These product and service innovation performance measures show
the following:
❍New product and service developments are lower in the last 5 years,
but the rate of successful market launches has risen from 36 per cent
of developments to 66 per cent.
❍Sales per new development have risen from £6 to £12.5 million.
❍Although 28 per cent of sales, in the last 12 months, are from prod-
ucts launched in the last 5 years (up from 16 per cent 3 years ago)
only 14 per cent of these sales are new (incremental) sales. The
remaining 14 per cent are sales that have cannibalised current prod-
ucts. This is an indication of poor planning.
❍The payback period for new developments is also lengthening.
One action the organisation could take is to have more effective segmenta-
tion and targeting processes, so that new product sales are developmental
rather than cannibalising existing sales. This type of analysis allows an
organisation to explore its current performance using hard output measures.
● Customer satisfaction ratings. This should be reviewed not just in terms
of the actual core product but across all areas of customer service.
● Staff turnover.
● An innovation/value portfolio analysis (see Figure 5.4) should be
undertaken on the organisation’s strategic business units or products
to establish whether they are:
❍Settlers: Businesses or products that offer the normal (me-too) mar-
ket value.
❍Migrators: Businesses or products that offer value improvements
over competitors.
❍Pioneers: Businesses or products that represent value innovations
such as the Dyson vacuum cleaner or the Sony Walkman.98 Strategic Marketing: Planning and ControlFigure 5.3
Product and service
innovation
performance
measures (Source:
Adapted from
Davidson, 1997)
Innovation criteria 3 years ago This yearNumber of significant 11 6
innovations in past 5 years
Number successful 4 4
Success rate (%) 36 66
Total sales in product/services launched 16 28
in past 5 years (%)
Incremental sales (%) 11 14
Average annual sales per 6 12.5
new product/service (£m)
Incremental payback per new 3 4
product/service (years)