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An evaluation of customer input into the development of products in The Body Shop

Submitted to Ann McManus Dissertation Supervisor Submitted by Student ID: 2 $roup: !"#"!

Dissertation submitted in part fulfilment of the re%uirements for the de&ree of Master of Business Administration at 'ardiff Metropolitan (niversity

May) 2 !2

Declaration

I certify that the work submitted for this dissertation is my own investigations. Where the work of others has been used to support my work then credit has been acknowledged giving explicit references. A bibliography is appended.

Students signature:

ate:

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Acknowledgement
After passing some difficult ups and downs I have been able to complete this dissertation and it has become possible due to persistent support and guidance of my respectable supervisor Ann McManus. I am unconditionally admitting that I would not be able to complete this research project without her generous support and encouragement. Thus, I am taking this opportunity to express my sincerest gratitude to her. 'ustomers of the case company who willingly completed the survey questionnaire deserve my sincere gratitude as I could not have the required data to complete the dissertation. I am indebted to them for their generous support and accordingly expressing my sincere gratitude to them. aturally I did not have experience of conducting such big research task before. In my conducting this research project I took tips and suggestions from my friends. !hile I was in frustration they boosted me up and encouraged me saying that I can do that. And at last I did that. "n this occasion I am also expressing my affectionate thanks to them.

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Abstract
Innovation has less commercial value if it cannot induce customer demand or meet customer needs. #ustomer need or demand is considerably linked to their perception. Therefore, it is essential to know what they perceive about a company$s specific innovation strategy and implementation. The research aim is to investigate customer involvement in product development and their perception of innovation strategies and their implementation at %The &ody 'hop$. It is to investigate how customers perceive the innovation strategies of a reputed innovative company. To achieve the research aim, the study selected deductive research approach, case study research strategy, and accordingly collected data from the customers of the case company ( The &ody 'hop using questionnaire data collection tool which produced quantitative data that were analysed using )' *xcel. It has been found that The &ody 'hop does not take formal approach to get suggestions for new products from customers and follows closed ended innovation process. The identified customer perception also suggests that the company can be nearer to its customers and enjoy their satisfaction more if they consider involving customers more in its product development process. +espite being highly innovative, innovation factor of The &ody 'hop has only a little influence in the customer perception though there is a potential scope to influence positively as all the respondent customers who were involved in product development process expressed their satisfaction for the involvement. It has been further found that customers of The &ody 'hop have high satisfaction for its innovative product ranges, but have less satisfaction when they perceive less value for money. In terms of involvement in new product development process, it has been found that most of them perceive themselves as %not involved$ and who stated %involved$ expressed satisfaction to be a part of product development process. The study suggests the company to practice open innovation process at least involving its customers, so that customer satisfaction would increase further for if they perceive to be a part of the company$s product development process. The &ody 'hop is suggested to consider open innovation process by involving external entities such as its existing and potential customers, universities, and other independent research institutions. The study further suggests The &ody 'hop to consider more customer communication to make them aware about its fair trade policies and socio,economic welfare activities, so that customers would have more positive perception about The &ody 'hop.

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Table of contents
+eclaration................................................................................................................................II Acknowledgement...................................................................................................................III Abstract...................................................................................................................................ITable of contents.......................................................................................................................ist of figures and tables.........................................................................................................-I / Introduction............................................................................................................................./ /./ #hapter Introduction......................................................................................................../ /.0 1esearch &ackground....................................................................................................../ /.2 1esearch aim...................................................................................................................0 /.3 1esearch questions and objectives..................................................................................0 /.4 'ignificance of the 'tudy................................................................................................2 /.5 6ey #oncepts..................................................................................................................2 /.7 +issertation 'tructure......................................................................................................3 /.8 #hapter #onclusion.........................................................................................................4 0 .iterature 1eview....................................................................................................................5 0./ #hapter Introduction.........................................................................................................5 0.0 #oncepts of Innovation....................................................................................................5 0.0./ "verview of Innovation.............................................................................................5 0.0.0 #lassification of Innovation......................................................................................7 0.0.2 'tages of Innovation 9rocess.....................................................................................: 0.0.3 'ignificance of Innovation for #ompetitive advantage.........................................../; 0.2 #oncepts of #ustomer 9erception................................................................................../; 0.3 Innovation 'trategies on #ustomer 9erception..............................................................// 0.4 .iterary <ramework in summary..................................................................................../0 0.5 #hapter #onclusion......................................................................................................../3 2 )ethodology........................................................................................................................./4 2./ #hapter Introduction....................................................................................................../4 2.0 &rief "verview of the #hapter....................................................................................../4 2.2 Introduction to )ethodologies....................................................................................../4 2.2./ 1esearch Approach................................................................................................../4 2.2.0 1esearch 'trategy..................................................................................................../5 2.3 1esearch &ackground..................................................................................................../5 2.4 1esearch +esign for the 9roject..................................................................................../7 2.4./ 1esearch Approach for the project........................................................................../7 2.4.0 1esearch 'trategy for the project............................................................................/7 2.5 +ata #ollection and Analysis......................................................................................../7 2.7 9resentation of the 1esults............................................................................................/8 2.8 'cope of the 'tudy........................................................................................................./8 2.: *thical #onsideration..................................................................................................../8 2./; -alidity and 1eliability................................................................................................/8 2.// .imitations.................................................................................................................../: 2./0 Table detailing the primary research............................................................................/: 2./2 #hapter #onclusion.....................................................................................................0; 3 +ata and Analysis..................................................................................................................0; 3./ #hapter Introduction......................................................................................................0; 3.0 #ase company (%The &ody 'hop$ and Its Innovation strategies and Implications.......0/ 3.2 9rimary +ata from the customers of The &ody 'hop and Analysis.............................02 3.2./ Insight from the ethnic origin of the respondents....................................................04 3.2.0 +ifferentiation and value of money of The &ody 'hop products...........................05 3.2.2 #ustomer 'atisfaction for innovative product ranges of The &ody 'hop and satisfaction induced word of mouth.................................................................................07 3.2.3 9roduct improvement ideas from customers and implication in The &ody 'hop...08 -

3.2.4 #ustomers$ involvement in making suggestions for new products for The &ody 'hop..................................................................................................................................2; 3.2.5 +istribution of factors that satisfy respondents most about The &ody 'hop..........2/ 3.3 'ummary <indings........................................................................................................20 3.4 #hapter #onclusion.......................................................................................................22 4 #onclusions and 1ecommendations......................................................................................23 4./ #hapter introduction......................................................................................................23 4.0 #onclusions...................................................................................................................23 4.2 1ecommendations.........................................................................................................27 4.3 <urther 1esearch............................................................................................................28 4.4 #hapter #onclusion.......................................................................................................2: 5 1eferences.............................................................................................................................3; Appendix..................................................................................................................................A

List of figures and tables


<igure 0.0./= #losed innovation process 'ource= #hesbrough >0;;2?......................................8 <igure 0.0.0= "pen innovation process 'ource= #hesbrough >0;;2?........................................: <igure 3.2= +istribution of ethnic origin of the respondents....................................................05 <igure 3.3= Analysis of respondents$ perception of product differentiation of The &ody 'hop ..................................................................................................................................................05 <igure 3.4= Analysis of respondents$ perception of product value of money of The &ody 'hop ..................................................................................................................................................07 <igure 3.5= Analysis of 1espondents$ level of satisfaction for the innovative product range of The &ody 'hop.........................................................................................................................07 <igure 3.7= Analysis of 1espondents$ intention of word of mouth if satisfied for the innovative product range of The &ody 'hop............................................................................08 <igure 3.8= Analysis of respondents$ opinion @ow *ager The &ody 'hop is to know product improvement ideas from them..................................................................................................0: <igure 3.:= Analysis of respondents$ opinion whether The &ody 'hop introduced any such products that they were looking for last several months..........................................................0: <igure 3./;= Analysis of respondents$ opinion whether they have been involved in making suggestions for new products for The &ody 'hop...................................................................2; <igure 3.//= Analysis of respondents$ degree of experience if they have been involved in making suggestions for new products for The &ody 'hop......................................................2/ <igure 3./0= Analysis of factors that satisfy respondents most about The &ody 'hop............2/

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1 Introduction
!+! 'hapter Introduction
The introductory chapter begins with a brief background to the research that includes academic and personal stimulation for choosing this particular research topic. After that, the research aim, questions, and objectives have been developed and justified, based on the research background. 'ignificance of the study has been given in this chapter. The key concepts of this study have been provided and are followed by a short dissertation structure as a sign post to the study.

!+2 ,esearch Bac-&round


Innovation is seen even more important for business success and competitiveness. 9orter >/:84? suggested a model of generic strategies for competitive advantage and mentioned that a company can have competitive advantage through cost leadership, differentiation, or focus strategy. According to 9orter$s generic strategy, cost leadership based competitive advantage can be achieved if lower cost than the competitors can be maintained. +ifferentiation based competitive advantage a company can have if it can introduce products that cannot be introduced by its competitors. <ocus based competitive advantage can be attained if a company select a small segment of the market and serve them in a customised way. @owever, cost leadership based competitive advantage has less sustainability compared to differentiation based competitive advantage. #ost leadership can be copied by the competitors more easily, but differentiation based competitive advantage is not easy to imitate. As a result, differentiation based competitive advantage has more long term sustainability. A company can have differentiation based competitive advantage through innovation. 'o it is important to business success and competitiveness. The researcher has been interested to innovation concepts while studying strategic management during a post graduate diploma programme and therefore selected an innovation related dissertation topic in the master$s programme. #onsequently, the researcher determines the research topic to evaluate customer input into the development of products in %The &ody 'hop$. The reason behind choosing %The &ody 'hop$ as the case company for the study is that, it is one of the most highly regarded innovative companies of the A6. The company is in the cosmetic industry and its product ranges are manufactured using natural ingredients and extracts which gives the company a highly differentiated position in the market. Its mission,driven innovation strategy is its key characteristic. The researcher intends to explore the impact of The &ody 'hop on its customers$ perception as a result of its innovation strategies. /

The primary motivation for this project is that, a similar type of study to relate innovation initiatives and customer perception on it has not been precisely identified in the contemporary literature review about which a short discussion has been done in the literature review part. Therefore, the project has been initiated to investigate how customers perceive the innovation strategies of a reputed innovative company. <urthermore, the researcher wishes to establish his career in the area of business where customers play a vital role. The researcher would have broad insight about innovation strategies and its implementation and therefore would have added value in his career profile.

!+. ,esearch aim


The research aim is to investigate customer involvement in product development and their
perception of innovation strategies and their implementation at %The &ody 'hop$.

!+/ ,esearch %uestions and ob0ectives


The research aim proposes the following research questions to answer=

To 1hat e2tent is The body Shop responsive to customer su&&estions for product development3 To 1hat e2tent customers perceive themselves to be involved in product development3
To 1hat e2tent customers feel satisfied 1ith the strate&ies used by The body Shop3 The above,mentioned research questions suggest following research objectives to investigate= /. To evaluate the responsiveness of %The &ody 'hop$ to customer suggestions for product development

0. To investigate customer perception in relation to their involvement in product development at %The body 'hop$ 2. To evaluate customer satisfaction level for the innovation strategies used by %The &ody 'hop$ 3. To recommend to %The body 'hop$ how to be more effective in innovation as a result of customer perception

!+" Si&nificance of the Study


The study aims to determine the degree of influence of innovation strategies and implementations on customer perception. The key factors of the research topic from an academic perspective are %concepts of innovation$ and %concepts of customer perception$. <rom the context of business implication, the key factor of the research topic is the %influence of innovation strategies on customer perception$. Innovation has less commercial value if it cannot induce customer demand or meet customer needs. #ustomer need or demand is considerably linked to their perception. Therefore, it is essential to know what they perceive about a company$s specific innovation strategy and implementation. In this regard, the study bears significance as it looks forward to provide some important insights on customer perception as a result of innovation strategies and implementations of the case company. <urthermore, the idea that emerged from the findings of the key authors of the related fields has high relevance to the selected research topic of this study.

!+4 5ey 'oncepts


The key concepts of this study have been defined below in brief and the names of the authors have been mentioned at the end of each definition. Innovation: It Bis the management of all the activities involved in the process of idea generation, technology development, manufacturing and marketing of a new >or improved? product or manufacturing process or equipmentC. >Trott, 0;;4, page /4? 'losed innovation: It is a conventional innovation process where organisations take innovation initiatives being in the institutional boundary in a systematic way. "rganisational boundaries of the companies of closed innovation process are kept more separated from the external entities. They carry innovation projects independently without influence of anything beyond the organisational boundaries. >#hesbrough, 0;;2? 6pen innovation: It proposes to link external entities with internal innovation establishment to conceptualise external entity induced innovation ideas and concepts. Along with internal product development initiatives, companies keep access open to get more product development ideas and concepts from the external sources such as customers, universities, independent research institutions in open innovation process. >#hesbrough, 0;;2?

'ustomer perception: 9erception is the process of creating a meaningful picture about something through selecting, organising, and interpreting the related stimuli. <rom customer perspective, there are numerous stimuli regarding a particular commercial object. A customer subconsciously selects some of those available stimuli on the basis of their previous experience and motives. >'chiffman and 6anuk, 0;;:?

!+7 Dissertation Structure


'hapter !: Introduction This chapter started with a brief background which includes academic and personal motivation for choosing this particular research topic. After that, the research aim, questions, and objectives were developed and justified, based on the research background. This chapter has also included a section to state the significance of the study and another section to introduce the key concepts of this study. 'hapter 2: *iterature ,evie1 The literature review will be developed discussing the fundamental concepts and key authors related to the subject matter. This will include %concepts of innovation$ and %concepts of customer perception$ as these are directly signifying the academic discussion of the research topic. As a literature review needs to be sufficiently critical in a balanced manner, the literature review for this study will be done by discussing the shortcomings along with the strengths of the subject matter through remaining neutral in the assessment of the pertinent concepts. 'hapter .: Methodolo&y This chapter will define and select the suitable rules and procedures to accomplish the project. A research project needs to be guided from the beginning to the end by a research plan based on the methodology. Attainment of the research aim has to be recognised and thus it is important to follow an established research process. This chapter will discuss and select the research methodology to achieve the research aim following a systematic and recognised research plan. 9reliminary sample siDe for questionnaire survey based primary data collection from customers will be around 5; that will be selected on random sampling basis.

'hapter /: Data and Analysis According to the research plan, the major part of empirical data will be quantitative in kind and thus, data analysis will be conducted taking assistance of computer,based statistical package like )' *xcel. The results of the data analysis in this chapter will be presented using )' *xcel generated graphs and charts. The explanation and rationale will be given along with every graphs and charts included. At the end of this chapter, the findings of the study and their significance will be discussed. 'hapter ": 'onclusions and ,ecommendations This chapter will have three sections ( conclusions, recommendations, and suggestion for further research. #onclusion will be drawn for each of the research objectives separately to state how the study met the research requirement. &ased on the entire study including literature review and data analysis, recommendations section of this chapter will propose suggestions to beauty stores such as The &ody 'hop for improved approaches of effective innovation in addition to positive improvement of customers perception of innovation strategies.

!+# 'hapter 'onclusion


Innovation can give a sustainable differentiation advantage to an organisation and thus innovation initiatives have increasingly becoming inevitable parts of organisational strategy. It captures high academic interests and accordingly, innovation has been studied from many different dimensions. @owever, studies relating customer perception to innovation implications have not been found many. It is expected that some interesting insights will emerge after the completion of the study, based on which companies can have some ideas for more effective innovation implications in accordance with the evaluation of customer perception of innovation strategies.

2 *iterature ,evie1
2.1 'hapter Introduction
The literature review has been developed to discuss the fundamental concepts and key authors associated with the subject matter. This includes %concepts of innovation$ and %concepts of customer perception$ as these are directly representative of the academic discussion on the subject of investigation. As a literature review needs to be sufficiently critical in a balanced way, the literature review for this study aims to do in the discussion of the weaknesses and strengths of the subject matter through impartial assessment of the relevant concepts.

2.2 'oncepts of Innovation


2.2.1 Overview of Innovation
&aregheh et al. >0;;:? defined innovation as the way an organisation conceptualised ideas into new products, services, or developments of the process and therefore, the organisation gains differentiation based competitive advantage. *ffective capabilities for innovation can bring a new product or service that could be in demand among customers. If there is no alternative for the new product or service available from the competitors, then differentiation advantage could be achieved. Therefore, customers would have no choice except buying the new product or service. In this situation, the company offering the new product or service can charge higher prices and therefore may have more revenue. According to Trott >0;;4, page /4?, Binnovation is the management of all the activities involved in the process of idea generation, technology development, manufacturing and marketing of a new >or improved? product or manufacturing process or equipmentC. The words %creativity$ and %innovation$ are used reciprocally considering both connote similar things, but there is a distinction. According to +avila et al. >0;;5?, creativity is the generation of ideas and innovation is about the conversion of ideas of creativity into products. <or a successful innovation, creativity is essential. Therefore, the innovation process begins with creativity. The concept of innovation was introduced by 'chumpeter >referred by Trott, 0;;4? and based on assumptions of different authors on innovationE Trott stated that if the market did not accept a new product, then it was not considered a successful innovation. Therefore, to be more effective and successful, the innovation process needs to be customer oriented.

1egarding the significance of innovation, 'tark >0;;;? stated that innovation was essential to keep pace with the changing environment. #ustomer expectation changes over time and therefore, innovative products are required to meet customer expectations. In addition, customers have more options to choose from and therefore, prone to switch from one product to another, if the later one is more innovative. #urrent and potential competitors work persistently to offer innovative products to have a competitive edge. To remain competitive, a company requires working hard to introduce innovative products or services. 'tark further made companies aware if they do not or cannot innovate and if a company lacks effective and successful innovation, then its revenue decreases, retention rate of customers drops, employee motivation is held back, and finally, the company falls behind in the competition.

2.2.2 Classification of Innovation


The above discussed definition of innovation given by &aregheh et al. >0;;:? does not cover the ranges of innovation, if Trott >0;;4? proposed classification of innovation is considered. This is because, Trott extended the innovation scope in management, production, marketing, etc, besides product, service and process innovation. #ontrary to the notion of &aregheh et al., that said about innovation of product, service and process only, Trott further included innovation in the fields of management, production, marketing, etc. Trot in addition mentioned about radical innovation and incremental innovation. 1adical innovation is to bring something completely new that contributes in the socio,environmental change process. Incremental innovation is to attain small but gradual improvement in existing entities. Incremental innovation can take advantage of differentiation in a smaller scale, but it is quite frequent. "n the other hand, radical innovation allows having differentiation advantage in a larger scale, but does not happen very often. 1egarding innovation process, #hesbrough >0;;2? discussed closed innovation and open innovation and emphasised that open innovation creates more productive innovation. #losed innovation is a traditional innovation process. #losed innovation implementing organisations take innovation initiatives within their institutional boundaries in a systematic way. They do not interact much with the external environment and also do not tend to take input beyond organisational boundaries.

8i&ure 2+2+!: 'losed innovation process

Source: 'hesbrou&h 92

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#losed innovation continues within the defined boundary of an organisation. In the research phase, some projects are taken forward and implemented in development phase in the internal setup of the organisation, then the new product or service is delivered to markets or customers. 1emarkably, the organisational boundaries of firms of closed innovation process are kept more isolated from the external entities. They carry innovation projects independently without influence of anything beyond organisational boundaries. "pen innovation is to establish a link between external entities with the establishment of an internal innovation to conceptualise ideas and concepts of externally induced innovation >#hesbrough, 0;;2?. )ore organisations increasingly turn to the concept of open innovation. Innovative productivity of an organisation increases while open innovation concept is adopted. It is because the limited internal innovation establishment gets innovation ideas and concepts from an unlimited number of external entities through open innovation. According to #hesbrough >0;;2?, Along with the internal product development initiatives, companies keep its access open to get more product development ideas and concepts from the external sources such as customers, universities, independent research institutions in the process of open innovation. Therefore, companies have more enriched sources of innovative ideas and concepts in the combination of internal initiatives and external sources.

8i&ure 2+2+2: 6pen innovation process

Source: 'hesbrou&h 92

.:

In the research phase of the open innovation process, research projects are initiated internally and their organisational boundaries are kept open to have research input from external entities such as customers, research establishments in universities, and other independent research establishments. !ith the mutual benefits of external entities and internal research facilities, research projects turn mature and are forwarded to the development stage to implement and then the new product or service is delivered to existing markets as well as potential markets. As internal research projects continue taking support from the external entities, open innovation can generate more effective and enriched innovation for a company. #hesbrough >0;;2? compared the open innovation process with the closed innovation and showed that output is relatively more productive and effective in open innovation which can be observed in <igures 0.0./ and 0.0.0.

2.2.3

tages of Innovation !rocess

1amsey >0;;2? proposed five stages of the innovation process= /. 9lanning 0. Implementing 2. *valuating 3. <ine,Tuning 4. 1outinising As suggested by 1amsey >0;;2?, Bthe innovation process begins with the planning phase and continues to routinisation phase, but does not stop thereE rather it moves cyclically in planning phase and begins againC. Through this cyclical process, further improvements in the existing product are possible and can therefore continue incremental innovation. In addition, the planning phase of the innovation process can be defined taking the proposition of :

@argadon and 'utton >0;;;? that brought the following three issues with respect to the initial phase of the innovation process= /? identification of creative ideas, 0? to cultivate ideas emerged, and 2? rethinking the new use of old ideas. Ideas that have been identified in the first hand could be raw and therefore require nurturing for an effective look. A rather easy approach of idea generation is to rethink new use of older ideas or concepts from different perspectives. !hile the innovation process continues in a cyclic order proposed by 1amsey, incremental innovation consequently continues to have new features overlaying on the existing features. In addition, incremental innovation on a continuous basis induces revolutionary ideas that can develop radical innovations.

2.2."

ignificance of Innovation for Com#etitive advantage


1amsey >0;;2? emphasised the innovation by stating that innovation is not an option

anymore, rather it becomes an essential factor to survival and success of business. 1amsey further asserted that innovation is one of the major keys to sustainable competitive advantage. A business can have a competitive advantage through cost leadership, differentiation, or focus as proposed by 9orter >/:84?. @owever, cost leadership based competitive advantage has less sustainability compared to differentiation based competitive advantage. #ost leadership is easier to imitate, but competitive advantage based on differentiation is difficult to imitate. <or this, differentiation based competitive advantage is more likely to sustainability. A company can have a competitive advantage based on differentiation through innovation and therefore innovation is so important to business success and competitiveness. In addition, Fohn 6ay >/::2? proposed three distinctive capabilities for a competitive advantage. 1eputation, Architecture >relationship? and Innovation are the three distinctive capabilitiesE the creation and exploitation of which are the sources of competitive advantage. @owever, innovation does not have value in a commercial field if it can not induce customer demand or meet the needs of customers. #ustomer needs or customer demand is highly linked to what they perceive. Therefore, it is necessary to know what customers think about innovation strategy and implementation of a company.. In accordance with this, the concepts related to the customer perception process have been examined in the following section.

2.3 'oncepts of 'ustomer ;erception


B9erception is the process of creating a meaningful picture about something through the selection, organising, and interpretation of related stimuliC >'chiffman and 6anuk, 0;;:?. <rom the customers$ perspective, there are many stimuli from a particular commercial object. A customer selects subconsciously some of the stimuli available based on their previous experiences and motives. Then, they organise the selected stimuli and interpret these based /;

on their attitudes and values. Their interpretation of the selected stimuli creates a meaningful image or mind map of a particular object. #ustomers select the stimuli that are pleasant to them and able to meet their needs. They avoid the stimuli that are not favourable and do not meet their particular needs. #ustomers organise the selected stimuli in a group forming a whole impression or mental image. This is a complex process, as people tend to remember incomplete message more than the complete one. According to 'chiffman and 6anuk >0;;:?, organised stimuli are interpreted through the formation of an individual$s attitudes and values. Interpretation is also a complex process as people tend to interpret and draw conclusions, even before listening all the information. #ustomers are different from one another and their attitudes are also different. Therefore, different customers have different perceptions of the same object. @owever, the learning of the customer perception process is expected to help in evaluating how they are influenced by the innovation implication of an organisation. According to 'chiffman and 6anuk >0;;:?, the first step in the process of perception is the selection of stimuli, and then the stimuli are taken forward to be organised and interpreted. <rom this, it can be assumed that the increased exposure of stimuli can make more selection of the stimuli to be taken in the process of perception. !hile the requirement is to the customer involvement and the positive impression of something in particular, the associated stimuli need to be exposed to them more frequently >'chiffman and 6anuk, 0;;:?. Therefore, it can be further inferred that customer perception can be influenced more while they are more exposed to the stimuli associated with new product development and innovation.

2." Innovation Strate&ies on 'ustomer ;erception


9erceiving innovation implication of an organisation is difficult for customers. .in and #hang >0;;3? showed that customers who know the basics of design can easily distinguish the differences in innovation. "nly the category of innovative products that are similar to competing products can be distinguished by customers with or without knowing the basics of design. Therefore, it can be inferred that customer involvement would educate them on product design so that they can differentiate products more than the situation when customers are not involved in innovation process. @owever, design is not the only issue in innovation. There are many issues in product, service, and marketing innovations that could be well recognised by customers. In addition, customers could have a better experience, if they understand innovation more. <urthermore, an organisation can be more effective in having both incremental and radical innovations //

utilising the customer experience >'andberg, 0;;7?. In other words, innovation can be more effective and enriched when an organisation involves its customers in its innovation process. This statement indicates the level of importance of customer involvement in the implications of innovation. .agrosen >0;;4? argued that formal methods of customer involvement in product innovation were inadequate in terms of effectiveness and therefore proposed creative ways through working of the different functional teams together to achieve a common goal. There are many factors that contribute to customer satisfaction. 'ome critical factors are quality, service, and price. Innovation has a significant influence on the quality, service, and price. In this regard, it can be stated that innovation has an impact on customer satisfaction that has a direct relationship to the positive impression of customers on an effective innovative company. It is therefore essential to identify how close must be an organisation to its customers for a more effective innovation. In this regard, &elkahla and Triki >0;//? proposed a measurement scale by which a company can evaluate its capability for innovation and can have an indication of how close it has to remain to customers for a more effective innovation.

2.$ *iterary 8rame1or- in summary


The literature review above broadly covers innovation, customer perception, and the influence of innovation strategies on customer perception. &ased on this literature review, a literary framework has been developed below to precisely address the research requirements. Investigation on customer involvement in product development and their perception of innovation strategies implemented by %The &ody 'hop$ is the aim of the project. To achieve this research aim this study is required to address the extent of customer involvement in the management of innovation of %The body 'hop$, the extent of influence of innovation strategies and implementations in the perception of customers about it, and approaches of further improved innovation strategies based on the perception of customers. The literary framework to study the extent of customer involvement in the innovation management of the case company requires knowledge of prominent concepts of innovation approaches along with their degree of customer involvement. In this section findings of the literature review have been included in a summarised form. In the framework, Trott >0;;4, page /4? proposed definition has been considered where it is stated that BInnovation is the management of all the activities involved in the process of idea generation, technology development, manufacturing and marketing of a new >or improved? product or manufacturing process or equipmentC. This definition clarifies the scope of innovation and therefore the /0

study intends to identify how customer involvement is possible in various aspects of innovation proposed by Trott. The literature review identifies several types of approaches to innovation and, by definition, different approaches allows varying degrees of customer involvement. <rom the degree of innovation, it can be incremental and radical. Incremental innovation can take advantage of differentiation in a smaller scale, but it is quite frequent. 1adical innovation allows to have differentiation advantage in a larger scale, but it does not happen very often. !hile the innovation process continues in the cyclic order that proposed by 1amsey >0;;2?, incremental innovation continues accordingly overlaying the new features on the existing features. )oreover, incremental innovation on continuous basis induces revolutionary ideas that can develop radical innovations. 1egarding innovation process, #hesbrough >0;;2? discussed closed innovation and open innovation and emphasised on open innovation over closed innovation for a more productive innovation management. #losed innovation is a traditional innovation process where organisations take innovation initiatives being in the institutional boundary in a systematic way. "pen innovation is to establish a link between external entities and internal innovation establishment to conceptualise external entity induced innovation ideas and concepts. )ore organisations increasingly turn to open innovation concept. Innovation productivity of an organisation increases while open innovation concept is adopted, as the limited internal innovation establishment gets innovation ideas and concepts from unlimited external entities through open innovation. These characterisations of different types of innovation processes suggest that customer involvement is accepted more in open innovation compared to closed innovation and customer involvement is more effective in the case of incremental innovation compared to radical innovation. &ased on this literary framework, the study intends to evaluate the extent of customer involvement in the innovation strategies and implications of %The body 'hop$, which is the first research objective of the project. The second research objective is to evaluate the extent of influence of innovation strategies and implementations on customer perception. To achieve this objective requires collecting data directly from the customers to know how customers perceive a company$s innovation strategies and implications. Therefore, it is necessary to first understand the process of perception that has been discussed in the literature review mainly based on the concepts proposed by 'chiffman and 6anuk >0;;:?. The question is whether customers can recognise and differentiate innovation from a company or not. In this regard, .in and #hang >0;;3? showed that customers who know the basics of design can easily distinguish the differences in innovation. The literary framework to assess the degree of influence of innovation strategies and implementations on customer perception suggests collecting data from the customers in relation to various aspects and concepts of innovation and therefore /2

needing to know how the characteristics of the innovation are related to customer perception on innovation strategies and implementation of %The &ody 'hop$. The requirement of information has been designed based on the characteristics of Trott >0;;4? proposed definition, #hesbrough >0;;2? discussed concepts of open and closed innovation, 1amsey >0;;2? discussed incremental and radical innovation and 'andberg >0;;7? suggested argument that an organisation can become more effective to have both incremental and radical innovations utilising the customer experience. &ased on this framework, the extent of influence of innovation strategies and implementations on customer perception can be effectively evaluated in the context of the case company. To achieve the third research objective, which is to identify approaches of further improved innovation strategies in reflection of customer perception in the context of The &ody 'hop, it is required to evaluate the existing innovation strategies of the company and analyse customer perception in regard to satisfaction, involvement in new product development process and compare the company implications in relation to the existing concepts and theories. This research objective is the follow,through of the first two research objectives and can be attained on the basis of overall analysis and discussion of the existing concepts, company implications, and customer perception on their satisfaction and involvement in the new product development process of the company.

2.% 'hapter 'onclusion


The literature review of this chapter guided to develop theoretical framework for this study which was included at the end of this chapter. The next chapter is to select the appropriate research methodology to meet the research aim properly.

/3

. Methodolo&y
.+! 'hapter Introduction
)ethodology defines and selects the appropriate rules and procedures to conduct a research. A research project needs to be guided from the beginning to the end by the research plan based on the methodology. Attainment of the research aim has to be recognised and thus it is important to follow an established research process. This chapter discusses and selects the research methodology to achieve the research aim following a systematic and recognised research plan.

.+2 Brief 6vervie1 of the 'hapter


This chapter is to select a set of appropriate research tools and techniques to properly achieve the research aim of this project. %Introduction to methodologies$ section will discuss the available research tools and techniques. %1esearch &ackground$ section will briefly discuss the research requirement for this study. %1esearch +esign for the 9roject$ section will select the research tools and techniques after establishing rationale for particular selections. %+ata #ollection and Analysis$ section will discuss what type of data will be collected and how the collected data will be analysed. %9resentation of the 1esults$ section will describe how the results of the data analysis will be presented. At the end of this chapter, scope of the research, ethical considerations, reliability, validity, and research limitations will also be discussed.

.+. Introduction to Methodolo&ies


3.3.1 &esearc' A##roac'
In reference of the concept proposed by +ubois and Gadde >0;;0?, 'aunders et al. >0;;:? discussed two research approaches ( Inductive and +eductive. Inductive research approach proposes the development of the theory based on the analysis of empirical data. "n the other hand, deductive research approach begins with the existing theoretical concepts and suggests theory assertion or amendment by putting it in the empirical parameters. To develop a theory, inductive research approach is functional and to verify an existing theory, deductive research approach is functional. In addition, 'aunders et al. also described the method of qualitative and quantitative research approaches. Huantitative research approach is applied when the empirical data are numeric in nature, where collected data are analysed using )' excel or '9'' kind of mathematical and statistical tools. "n the other hand, qualitative research approach is useful when collected empirical data are non,numeric kind such as words and /4

pictures, where the data analysis essentially depends on a self perspective and judgment of the researcher.

3.3.2 &esearc' trateg(


1esearch strategies discussed by 'aunders et al. >0;;:? are mainly sample survey, experiment research, archival analysis, and case study. Archival analysis is primarily a research strategy based on secondary data where existing data in documents, reports, and databases are analysed to achieve the aim of the research. In the strategy of experimental research, the research subjects are separated in the experiment group and non,experiment group. 'tudy is performed on experiment group and the outcome is compared with the outcome of the non,experiment group. *xperiment research strategy is more considered in the study of pure science, but it is also applicable in the study of social sciences. In the sample survey research strategy, data are collected from a representative sample of a specific population through primarily questionnaire survey which essentially generates numeric empirical data and therefore quantitative research approach is required to select. The case study research strategy is more appropriate in a context on which researcher has little or no control, but requires to study the setup comprehensively. In the case study research strategy, either or both quantitative and qualitative research approaches are functional.

.+/ ,esearch Bac-&round


Investigating customer involvement in product development and their perception of innovation strategies implemented by %The &ody 'hop$ is the aim of the project. To attain this research aim it is required address the extent of customer involvement in the innovation management of %The body 'hop$, the extent of influence of innovation strategies and implementations on customer perception about it, and approaches of further improved innovation strategies in reflection of customer perception.

/5

.+" ,esearch Desi&n for the ;ro0ect


3.$.1 &esearc' A##roac' for t'e #ro)ect
The project aims to apply existing theories on innovation implication and customer perception on the setup of the case company and therefore deductive research approach is suitable. )oreover, customers of the case company will be approached for data collection through questionnaire survey from where numeric empiric data will be collected and therefore quantitative research approach is suitable.

3.$.2 &esearc' trateg( for t'e #ro)ect


The research project is to assess customer involvement in innovation implication and their perception on new product development process in the context of %The &ody 'hop$. The research strategy chosen for this project is %case study$. The underlying principle behind this is that the study is to investigate comprehensively the involvement of customers and their perception in relation to innovation implications on a setup of a company where the researcher has little or no control over the company and its customers.

.+4 Data 'ollection and Analysis


1egarding the sources of data collection, 'aunders et al. >0;;:? described both secondary data and primary data. 9rimary data are those which are collected by the researcher directly from the sources. 'econdary data are those which are collected by other researchers and institutions to meet the other research aims. In this case, the researcher collects data from secondary sources and intends to apply them to realiDe their own research purposes. It infers that primary data are more suitable compared to secondary data on exactly meeting a particular research purpose. @owever, the primary data collection is time consuming and costlyE on the hand, secondary data collection is relatively fast and economical. The purpose of this research study is to investigate the involvement of customers in product development and their perception of innovation strategies implemented by %The &ody 'hop$. To achieve this research aim, two types of data are necessary to collect= /? data on innovation strategies and their implications in the case company and 0? data on customer perception about the impact of innovations of the case company. <or the first type, data are needed to collect from secondary sources such as documents, reports, newspaper articles on case company$s innovation strategies and implications. <or the second type, data are needed to collect directly from a representative sample of customers of the case company through questionnaire survey and therefore data gathered will be primary data. /7

#losed ended questionnaire will be developed so that a precise answer can be found with a minimal effort of the respondents. umber of questions in total is eighteen including eleven questions that are directly related to the objectives of the research. 9reliminary sample siDe for questionnaire survey based primary data collection from customers is around 5; that are selected on random sampling basis. In front of the open premise of The &ody 'hop$s 'tratford branch, customers will be approached to fill the questionnaire. As the major part of empirical data is quantitative in nature, the analysis will be carried using the computer,based statistical package such as )' *xcel.

.+7 ;resentation of the ,esults


*mpirical data will be mainly quantitative in nature. Analysis will be done in assistance of )' *xcel. The results of the data analysis will be presented using )' *xcel generated graphs and charts. The explanation and rationale will be given along with every graphs and charts included.

.+# Scope of the Study


The research topic is centred on no other business aspects but innovation strategies and implications. In addition, the perception of customers is intended to assess in relation to only innovation strategies and implications, though many other factors are involved in the process of customer perception.

.+< =thical 'onsideration


1esearch ethics will be strictly maintained following the given guidelines. To fill the questionnaire no one will be compelled. In front of the open premise of The &ody 'hop$s 'tratford branch, customers will be approached to fill the questionnaire. Huestionnaire will be filled only when the approached customers express their willingness. Identity of the respondents will not be disclosed so that respondents will not face any unwanted inconvenience.

.+!

>alidity and ,eliability

-alidity is the extent to which a test measures what it claims to measure. <or the research validity data collection methods have been developed exactly following the requirement of the research objectives moreover, data will be collected without the respondents$ biasness and analysed without researcher$s biasness. <or the research reliability, each and every step of the projects will be carried following a structured plan so that the same research can conducted by others following the given plan will have similar results. /8

.+!!

*imitations

The study aims to assess customer perception from the context of innovation alone. Another limitation is the evaluation of innovation is discussed on the basis of none other aspects but customer involvement and perception. The study also intends to conduct on the basis of only a limited number of sample customers of a single branch of the case company and hence similar studies are necessary to carry out in some different setups to have more research validity and Generalisability.

.+!2
Title Theory

Table detailin& the primary research


My research ,ationale Innovation process >1amsey The project evolves around customer 0;;2?
involvement in product development and their perception of innovation strategies thus more relevant theories

"pen and #losed innovation and process >#hesbrough, 0;;2? Innovation as +istinctive

mentioned beside have been considered

#apabilities >6ay, /::2? #ustomer involvement in

Innovation >.agrosen, 0;;4, +eduction &elkahla and Triki, 0;//? +eductive approach
It is to apply the exiting theories on innovation and customer perception on the setup of the case company and thus deductive research approach is found appropriate. I have little or no control over the company and its customers, though I have to study customer involvement in product development and their perception of innovation strategies comprehensively and thus appropriate research strategy is case study.

'trategy

#ase study

Huestionnaire #losed ended

1esponse from the survey participants can be found more easily when questionnaire is closed ended

+ata collection

Two kinds of data are required to collect= /? data regarding

<or the first kind, data are required to collect from secondary sources like

/:

innovation implications

strategies of the

and documents, reports, newspaper articles case regarding case company$s innovation strategies and implications. <or the second kind, data are required to collect directly from a representative sample of customers of the case company through questionnaire survey and thus collected data will be primary data. *ach individual is chosen entirely by chance and each member of the population has an equal chance of being included in the sample.

company and 0? data regarding customer perception in relation to innovation implications of the case company.

'ampling

1andom 'ampling

Analysis

)' *xcel

As the major part of empirical data is quantitative in kind, the analysis is expected to conduct taking assistance of computer,based statistical package , )' *xcel. )' *xcel produced graphs and charts are effective in presenting research findings "n the basis of time and cost involved, sample siDe of 5; has been considered manageable

9resentation

Graphs and charts

'ample siDe

5;

3.13

'hapter 'onclusion

This chapter discussed and selected research methodology. Ander deductive research approach the study selected case study research strategy to achieve the research aim collecting data from the customers of the case company ( The &ody 'hop using questionnaire data collection tool which produced quantitative data that were analysed using )' *xcel in the following chapter.

/ Data and Analysis


/+! 'hapter Introduction
To achieve the research aim, two types of data are needed to collect= /? data on innovation strategies and the implications of the case company and 0? data relating to 0;

customer perception as to the innovation implications of the case company. <or the first type, it is necessary to collect data from secondary sources such as documents, reports, newspaper articles on case company$s innovation strategies and implications. <or the second type, data is collected directly from a representative sample of customers of the case company through questionnaire survey and therefore the collected data will be the primary data. As the major part of empirical data is quantitative in nature, the analysis will be conducted using )' *xcel. The results of data analysis are presented using )' *xcel generated graphs and charts. The explanation and rationale is given along with every graph and chart included.

/+2 'ase company ?The Body Shop and Its Innovation strate&ies and Implications
The &ody 'hop International plc, a highly regarded innovative company in the A6, was established in /:75 by +ame Anita 1oddick and appeared the second largest cosmetic franchise in the world with 04;; stores in 5; countries. It stands out as the Boriginal, natural and ethical beauty brandC. In 0;;4, The &ody 'hop was acquired by .$"real for G&9 540 million >The Independent news, /7 )arch 0;;5?. *ven after the acquisition, the &ody 'hop operates its business with its own identity and values and keeps its headquarters in .ittlehampton, A6. According to the 0;/; Annual 1eport of its parent company .$"real, its revenue was 744 million *uros, of which 54 million *uros was its operation profit >+ata source= #orporate !ebsite of The &ody 'hop, 0;/0?. The mission statement of The &ody 'hop is Bto dedicate our business to the pursuit of social and environmental changeC. *ven after 2; years of dynamic business operation, it lives on its mission statement. Its innovation strategies also highly reflect its mission. Its value statement is B!e believe there is only one way to be beautiful, natureIs wayC which is also driven by its mission statement. )ore specifically, The &ody 'hop sets the following five as its core values ( Bagainst animal testingC, Bsupport community tradeC, Bactivate self,esteemC, Bdefend human rightsC, and Bprotect our planetC. These core values refer to the dedication of The &ody 'hop to an ethical commitment offering products from natural extracts and ingredients ( more than 54J of which are sourced from 2; community fair trade suppliers in 00 countries, for which more than 04;;; people are benefited directly >+ata source= Annual 1eport 0;/; of parent company .$"real?. The &ody 'hop offers more than :;; beauty products. 'peciality of its products is that all are mainly produced from natural ingredients and extracts. The product range includes skin care, hair care, body butter, aromatherapy, make,up, and all bath and body essentials. &ody butter of The &ody 'hop is produced from the extracts of mango, olive, strawberry, coconut 0/

etcE innovative mineral based makeupE and skin care products from the extracts of tea tree, sea weed, Aloe -era, and many kinds of vitamins. Apart from these, it has product ranges for baby and men. Its large 1K+ facilities persistently look for innovative products and in the year 0;/;, it introduced a substantial number of new products which include BrainforestC hair care using &raDilian pracaxi oil, without using silicones, parabens or colourants and sulphates in shampoosE BnatruliftC firming skin care using organic pomegranateE and Bthe hemp collectionC for dry skin care using #ommunity <air Trade hemp seed oil. All of these are innovative in its kinds. It has been observed that its product ingredients are generally collected from food extracts. <urthermore, the 1K+ of The &ody 'hop is highly focused on introducing non,wood forest products ><A", corporate document repository, /::4?. The &ody 'hop deliberately looks for natural alternatives to traditional ingredients of cosmetic industry. !hatever it does, it does by keeping the environmental impact minimum in a broader sense. All the manufacturing it outsourced except soap products, for which it has its own soap factory in Glasgow, A6 >+ata source= #orporate !ebsite of The &ody 'hop, 0;/0?. The &ody 'hop is the second largest cosmetic franchise in the world with 04;; stores in 5; countries including India, 9akistan, 9oland, amibia, and *gypt. In addition to selling products through its own stores, it also sells through the direct,selling channel which is called BThe &ody 'hop at @omeC , markets of that are currently the A6 and Australia. 9arallel to actual market, The &ody shop sells products in virtual market through its e,commerce websites in the A6, the A'A, #anada, Australia, 6orea and Fapan. In recent years, The &ody 'hop has expanded its business into new markets. !hen it went to India, it offered /;;J vegetarian products in response to socio,cultural scenario of India and got a tremendous response from Indian customers >+ata source= Annual 1eport 0;/; of parent company .$"real?. Innovation gets key focus in The &ody 'hop and it strategically went for manufacturing outsourcing only to give optimum focus on innovation. Its large 1K+ facilities persistently look for innovative products. Along with product innovation efforts, it went for innovation in packaging. To reduce environmental affect and to reduce costs, it offers customers to refill to avoid new bottle or jar use. It formally introduced reuse of large boxes. In addition of material recycling, it persistently seeks for those products that have less environmental affect >+ata source= #orporate !ebsite of The &ody 'hop, 0;/0?. According to the preferences of customers from different cultural backgrounds, the company emphasises in the introduction of new range of products and they are doing so for 00

the customers of &raDil, India, and #hina. This means, the company is collecting innovation ideas from the consumers of different cultural backgrounds. )oreover, while it goes for corporate social responsibilities, it allocates grants to young people to create innovative projects. Innovative products need to be tested before commercial launching. As it stands against animal testing, it adopted innovative approaches to product testing without testing on animals, without destroying the planet, and without exploiting human beings >+ata source= Annual 1eport 0;/; of parent company .$"real?.

/+. ;rimary Data from the customers of The Body Shop and Analysis
9rimary data was collected from a sample siDe of 5; customers of The &ody 'hop, 'tratford &ranch on a random sampling basis. The data collection was done in the period of 0 April to 8 April 0;/0. #losed ended questionnaire generated quantitative data and were analysed using )' *xcel statistical package. @uestionnaire lin-ed to the 6b0ectives

,esearch ob0ective != To what extent %The &ody 'hop$ is responsive to customer suggestions
for product development 1evised questionnaire linked to 1esearch objective /=

!+ Do you a&ree that TA= B6DB SA6; is ea&er to -no1 about you opinion for product improvement ideas3
Strongly agree Somewhat agree !either agree nor disagree isagree Strongly disagree

2+ Are you a1are of any promotion from TA= B6DB SA6; for customers to provide ne1 product ideas and 1in a priCe3
"es !o !ever heard of this

.+ Aas TA= B6DB SA6; introduced any such products that you 1ere loo-in& for last several months3
#re$uently introduces Sometime introduces !ever found so %annot say precisely

02

,esearch ob0ective 2= To what extent customers perceive themselves to be involved in product


development 1evised questionnaire linked to 1esearch objective 0=

/+ Ao1 different to other beauty ran&es do you thin- TA= B6DB SA6; products are3
&ighly ifferent Somewhat ifferent Similar products are available in the market

"+ Do you thin- TA= B6DB SA6; products are &ood value for money3
&ighly 'aluable Somewhat 'aluable (ess valuable in regard of price

4+ Aave you ever been involved in ma-in& su&&estions for ne1 products for TA= B6DB SA6;3
"es !o %annot say precisely

7+ If Bes) ho1 1ould you rate your e2perience3


&ighly )n*oyed fairly )n*oyed !ever )n*oyed

,esearch ob0ective .= To what extent customers feel satisfied with the strategies used by %The
&ody 'hop$ 1evised questionnaire linked to 1esearch objective 2=

#+ 8or the innovative product ran&e of TA= B6DB SA6; ho1 satisfied do you feel as a customer3
&ighly Satisfied Sometime Satisfied !ever Satisfied +nly Satisfied when the price is low

<+ If satisfied for the innovative product ran&e of TA= B6DB SA6;) do you positively discuss about it 1ith your peers3
Always Sometime I do not care +nly discuss +nly discuss when I

03

iscuss

iscuss

when the price is low

got benefited by the product

! + Dhat satisfies you the most about TA= B6DB SA6;3 9please tic- most preferred .:
8actors Innovative 9roduct 1ange &rand Image Ase of atural Ingredients -alue for the money Attractive 9romotional campaign +iscount -oucher #ompany reputation <air Trade 9olicies 'ocial and *nvironmental !elfare Activities #ustomer #are *agerness to have customer feedback regarding product Bour choice

+iscussion, explanation, and rationale of the analysis and findings have been included below that includes presentation of findings using )' *xcel generated graphs and charts.

".3.1 Insig't from t'e et'nic origin of t'e res#ondents


"f 5; respondents, 05 >32J? were of *uropean origin. Asian origin respondents were /3 >02J?. .atin American, African, and #aribbean origin were /; >/7J?, 7 >/0J?, and 2 >4J? respectively. *xpectedly *uropean customers are high in number. @owever, Asian origin customers are significant in number. #ustomers of .atin American, African, and #aribbean origin are well distributed. +ifferent ethnic origins have different needs of beauty products like other products such as foods, cloths, etc. They have different fashion needs induced from different cultural background. In addition to generic beauty products, customised beauty products related to different cultural background could have significant prospect among the existing and potential customers of different ethnic background.

04

(atin American 02.

%aribbean 1.

)uropean ,-.

African 0/.

Asian /-.

8i&ure /+.: Distribution of ethnic ori&in of the respondents Source: ;rimary Data Analysis 92 !2:

".3.2 Differentiation and value of mone( of T'e *od( 'o# #roducts


2: >54J? respondents of 5; opined that The &ody 'hop products were highly different. /8 >2;J? opined that they were somewhat different. A very insignificant number, only 2 >4J?, opined that similar products were available in the market. &eauty products of similar purpose which are made of natural ingredients and extracts are recognised as different by 47 >:4J? respondent customers. It can be stated from this finding that The &ody 'hop is sufficiently successful in establishing differentiation as a competitive advantage.

,1 ,5 -1 -5 /1 /5 01 05 1 5 &ighly Series0

-3

04

Similar products are available in the market -

ifferent -3

Somewhat 04

ifferent

8i&ure /+/: Analysis of respondents perception of product differentiation of The Body Shop Source: ;rimary Data Analysis 92 !2: @owever, a significant 02 >28J? of 5; respondent customers consider The &ody 'hop products less valuable in regard to price. Though about 27 >50J? of the respondent customers 05

consider The &ody 'hop products have value of money, rest 02 >28J? respondents consider the opposite.

-1 -5 /1 /5 01 05 1 5 &ighly 'aluable Series0 -0 Somewhat 'aluable 6 6 (ess valuable in regard of price /-0 /-

8i&ure /+": Analysis of respondents perception of product value of money of The Body Shop Source: ;rimary Data Analysis 92 !2:

".3.3 Customer atisfaction for innovative #roduct ranges of T'e *od( 'o# and satisfaction induced word of mout'
1espondents were asked how satisfied they are for innovative product ranges of The &ody 'hop and 2: >54J? of them expressed their satisfaction. @owever, a significant 0/ >24J? respondents stated that they were only satisfied when the price was low. Therefore, it can be assumed that despite its innovative product range, high price is a concern for more customer satisfaction.

-1 -5 /1 /5 01 05 1 5 &ighly Satisfied Series0 -0 Sometime Satisfied 4 5 !ever Satisfied 5 +nly Satisfied when the price is low /0 4 /0 -0

8i&ure /+4: Analysis of ,espondents level of satisfaction for the innovative product ran&e of The Body Shop Source: ;rimary Data Analysis 92 !2: 07

'atisfied customers most likely spread good words to their peers. A question was asked to the respondent customers in this regard. 1emarkably /7 >08J? of 5; customers remarked that they only discussed when the price was low. This finding suggests that The &ody 'hop does not get the benefits of word of mouth marketing for the products which are perceived high price. Another remarkable finding is that /4 >04J? of the respondent customers opined that they only discussed positively when they got benefits from the product. <rom this finding it can be assumed that positive word of mouth are more likely generated when customers find the product nearer to their requirement. #ombining this with the finding of 'ection 3.2./, it can be further assumed that customer satisfaction can be improved and positive word of mouth can be generated more when customers of different ethnic origin can have different sets of beauty products.
02 0, 01

04 06 0, 0/ 05 4 6 , / 5 Always iscuss Series0 0, Sometime iscuss 6 I do not care 4 6 4

+nly discuss when the price is low 02

+nly discuss when I got benefited by the product 01

8i&ure /+7: Analysis of ,espondents intention of 1ord of mouth if satisfied for the innovative product ran&e of The Body Shop Source: ;rimary Data Analysis 92 !2:

".3." !roduct im#rovement ideas from customers and im#lication in T'e *od( 'o#
!hile respondents were asked whether The &ody 'hop was eager to know product improvement ideas from them, only /4 >04J? of 5; respondents agreed and /2 >0/.5J? respondents disagreed. 20 >42J? responses of %neither agree nor disagree$ reflect their confusion in this regard. It could be that either The &ody 'hop does not have a formal approach to know product improvement ideas from them, or most of the respondents could not recall the similar kind of initiatives.

08

-1 -5 /1 /5 01 05 1 5 Strongly agree Series0 0 Somewhat agree 0, 0 0,

-/

05 !either agree nor disagree -/ Strongly disagree -

isagree 05

8i&ure /+#: Analysis of respondents opinion Ao1 =a&er The Body Shop is to -no1 product improvement ideas from them Source: ;rimary Data Analysis 92 !2: 'imilar kind of reflection from the respondent customers appeared while they were asked whether The &ody 'hop introduced any such products that they were looking for in the last few months. A significant 34 >74J? of them opined that they did not find this or could not say precisely. In accordance with the finding of <igure 3.5, it can be assumed that The &ody 'hop does not take formal approach to know about product improvement ideas from customers and go for implication to introduce the products that customers look for. This assumption can be said more validated from the finding that 40 >87J? of the respondent customers did not find any promotion from The &ody 'hop for customers to provide new product ideas and win a priDe.

-5 /1 /5 01 05 1 5 0/ 02

/4

#re$uently introduces Sometime introduces 0/ !ever found so 02 %annot say precisely /4

Series0

8i&ure /+<: Analysis of respondents opinion 1hether The Body Shop introduced any such products that they 1ere loo-in& for last several months Source: ;rimary Data Analysis 92 !2: 0:

".3.$ Customers+ involvement in making suggestions for new #roducts for T'e *od( 'o#
In response to the question whether they have been involved in making suggestions for new products for The &ody 'hop, a significant 3/ >58J? respondents of 5; said %no$. In addition to this, // >/8J? respondents ticked %cannot say precisely$. This finding as well reflects that The &ody 'hop does not take formal approach to getting suggestions for new products from customers.

%annot s ay precis ely 04.

"es 0-.

!o 63.

8i&ure /+! : Analysis of respondents opinion 1hether they have been involved in ma-in& su&&estions for ne1 products for The Body Shop Source: ;rimary Data Analysis 92 !2: In relation to previous question, respondents were asked whether they enjoyed the suggestion making activities for new products if they were involved. This question was responded by 8 >/2J? of 5; customers as only 8 respondents said that they were involved in suggestion making activities for new products for The &ody 'hop and all of them opined that they enjoyed the experience. <rom this finding it can be assumed that most of the customers would be interested to be involved in the process of new product development.

2;

6 1 , / 0 5 Series0 5 !ever )n*oyed 5 1

&ighly )n*oyed 1

#airly )n*oyed -

8i&ure /+!!: Analysis of respondents de&ree of e2perience if they have been involved in ma-in& su&&estions for ne1 products for The Body Shop Source: ;rimary Data Analysis 92 !2:

".3.% Distribution of factors t'at satisf( res#ondents most about T'e *od( 'o#
The respondent customers were asked about the factors of The &ody 'hop that satisfy them most. A list of /; factors has been given to choose the best 2. The list of factors includes >/? Innovative 9roduct 1ange, >0? Ase of atural Ingredients, >2? -alue for the money, >3? Attractive 9romotional campaign, >4? +iscount -oucher, >5? #ompany reputation, >7? <air Trade 9olicies, >8? 'ocial and *nvironmental !elfare Activities, >:? #ustomer #are, and >/;? *agerness to have customer feedback regarding product.
,5 -4 -1 --5 /1 /5 04 01 05 4 1 5
Series0

-5

/3

01

1 5

,
Social and )nvironmental Welfare , )agerness to have customer feedback 4

Innovative 7roduct 8ange -4

9se of !atural Ingredients --

'alue for the money 01

Attractive 7romotional campaign 1

iscount 'oucher -5

%ompany reputation /3

#air :rade 7olicies 5

%ustomer %are 04

8i&ure /+!2: Analysis of factors that satisfy respondents most about The Body Shop Source: ;rimary Data Analysis 92 !2: 2/

The top 3 selected factors of The &ody 'hop that satisfy the respondent customers are Innovative 9roduct 1ange, Ase of atural Ingredients, +iscount -oucher, and #ompany reputation. This finding has resemblance with the finding of 'ection 3.2.0 which establishes The &ody 'hop as a highly differentiated innovative company. +iscount voucher significantly reduces the product price and thus customers find the product more value for money and talk positively about it with their peers which also resemble the finding of 'ection 3.2.2. The factor, which is company$s %eagerness to have customer feedback regarding product$, is to give an idea whether the company intends to get customer feedback for the purpose of product improvement in accordance with open innovation process. This particular factor gets only 8 >3.3J? responses of /8; responses from 5; respondent customers. This finding leads to the assumption that The &ody 'hop tends to rely less on customer feedback for its product improvement and thus suggests to have closed innovation process.

/+/ Summary 8indin&s


To evaluate customer perception regarding company$s innovation strategies and the degree of customer involvement, primary data was collected from a random sample of 5; customers and analysed in 'ection 3.2. The key findings are as follows= #ustomers of premium priced beauty products of The &ody 'hop are proportional to ethnic origin in a balanced manner. The &ody 'hop is significantly recognised to its customers as an innovative company with highly differentiated competitive advantage. A significant response came to say The &ody 'hop products give less value for money, though price decrease for discount voucher frequently gives more product value for money. Innovative product ranges of The &ody 'hop are found highly satisfying to the customers. @owever, customers were less involved in new product development or improvement process, though they have been found interested to be more involved with the product development process . In this regard, The &ody 'hop has been found less willing to take customer feedback for product improvement and thus suggests it has a closed innovation process. In 'ection 3.0 it was found that The &ody 'hop had many initiatives for socio economic welfare. @owever, in 'ection 3.2.5, it was found that the respondent customers were less aware about their corporate social responsibilities and fair trade policies. If more aware, then The &ody 'hop could have more company reputation and less sensitivity of the customers for high price.

20

/+" 'hapter 'onclusion


Information regarding innovation strategies and their implication in The &ody 'hop was collected mainly from the company website information and parent company$s 0;/; annual report and discussed in 'ection 3.0 which was followed by primary data analysis and findings in 'ections 3.2 and 3.3. The following chapter will draw conclusion of the dissertation and propose recommendations for a more improved innovation strategies and implications to The &ody 'hop and like companies.

22

" 'onclusions and ,ecommendations


"+! 'hapter introduction
#onclusion section of this chapter evaluates the achievement of the study taking each of the research objectives separately. &ased on the entire study including literature review and data analysis, recommendations section of this chapter proposes suggestions to beauty stores for improved approaches of effective innovation that involve customers more with stronger customer perception.

"+2 'onclusions
*ach of the research objectives of this study have been taken separately in this section and discussion has been conducted considering the literature review and data analysis to evaluate how the findings achieve the particular research objective to meet the broader research aim of the study. 8irst research ob0ective 1as to evaluate the responsiveness of The Body Shop to customer su&&estions for product development #ustomers could be external sources of new product development ideas in an open innovation process as discussed by #hesbrough >0;;2? who further asserted that open innovation process in association with external sources could be more productive in innovation compared to closed innovation Lsee 'ection 0.0.0M. The first research objective was to identify to what extent the case company %The &ody 'hop$ is responsive to customer suggestions for product development. To attain this objective, openly accessible official documents such as corporate website and the annual report of The &ody 'hop were discussed Lsee 'ection 3.0M. In addition, a set of related questions were asked to the respondent customers of The &ody 'hop which were analysed in 'ections 3.2.3 and 3.2.4. It has been found that The &ody 'hop did not claim to have closed innovation process, but also did not claim to be responsive to customer suggestions for product development. o where in its mission statement, core values, and innovation strategies, customer involvement in new product development was mentioned Lsee 'ection 0.0.0M. !hile the respondent customers were asked the same, it was found that they could not recall an instance when they were approached by the company for suggestions for product development Lsee <igure 3.5M. It has been further revealed that customers did not find any promotion from The &ody 'hop for customers to provide new product ideas and win a priDe Lsee <igure 3.7M. In another question, only 8 >/2.2J? of 5; respondent customers stated that they were involved at some point in making suggestions for new products for The &ody 'hop, which is a very low percentage 23

Lsee 'ection 3.2.4M. These 8 respondents also expressed that they enjoyed their involvement in product development process Lsee <igure 3.:M. <rom the above mentioned findings, a conclusion can be drawn that The &ody 'hop does not take formal approach to get suggestions for new products from customers and follows closed ended innovation process. <urther conclusion can be drawn that the company can be nearer to its customers and enjoy their satisfaction more if they consider involving customers more in its product development process. Second research ob0ective 1as to investi&ate customer perception in relation to their involvement in product development at The body Shop #ustomer perception on a particular product or a company is developed in the influence of many stimuli of the factors relevant to the product or company >'chiffman and 6anuk, 0;;:?. Innovation strategies and their implication at a company could be a key factor that influence in perception development process Lsee 'ection 0.2M. A set of questions were asked of respondent customers to gauge how they perceive their involvement in the product development process at %The &ody 'hop$. <rom the analysis it has been revealed that a majority of the respondent customers perceive the products of The &ody 'hop highly differentiated Lsee <igure 3.0M. onetheless, a significant 28 percent perceived that the products of The &ody 'hop bore less value for money Lsee <igure 3.2M. )oreover, only /2 percent of the respondent customers positively stated their involvement in the product development process and expressed their enjoyment to be involved Lsee 'ection 3.2.4M. This finding is further emphasised when respondents only 8 times of /8; >2N5;? that express only a little eagerness of The &ody 'hop to have customer feedback for product development Lsee <igure 3./;M. The above findings draw a conclusion that, despite being highly innovative, innovation factor of The &ody 'hop has only a little influence in the customer perception though there is a potential scope to influence positively as all the respondent customers who were involved in product development process expressed their satisfaction for the involvement.

24

Third research ob0ective 1as to evaluate customer satisfaction level for the innovation strate&ies used by The Body Shop

Innovation is one key factor that helps a company to have differentiation based sustainable competitive advantage >9orter, /:84, 6ay /::2?. ew products or services offer from a company not only help to have differentiation based competitive advantage but also help to induce customer satisfaction Lsee 'ection 0.0.3M. To evaluate the degree of customer satisfaction for the innovation strategies used by %The &ody 'hop$ in accordance with the third research objective of study, it has been revealed that 54 percent of the respondent customers expressed their satisfaction for the innovative product ranges of The &ody 'hop Lsee <igure 3.3M. They also expressed that they used to talk to their peers about The &ody 'hop and its products while they are satisfied Lsee <igure 3.4M. onetheless, a significant number of them expressed less satisfaction in terms of products$ value of money Lsee <igure 3.2M, though %discount voucher$ offer was perceived as one of the most attractive factors of The &ody 'hop Lsee 'ection 3.2.5M. It has been further revealed that the satisfaction level of customer was increased when they find themselves more involved in product development process of The &ody 'hop though a majority of the respondent customers did not find themselves involved in it Lsee 'ection 3.2.4M. <rom the above findings for the third research objective, it can be concluded that customers of The &ody 'hop have high satisfaction for its innovative product ranges, but have less satisfaction when they perceive less value for money. In terms of involvement in new product development process, it has found that most of them perceive themselves as %not involved$ and who stated %involved$ expressed satisfaction to be a part of product development process. 8ourth research ob0ective 1as to recommend to The body Shop ho1 to be more effective in innovation as a result of customer perception This research objective is to recommend to The &ody 'hop to be more effective innovation in terms of customer perception. This has been discussed in the following section in combination of literary understanding of innovation and customer perception of chapter 0 and empirical findings of chapter 3.

25

"+. ,ecommendations
<or more improved innovation strategies and their implications in terms of the identified perception of customers a set of recommendations to The &ody 'hop has been proposed below= ,ecommendation ! "n the basis of available documents and annual reports of The &ody 'hop and empirical findings from primary data, it can be assumed that the company practiced closed innovation process. +espite being a highly innovative company, The &ody 'hop enjoys less satisfaction for the limited involvement of customers in its product development process. If it is assumed that the company is sufficiently satisfied with their innovation output, then as well the study suggests the company to practice open innovation process at least involving its customers, so that customer satisfaction would increase further for if they perceive to be a part of the company$s product development process. ,ecommendation 2 It is widely established that open innovation process is more productive than closed innovation process which was found in the literature review. *mpirical findings suggested that the company is highly successful in innovation even with its closed innovation process. As success has no limit, it can be even more productive if it adopts open innovation process. In this regard, the study suggests that The &ody 'hop to consider open innovation process by involving external entities such as its existing and potential customers, universities, and other independent research institutions. ,ecommendation . !hile the distribution of ethnic origins of the respondent customers was analysed, it was found that along with *uropean origin customers, a significant number of customers from Asian, African, and #aribbean origin were proportionately found. #ustomers of different cultural background have different beauty needs. They could be even more satisfied if they find ethnic beauty products of their own need. In this regard, this study suggests The &ody 'hop to consider introducing product ranges for different ethnic origin taking product development ideas from the respective culture. It will not only enrich its innovative product ranges, but also more satisfy the customers of different cultural background. In consequence, the company can also have more revenue and increased number of ethnic customers. 27

,ecommendation / 'atisfying factors of The &ody 'hop that got least responds from the respondent customers were %fair trade policies$ and %social and environmental welfare$. @owever, official documents and annual report of The &ody 'hop revealed that it strictly followed fair trade policies and is widely involved in socio,economic welfare activities. Therefore, it can be assumed that fair trade policies and socio,economic welfare activities of The &ody 'hop are not well communicated with the customers and in consequence customers are less aware about these. If well communicated, then these can influence to build a positive perception of the customers. "n the basis of this finding, the study suggests The &ody 'hop to consider more customer communication to make them aware about its fair trade policies and socio, economic welfare activities, so that customers would have more positive perception about The &ody 'hop. ,ecommendation " The study revealed that respondent customers felt that the products were expensive but their satisfaction levels increased when they had access to promotions such as discount vouchers. "n that basis, it can be suggested to continue discount vouchers like promotions that can reduce the affect of high price in customer perception. It would be even more effective if promotion is designed to offer more discount vouchers to customers if they provide more product development ideas.

"+/ 8urther ,esearch


In regards to the innovation process of The &ody 'hop, the study came to a conclusion on the basis of available documents, annual reports, and the perception of its customers. This conclusion will have more reliability if the data were collected from the management of the respective company. Therefore, further research is suggested to take account of the company management perspective in the study. The findings of this study regarding the influence of customer involvement in product development process was based only on the sample customers of single branch of a single beauty company. This limits the generalisability of the study result. Therefore, further research is suggested to conduct increasing the sample siDe in some more companies of same industry.

28

"+" 'hapter 'onclusion


This chapter drew conclusion on each of the research objectives including references and justification based on the literature review and empirical analysis. The result of the study suggest less than sufficient customer input and involvement in product development at The &ody 'hop and thus innovation implication of the company has only a little influence in building customer perception with the exception that customers perceive significantly well that the company is highly differentiated with its innovative product range. This chapter recommends The &ody 'hop to involve customers more in its innovation implications as the study found that more satisfied customers are those who were involved in its product development process.

2:

4 ,eferences
&aregheh, A., 1owley, F., and 'ambrook, '. >0;;:?, OTowards a multidisciplinary definition of innovationO, Management Decision, -ol. 37 o. 8, pp./202,/22: &elkahla, !. and Triki, A. >0;//?, B#ustomer knowledge enabled innovation capability= proposing a measurement scaleC, Journal of Knowledge Management, -ol. /4 o. 3. #hesbrough, @.!. >0;;2?, BThe era of open innovationC, MIT Sloan Management Review, -ol. 33 o. 2, pp. 24(3/ +avila, T., *pstein, ). F. and 'helton, 1. >0;;5?, Making Innovation Work: How to Manage It, Measure It, and rofit from It. Apper 'addle 1iver= !harton 'chool 9ublishing <A", corporate document repository >/::4?, BThe &ody 'hop *xperienceC, &eyond timber= social, economic and cultural dimensions of non,wood forest products in Asia and the 9acific, LonlineM, Available at Phttp=QQwww.fao.orgQdocrepQN4225*Qx4225e;h.htmR, accessed on 0 April 0;/0 @argadon, A. and 'utton, 1. I. >0;;;? B&uilding an innovation factoryC, Harvard !usiness Review, 78, pp. /47,/57 .$"real Annual 1eport >0;/;?, Information related to organisation and innovation. LonlineM, Available at Phttp=QQasp.Done,secure.netQv0Qindex.jspSidT5/2Q785Q/3;47KlngTenR, accessed on 0 April 0;/0 .agrosen, '. >0;;4?, B#ustomer involvement in new product development= A relationship marketing perspectiveC, "uro#ean Journal of Innovation Management, -ol. 8 o. 3. .in, 1. and #hang, #,.. >0;;3?, BA study of #onsumer 9erception in Innovative 9roductC, <uture Ground International #onference, Australia, 9aper,/33. 9orter, ). >/:84?, #ompetitive Advantage, The <ree 9ress, U. 1amsey, 1. +. >0;;2?, BThe supervision of innovationC, Su#ervision 57, pp. 2,5, L"nlineM Available at Phttp=QQwww.allbusiness.comQmanagementQ4:4085,/.htmlR, accessed on 0/ +ecember, 0;// 'andberg, &. >0;;7?, B#ustomer,related proactiveness in the radical innovation development processC, "uro#ean Journal of Innovation Management, -ol. /; o. 0. 'aunders, )., .ewis, 9. and Thornhill, A. >0;;:?, Researc$ met$ods for %usiness students, 4th edition, *ssex= 9rentice @all. 'chiffman, .. G., and .. .. 6anuk >0;;:?, &onsumer %e$avior. /;th *dition, 9rentice @all. 'tark, F. >0;;;?. BInnovation )anagement.C L"nlineM Available at= Phttp=QQwww.johnstark.comQin3.htmlR, accessed on 07 <ebruary 0;/0 The &ody 'hop >0;/0?, Information related to organisation and innovation. LonlineM, Available at Phttp=QQwww.thebodyshop.co.ukQVenQVgbQservicesQaboutusVcompany.aspxR, accessed on 3 April 0;/0 The Independent news >0;;5?, .I"real buys &ody 'hop for W540m, /7 )arch, LonlineM, Available at Phttp=QQwww.independent.co.ukQnewsQbusinessQnewsQloreal,buys,body,shop,for, pound540m,37;033.htmlR, accessed on 3 April 0;/0 Trott, 9. >0;;4?, Innovation Management and 'ew roduct Develo#ment. 9rentice @all

3;

Appendi2

'ample of the questionnaire to customers of The &ody 'hop to collect primary data for the research project

+ate= ;0 April 0;/0

+ear 'irQ)adam, Uour cooperation is highly requested to get information regarding #ustomer Involvement in Innovation 'trategies and Implications in The Body Shop. Any information will be aggregated to meet a )asters +egree dissertation objective only and will not be shared with others. Uou will require not more than /; minutes to fill the questionnaire. 9lease read each question carefully and mark tick to indicate your answer. In most cases you will only have to tick one box but please read the questions carefully as sometimes you may need to tick more than one box. Uour questionnaire responses will be strictly confidential and data from this research will be reported in the dissertation anonymously. If you have questions at any time about the survey or the procedures, please contact me on X.. Thank you very much for engaging your valuable time and effort. 'incerely, )AY

;lease &ive tic- mar- 1here you a&ree Section !: ,espondents profile

)ale !!+ $ender

<emale

!2+ Dhich a&e &roup do you belon& to3 /5,03 years 04,3; years 3/,44 years 45, 7; years 7/ years K older

!.+ Dhat is your occupation3 Anemployed 'tudent *mployed 1etired @ome maker

!/+ Dould you mind to share your E your household annual income3 less than W/;,;;; ( W/;,;;; W/4,;;; /4,;;/, 0;,;;; 0;,;;/, 04,;;; 04,;;/, 2;,;;; 2;,;;/, 24,;;; 24,;;/ and above

!"+ Dhat is your social economic class3

.ower class

economy )iddle

class

economy Apper class

middle

Apper economy class

!4+ =ducational bac-&round

&elow than bachelors degree a?

&achelor$s degree

)asters degree

!7+ =thnic ori&in

*uropean

Asian

African &

#aribbean

.atin American

Section 2: $eneral %uery

!#+ Ao1 often do you shop at TA= B6DB SA6;3 "nce every week "nce every 0 weeks "nce every month "nce every 2 months "nce every 5 months "nce every year

!<+ Ao1 different to other beauty ran&es do you thin- TA= B6DB SA6; products are3
@ighly +ifferent 'omewhat +ifferent 'imilar products are available in the market

2 + Do you thin- TA= B6DB SA6; products are &ood value for money3
@ighly -aluable 'omewhat -aluable .ess valuable in regard of price

2!+ Do you a&ree that TA= B6DB SA6; is ea&er to -no1 about you opinion for product improvement ideas3
'trongly agree 'omewhat agree either agree nor disagree +isagree 'trongly disagree

22+ Aas TA= B6DB SA6; introduced any such products that you 1ere loo-in& for last several months3
<requently introduces 'ometime introduces ever found so #annot say precisely

2.+ Aave you ever been involved in ma-in& su&&estions for ne1 products for TA= B6DB SA6;3
Ues o #annot say precisely

2/+ If Bes) ho1 1ould you rate your e2perience3


@ighly *njoyed fairly *njoyed ever *njoyed

2"+ Are you a1are of any promotion from TA= B6DB SA6; for customers to provide ne1 product ideas and 1in a priCe3
Ues o ever heard of this

24+ 8or the innovative product ran&e of TA= B6DB SA6; ho1 satisfied do you feel as a customer3
@ighly 'atisfied 'ometime 'atisfied ever 'atisfied "nly 'atisfied when the price is low

27+ If satisfied for the innovative product ran&e of TA= B6DB SA6;) do you positively discuss about it 1ith your peers3
Always +iscuss 'ometime +iscuss I do not "nly discuss when care the price is low "nly discuss when I got benefited by the product

2#+ Dhat satisfies you the most about TA= B6DB SA6;3 9please tic- most preferred .:
8actors Innovative 9roduct 1ange &rand Image Ase of atural Ingredients -alue for the money Attractive 9romotional campaign +iscount -oucher #ompany reputation <air Trade 9olicies 'ocial and *nvironmental !elfare Activities #ustomer #are *agerness to have customer feedback regarding product Bour choice

Than- you very much for your -ind cooperation

I really appreciate your help