipes of smoothie were chosen to meet needs of customers. Gate 2. Concept screen First smoothies were tested on visitors of the jazz festival, and the concept was approved.
From the very outset to present day the concept is aimed at customers taste, lifestyle and personality. Stage 2. Planning and design. Stage 3. Prototype development. Business plan was developed and approved, investment was provided, and production capacity at bottling plant was bought. Experienced professional for branding was hired and the distinctive branding concept and image were developed, attractive for the target market. Distinctive, simple and practical packaging design, logo and promotional design (including design for delivery vans) were developed. Unusual bottle shape, more convenient in using, was designed. Gate 3.
Design screen. Gate 4. Develop screen. Branding concept, packaging and promotional design and shape of bottles were tested in focus groups consisting from friends. The brand and design was extremely successful and has played an important role in the overall success of the business. Stage 4. Manufacture evaluation and development. New distinctive composition of the product was suggested (pure fruit juice instead of commonly-used concentrated juice) and new manufacturing technology was developed. Strict quality control procedures were established (including regular sampling of fruits to ensure good taste of the drinks). New recipes of drinks were developed and tested. Four independents manufacturers were found and contracted in order to expand production capacity. Gate 5.
Product screen New recipes of drinks were successfully tested in focus groups from friends and people in surrounding office buildings. Stage 5. Distribution and marketing. Stage 6. Market testing and launch. Starting from the only local sandwich shop, the distribution chain was developed profoundly; currently it consists of a number of outlets of various sizes in UK and Europe. Quality control and packaging technology were improved to ensure the longest possible shelf life of 100% fresh fruit juice product. Not spending much on TV, radio and press promotion, the Innocent carried out a successful advertising company; it was based on packaging design and relationships with retailers.
Fun and humor helped to break down barriers between manufacturer and customers. Gate 6. Market screen Gate 7. Market launch screen In spite of high prices, the Innocent drinks won the market quickly, in the most part thanks to their tastes, absence of preservatives and additives (as they are made completely from fresh fruit juice) and, of course, the brand image. In 2004 the Innocent generated revenue of 35 million pounds; in 2006 it was increased to 80 million, while its competitor had only 13 million. Stage 7.
Post-launch and product retirement. In order to ensure long life of the Innocent drinks on the market regular market research are conducted in order to explore customers’ tastes, needs and preferences in fruit drinks. On the basis of these research results new recipes are developed and introduced on the market. 750