Academic Research Report SAMPLE

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

Submitted to

Ann McManus

Dissertation Supervisor

Submitted by

Student ID: 20015851

Group:

Dissertation submitted in part fulfilment of the requirements for the degree of Master of

Business Administration at Cardiff Metropolitan University

May, 2012

http://www3.cardiffmet.ac.uk/English/

Declaration

II

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.

Student’s signature: Date:

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.

Customers 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.

Naturally 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. While I was in

frustration they boosted me up and encouraged me saying that I can do that. And at last I did

that. On this occasion I am also expressing my affectionate thanks to them.

London, 2012

III

Abstract

Innovation has less commercial value if it cannot induce customer demand or meet

customer needs. Customer 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 Body Shop’. 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 Body Shop using questionnaire data collection tool

which produced quantitative data that were analysed using MS Excel.

It has been found that The Body Shop 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. Despite being highly innovative, innovation factor of The Body Shop 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 Body Shop 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 Body Shop 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 Body Shop 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 Body Shop.

IV

Table of contents

Declaration................................................................................................................................IIAcknowledgement....................................................................................................................IIIAbstract....................................................................................................................................IVTable of contents.......................................................................................................................VList of figures and tables........................................................................................................VII

1 Introduction........................................................................................................................11.1 Chapter Introduction..................................................................................................11.2 Research Background.................................................................................................11.3 Research aim..............................................................................................................21.4 Research questions and objectives.............................................................................21.5 Significance of the Study...........................................................................................31.6 Key Concepts.............................................................................................................31.7 Dissertation Structure.................................................................................................41.8 Chapter Conclusion....................................................................................................5

2 Literature Review...............................................................................................................62.1 Chapter Introduction..................................................................................................62.2 Concepts of Innovation..............................................................................................6

2.2.1 Overview of Innovation.....................................................................................62.2.2 Classification of Innovation...............................................................................72.2.3 Stages of Innovation Process.............................................................................92.2.4 Significance of Innovation for Competitive advantage...................................10

2.3 Concepts of Customer Perception............................................................................102.4 Innovation Strategies on Customer Perception........................................................112.5 Literary Framework in summary.............................................................................122.6 Chapter Conclusion..................................................................................................14

3 Methodology....................................................................................................................153.1 Chapter Introduction................................................................................................153.2 Brief Overview of the Chapter.................................................................................153.3 Introduction to Methodologies.................................................................................15

3.3.1 Research Approach..........................................................................................153.3.2 Research Strategy.............................................................................................16

3.4 Research Background...............................................................................................163.5 Research Design for the Project...............................................................................17

3.5.1 Research Approach for the project...................................................................173.5.2 Research Strategy for the project.....................................................................17

3.6 Data Collection and Analysis...................................................................................173.7 Presentation of the Results.......................................................................................183.8 Scope of the Study...................................................................................................183.9 Ethical Consideration...............................................................................................183.10 Validity and Reliability............................................................................................183.11 Limitations...............................................................................................................193.12 Table detailing the primary research........................................................................193.13 Chapter Conclusion..................................................................................................20

4 Data and Analysis............................................................................................................214.1 Chapter Introduction................................................................................................214.2 Case company –‘The Body Shop’ and Its Innovation strategies and Implications..214.3 Primary Data from the customers of The Body Shop and Analysis........................23

4.3.1 Insight from the ethnic origin of the respondents............................................25V

4.3.2 Differentiation and value of money of The Body Shop products....................264.3.3 Customer Satisfaction for innovative product ranges of The Body Shop and satisfaction induced word of mouth.................................................................................274.3.4 Product improvement ideas from customers and implication in The Body Shop

284.3.5 Customers’ involvement in making suggestions for new products for The Body Shop........................................................................................................................304.3.6 Distribution of factors that satisfy respondents most about The Body Shop...31

4.4 Summary Findings...................................................................................................324.5 Chapter Conclusion..................................................................................................33

5 Conclusions and Recommendations................................................................................345.1 Chapter introduction.................................................................................................345.2 Conclusions..............................................................................................................345.3 Recommendations....................................................................................................375.4 Further Research......................................................................................................385.5 Chapter Conclusion..................................................................................................39

6 References........................................................................................................................40

Appendix...................................................................................................................................A

VI

List of figures and tables

Figure 2.2.1: Closed innovation process Source: Chesbrough (2003)...................................8

Figure 2.2.2: Open innovation process Source: Chesbrough (2003).....................................9

Figure 4.1: Distribution of ethnic origin of the respondents....................................................26

Figure 4.2: Analysis of respondents’ perception of product differentiation of The Body Shop..................................................................................................................................................26

Figure 4.3: Analysis of respondents’ perception of product value of money of The Body Shop..................................................................................................................................................27

Figure 4.4: Analysis of Respondents’ level of satisfaction for the innovative product range of The Body Shop.........................................................................................................................27

Figure 4.5: Analysis of Respondents’ intention of word of mouth if satisfied for the innovative product range of The Body Shop...........................................................................28

Figure 4.6: Analysis of respondents’ opinion How Eager The Body Shop is to know product improvement ideas from them.................................................................................................29

Figure 4.7: Analysis of respondents’ opinion whether The Body Shop introduced any such products that they were looking for last several months..........................................................29

Figure 4.8: Analysis of respondents’ opinion whether they have been involved in making suggestions for new products for The Body Shop...................................................................30

Figure 4.9: Analysis of respondents’ degree of experience if they have been involved in making suggestions for new products for The Body Shop......................................................31

Figure 4.10: Analysis of factors that satisfy respondents most about The Body Shop............31

VII

1 Introduction

1.1 Chapter 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. Significance 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.

1.2 Research Background

Innovation is seen even more important for business success and competitiveness. Porter

(1985) 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 Porter’s generic strategy, cost leadership based competitive advantage

can be achieved if lower cost than the competitors can be maintained. Differentiation based

competitive advantage a company can have if it can introduce products that cannot be

introduced by its competitors. Focus based competitive advantage can be attained if a

company select a small segment of the market and serve them in a customised way. However,

cost leadership based competitive advantage has less sustainability compared to

differentiation based competitive advantage. Cost 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. So 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. Consequently, the researcher determines the research topic to

evaluate customer input into the development of products in ‘The Body Shop’. The reason

behind choosing ‘The Body Shop’ as the case company for the study is that, it is one of the

most highly regarded innovative companies of the UK. 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 Body Shop on its customers’ perception as a result of its innovation strategies.

1

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. Furthermore, 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.

1.3 Research aim

The research aim is to investigate customer involvement in product development and their

perception of innovation strategies and their implementation at ‘The Body Shop’.

1.4 Research questions and objectives

The research aim proposes the following research questions to answer:

To what extent is ‘The body Shop’ responsive to customer suggestions for

product development?

To what extent customers perceive themselves to be involved in product

development?

To what extent customers feel satisfied with the strategies used by ‘The body Shop’?

The above-mentioned research questions suggest following research objectives to investigate:

1. To evaluate the responsiveness of ‘The Body Shop’ to customer suggestions for product

development

2. To investigate customer perception in relation to their involvement in product

development at ‘The body Shop’

3. To evaluate customer satisfaction level for the innovation strategies used by ‘The

Body Shop’

4. To recommend to ‘The body Shop’ how to be more effective in innovation as a result

of customer perception

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1.5 Significance 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’.

From 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. Customer 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.

Furthermore, 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.

1.6 Key Concepts

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 “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 equipment”. (Trott, 2005, page 15)

Closed innovation: It is a conventional innovation process where organisations take

innovation initiatives being in the institutional boundary in a systematic way. Organisational

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. (Chesbrough, 2003)

Open 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. (Chesbrough,

2003)

3

Customer perception: Perception is the process of creating a meaningful picture about

something through selecting, organising, and interpreting the related stimuli. From 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. (Schiffman and Kanuk, 2009)

1.7 Dissertation Structure

Chapter 1: 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.

Chapter 2: Literature Review

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.

Chapter 3: Methodology

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. Preliminary sample size for questionnaire survey based primary data collection

from customers will be around 60 that will be selected on random sampling basis.

4

Chapter 4: 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 MS Excel. The results of the data analysis in this chapter will be presented using

MS Excel 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.

Chapter 5: Conclusions and Recommendations

This chapter will have three sections – conclusions, recommendations, and suggestion for

further research. Conclusion will be drawn for each of the research objectives separately to

state how the study met the research requirement. Based on the entire study including

literature review and data analysis, recommendations section of this chapter will propose

suggestions to beauty stores such as The Body Shop for improved approaches of effective

innovation in addition to positive improvement of customers perception of innovation

strategies.

1.8 Chapter Conclusion

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. However, 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.

5

2 Literature Review


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 Concepts of Innovation

2.2.1 Overview of Innovation

Baregheh et al. (2009) 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. Effective 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 (2005, page 15), “innovation 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 equipment”. The

words ‘creativity’ and ‘innovation’ are used reciprocally considering both connote similar

things, but there is a distinction. According to Davila et al. (2006), creativity is the generation

of ideas and innovation is about the conversion of ideas of creativity into products. For a

successful innovation, creativity is essential. Therefore, the innovation process begins with

creativity. The concept of innovation was introduced by Schumpeter (referred by Trott, 2005)

and based on assumptions of different authors on innovation; 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.

6

Regarding the significance of innovation, Stark (2000) stated that innovation was

essential to keep pace with the changing environment. Customer 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. Current 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.

Stark 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 Baregheh et al. (2009) does not

cover the ranges of innovation, if Trott (2005) 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. Contrary to the notion of

Baregheh 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. Radical 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. On the other hand, radical innovation allows having differentiation advantage in a

larger scale, but does not happen very often.

Regarding innovation process, Chesbrough (2003) discussed closed innovation and

open innovation and emphasised that open innovation creates more productive innovation.

Closed innovation is a traditional innovation process. Closed 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.

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Figure 2.2.1: Closed innovation process Source: Chesbrough (2003)

Closed 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. Remarkably, 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.

Open 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

(Chesbrough, 2003). More 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 Chesbrough (2003), 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.

8

Figure 2.2.2: Open innovation process Source: Chesbrough (2003)

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. With 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. Chesbrough (2003) 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 Figures 2.2.1 and 2.2.2.

2.2.3 Stages of Innovation Process

Ramsey (2003) proposed five stages of the innovation process:

1. Planning

2. Implementing

3. Evaluating

4. Fine-Tuning

5. Routinising

As suggested by Ramsey (2003), “the innovation process begins with the planning phase

and continues to routinisation phase, but does not stop there; rather it moves cyclically in

planning phase and begins again”. 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 9

Hargadon and Sutton (2000) that brought the following three issues with respect to the initial

phase of the innovation process: 1) identification of creative ideas, 2) to cultivate ideas

emerged, and 3) 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. While the innovation process continues in a cyclic order proposed by Ramsey,

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.

2.2.4 Significance of Innovation for Competitive advantage

Ramsey (2003) emphasised the innovation by stating that innovation is not an option

anymore, rather it becomes an essential factor to survival and success of business. Ramsey

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 Porter (1985). However, cost leadership based competitive advantage

has less sustainability compared to differentiation based competitive advantage. Cost

leadership is easier to imitate, but competitive advantage based on differentiation is difficult

to imitate. For 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, John Kay (1993) proposed three distinctive capabilities for a competitive

advantage. Reputation, Architecture (relationship) and Innovation are the three distinctive

capabilities; the creation and exploitation of which are the sources of competitive advantage.

However, innovation does not have value in a commercial field if it can not induce customer

demand or meet the needs of customers. Customer 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 Concepts of Customer Perception

“Perception is the process of creating a meaningful picture about something through the

selection, organising, and interpretation of related stimuli” (Schiffman and Kanuk, 2009).

From 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 10

on their attitudes and values. Their interpretation of the selected stimuli creates a meaningful

image or mind map of a particular object. Customers 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. Customers 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 Schiffman and Kanuk (2009),

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. Customers are different from one

another and their attitudes are also different. Therefore, different customers have different

perceptions of the same object. However, 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 Schiffman and Kanuk (2009), 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. From 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. While 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 (Schiffman and Kanuk, 2009).

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.

2.4 Innovation Strategies on Customer Perception

Perceiving innovation implication of an organisation is difficult for customers. Lin and

Chang (2004) showed that customers who know the basics of design can easily distinguish

the differences in innovation. Only 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.

However, 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. Furthermore,

an organisation can be more effective in having both incremental and radical innovations

11

utilising the customer experience (Sandberg, 2007). 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.

Lagrosen (2005) 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. Some 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, Belkahla and Triki (2011) 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.

2.5 Literary Framework in summary

The literature review above broadly covers innovation, customer perception, and the

influence of innovation strategies on customer perception. Based 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 Body Shop’ 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 Shop’, 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 (2005,

page 15) proposed definition has been considered where it is stated that “Innovation 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 equipment”. This definition clarifies the scope of innovation and therefore the

12

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. From 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.

Radical innovation allows to have differentiation advantage in a larger scale, but it does not

happen very often. While the innovation process continues in the cyclic order that proposed

by Ramsey (2003), incremental innovation continues accordingly overlaying the new features

on the existing features. Moreover, incremental innovation on continuous basis induces

revolutionary ideas that can develop radical innovations. Regarding innovation process,

Chesbrough (2003) discussed closed innovation and open innovation and emphasised on

open innovation over closed innovation for a more productive innovation management.

Closed innovation is a traditional innovation process where organisations take innovation

initiatives being in the institutional boundary in a systematic way. Open innovation is to

establish a link between external entities and internal innovation establishment to

conceptualise external entity induced innovation ideas and concepts. More 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. Based on this literary framework, the study intends to

evaluate the extent of customer involvement in the innovation strategies and implications of

‘The body Shop’, 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 Schiffman and Kanuk (2009). The question is whether customers can

recognise and differentiate innovation from a company or not. In this regard, Lin and Chang

(2004) 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 13

needing to know how the characteristics of the innovation are related to customer perception

on innovation strategies and implementation of ‘The Body Shop’. The requirement of

information has been designed based on the characteristics of Trott (2005) proposed

definition, Chesbrough (2003) discussed concepts of open and closed innovation, Ramsey

(2003) discussed incremental and radical innovation and Sandberg (2007) suggested

argument that an organisation can become more effective to have both incremental and

radical innovations utilising the customer experience. Based 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

Body Shop, 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.


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.

14

3 Methodology


Methodology 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.

3.2 Brief Overview of the Chapter

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. ‘Research Background’ section will briefly

discuss the research requirement for this study. ‘Research Design for the Project’ section will

select the research tools and techniques after establishing rationale for particular selections.

‘Data Collection and Analysis’ section will discuss what type of data will be collected and

how the collected data will be analysed. ‘Presentation of the Results’ 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.

3.3 Introduction to Methodologies

3.3.1 Research Approach

In reference of the concept proposed by Dubois and Gadde (2002), Saunders et al. (2009)

discussed two research approaches – Inductive and Deductive. Inductive research approach

proposes the development of the theory based on the analysis of empirical data. On 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, Saunders et al. also described the method of qualitative

and quantitative research approaches. Quantitative research approach is applied when the

empirical data are numeric in nature, where collected data are analysed using MS excel or

SPSS kind of mathematical and statistical tools. On the other hand, qualitative research

approach is useful when collected empirical data are non-numeric kind such as words and

15

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

the researcher.

3.3.2 Research Strategy

Research strategies discussed by Saunders et al. (2009) 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. Study is performed on experiment group and the outcome is compared with the

outcome of the non-experiment group. Experiment 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.

3.4 Research Background

Investigating customer involvement in product development and their perception of

innovation strategies implemented by ‘The Body Shop’ 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 Shop’, 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.

16

3.5 Research Design for the Project

3.5.1 Research Approach for the project

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. Moreover, 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.

3.5.2 Research Strategy for the project

The research project is to assess customer involvement in innovation implication and their

perception on new product development process in the context of ‘The Body Shop’. 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.

3.6 Data Collection and Analysis

Regarding the sources of data collection, Saunders et al. (2009) described both secondary

data and primary data. Primary data are those which are collected by the researcher directly

from the sources. Secondary 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 realize their own research purposes. It infers

that primary data are more suitable compared to secondary data on exactly meeting a

particular research purpose. However, the primary data collection is time consuming and

costly; 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

Body Shop’. To achieve this research aim, two types of data are necessary to collect: 1) data

on innovation strategies and their implications in the case company and 2) data on customer

perception about the impact of innovations of the case company. For 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. For 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.

17

Closed ended questionnaire will be developed so that a precise answer can be found with

a minimal effort of the respondents. Number of questions in total is eighteen including eleven

questions that are directly related to the objectives of the research. Preliminary sample size

for questionnaire survey based primary data collection from customers is around 60 that are

selected on random sampling basis. In front of the open premise of The Body Shop’s

Stratford 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 MS Excel.

3.7 Presentation of the Results

Empirical data will be mainly quantitative in nature. Analysis will be done in assistance

of MS Excel. The results of the data analysis will be presented using MS Excel generated

graphs and charts. The explanation and rationale will be given along with every graphs and

charts included.

3.8 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.

3.9 Ethical Consideration

Research 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 Body Shop’s

Stratford branch, customers will be approached to fill the questionnaire. Questionnaire 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.

3.10 Validity and Reliability

Validity is the extent to which a test measures what it claims to measure. For 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. For 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.

18

3.11 Limitations

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.

3.12 Table detailing the primary research

Title My research Rationale

Theory Innovation process (Ramsey

2003)

Open and Closed innovation

process (Chesbrough, 2003)

Innovation as Distinctive

Capabilities (Kay, 1993)

Customer involvement in

Innovation (Lagrosen, 2005,

Belkahla and Triki, 2011)

The project evolves around customer

involvement in product development and

their perception of innovation strategies

and thus more relevant theories

mentioned beside have been considered

Deduction Deductive 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.

Strategy Case study 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.

Questionnaire Closed ended Response from the survey participants

can be found more easily when

questionnaire is closed ended

19

Data

collection

Two kinds of data are required

to collect: 1) data regarding

innovation strategies and

implications of the case

company and 2) data regarding

customer perception in relation

to innovation implications of

the case company.

For the first kind, data are required to

collect from secondary sources like

documents, reports, newspaper articles

regarding case company’s innovation

strategies and implications. For 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.

Sampling Random Sampling Each individual is chosen entirely by

chance and each member of the

population has an equal chance of being

included in the sample.

Analysis MS Excel As the major part of empirical data is

quantitative in kind, the analysis is

expected to conduct taking assistance

of computer-based statistical package

- MS Excel.

Presentation Graphs and charts MS Excel produced graphs and charts

are effective in presenting research

findings

Sample size 60 On the basis of time and cost

involved, sample size of 60 has been

considered manageable


This chapter discussed and selected research methodology. Under 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 Body Shop using questionnaire data collection tool which

produced quantitative data that were analysed using MS Excel in the following chapter.

20

4 Data and Analysis


To achieve the research aim, two types of data are needed to collect: 1) data on

innovation strategies and the implications of the case company and 2) data relating to

customer perception as to the innovation implications of the case company. For 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. For 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 MS

Excel. The results of data analysis are presented using MS Excel generated graphs and charts.

The explanation and rationale is given along with every graph and chart included.

4.2 Case company –‘The Body Shop’ and Its Innovation strategies and Implications

The Body Shop International plc, a highly regarded innovative company in the UK, was

established in 1976 by Dame Anita Roddick and appeared the second largest cosmetic

franchise in the world with 2500 stores in 60 countries. It stands out as the “original, natural

and ethical beauty brand”. In 2005, The Body Shop was acquired by L’Oreal for GBP 652

million (The Independent news, 17 March 2006). Even after the acquisition, the Body Shop

operates its business with its own identity and values and keeps its headquarters in

Littlehampton, UK. According to the 2010 Annual Report of its parent company L’Oreal, its

revenue was 755 million Euros, of which 65 million Euros was its operation profit (Data

source: Corporate Website of The Body Shop, 2012).

The mission statement of The Body Shop is “to dedicate our business to the pursuit of

social and environmental change”. Even after 30 years of dynamic business operation, it lives

on its mission statement. Its innovation strategies also highly reflect its mission. Its value

statement is “We believe there is only one way to be beautiful, nature's way” which is also

driven by its mission statement. More specifically, The Body Shop sets the following five as

its core values – “against animal testing”, “support community trade”, “activate self-esteem”,

“defend human rights”, and “protect our planet”. These core values refer to the dedication of

The Body Shop to an ethical commitment offering products from natural extracts and

ingredients – more than 65% of which are sourced from 30 community fair trade suppliers in

22 countries, for which more than 25000 people are benefited directly (Data source: Annual

Report 2010 of parent company L’Oreal).

21

The Body Shop offers more than 900 beauty products. Speciality 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. Body

butter of The Body Shop is produced from the extracts of mango, olive, strawberry, coconut

etc; innovative mineral based makeup; and skin care products from the extracts of tea tree,

sea weed, Aloe Vera, and many kinds of vitamins. Apart from these, it has product ranges for

baby and men. Its large R&D facilities persistently look for innovative products and in the

year 2010, it introduced a substantial number of new products which include “rainforest” hair

care using Brazilian pracaxi oil, without using silicones, parabens or colourants and sulphates

in shampoos; “natrulift” firming skin care using organic pomegranate; and “the hemp

collection” for dry skin care using Community Fair 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. Furthermore, the R&D of The Body Shop is highly focused on

introducing non-wood forest products (FAO, corporate document repository, 1995). The

Body Shop deliberately looks for natural alternatives to traditional ingredients of cosmetic

industry. Whatever 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, UK (Data source: Corporate Website of The Body Shop,

2012).

The Body Shop is the second largest cosmetic franchise in the world with 2500 stores in

60 countries including India, Pakistan, Poland, Namibia, and Egypt. In addition to selling

products through its own stores, it also sells through the direct-selling channel which is called

“The Body Shop at Home” - markets of that are currently the UK and Australia. Parallel to

actual market, The Body shop sells products in virtual market through its e-commerce

websites in the UK, the USA, Canada, Australia, Korea and Japan. In recent years, The Body

Shop has expanded its business into new markets. When it went to India, it offered 100%

vegetarian products in response to socio-cultural scenario of India and got a tremendous

response from Indian customers (Data source: Annual Report 2010 of parent company

L’Oreal).

Innovation gets key focus in The Body Shop and it strategically went for manufacturing

outsourcing only to give optimum focus on innovation. Its large R&D 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

22

material recycling, it persistently seeks for those products that have less environmental affect

(Data source: Corporate Website of The Body Shop, 2012).

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

the customers of Brazil, India, and China. This means, the company is collecting innovation

ideas from the consumers of different cultural backgrounds. Moreover, 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 (Data source:

Annual Report 2010 of parent company L’Oreal).

4.3 Primary Data from the customers of The Body Shop and Analysis

Primary data was collected from a sample size of 60 customers of The Body Shop,

Stratford Branch on a random sampling basis. The data collection was done in the period of 2

April to 8 April 2012. Closed ended questionnaire generated quantitative data and were

analysed using MS Excel statistical package.

Questionnaire linked to the Objectives

Research objective 1: To what extent ‘The Body Shop’ is responsive to customer suggestions

for product development

Revised questionnaire linked to Research objective 1:

1. Do you agree that THE BODY SHOP is eager to know about you opinion for product improvement ideas?

Strongly agree Somewhat agree Neither agree nor disagree

Disagree Strongly disagree

2. Are you aware of any promotion from THE BODY SHOP for customers to provide new product ideas and win a prize?

Yes No Never heard of this

3. Has THE BODY SHOP introduced any such products that you were looking for last several months?

23

Frequently introduces

Sometime introduces

Never found so Cannot say precisely

Research objective 2: To what extent customers perceive themselves to be involved in product

development


4. How different to other beauty ranges do you think THE BODY SHOP products are?

Highly Different Somewhat Different

Similar products are available in the market

5. Do you think THE BODY SHOP products are good value for money?

Highly Valuable Somewhat Valuable

Less valuable in regard of price

6. Have you ever been involved in making suggestions for new products for THE BODY SHOP?

Yes No Cannot say precisely

7. If Yes, how would you rate your experience?

Highly Enjoyed fairly Enjoyed Never Enjoyed

Research objective 3: To what extent customers feel satisfied with the strategies used by ‘The

Body Shop’


8. For the innovative product range of THE BODY SHOP how satisfied do you feel as a customer?

Highly Satisfied Sometime Satisfied

Never Satisfied Only Satisfied when the price is low

24

9. If satisfied for the innovative product range of THE BODY SHOP, do you positively discuss about it with your peers?

Always Discuss

Sometime Discuss

I do not care Only discuss when the price is low

Only discuss when I got benefited by the product

10. What satisfies you the most about THE BODY SHOP? (please tick most preferred 3)

Factors Your choiceInnovative Product RangeBrand ImageUse of Natural IngredientsValue for the moneyAttractive Promotional campaignDiscount Voucher Company reputationFair Trade PoliciesSocial and Environmental Welfare ActivitiesCustomer CareEagerness to have customer feedback regarding product

Discussion, explanation, and rationale of the analysis and findings have been included

below that includes presentation of findings using MS Excel generated graphs and charts.

4.3.1 Insight from the ethnic origin of the respondents

Of 60 respondents, 26 (43%) were of European origin. Asian origin respondents were

14 (23%). Latin American, African, and Caribbean origin were 10 (17%), 7 (12%), and 3

(5%) respectively. Expectedly European customers are high in number. However, Asian

origin customers are significant in number. Customers of Latin American, African, and

Caribbean origin are well distributed. Different 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.

25

European43%

Asian23%

African12%

Caribbean5%

Latin American17%

Figure 4.3: Distribution of ethnic origin of the respondentsSource: Primary Data Analysis (2012)

4.3.2 Differentiation and value of money of The Body Shop products

39 (65%) respondents of 60 opined that The Body Shop products were highly

different. 18 (30%) opined that they were somewhat different. A very insignificant number,

only 3 (5%), opined that similar products were available in the market. Beauty products of

similar purpose which are made of natural ingredients and extracts are recognised as different

by 57 (95%) respondent customers. It can be stated from this finding that The Body Shop is

sufficiently successful in establishing differentiation as a competitive advantage.

39

18

3

0

5

10

15

20

25

30

35

40

45

Series1 39 18 3

Highly Different Somewhat Different Similar products are available in the market

Figure 4.4: Analysis of respondents’ perception of product differentiation of The Body ShopSource: Primary Data Analysis (2012)

However, a significant 23 (38%) of 60 respondent customers consider The Body Shop

products less valuable in regard to price. Though about 37 (62%) of the respondent customers

26

consider The Body Shop products have value of money, rest 23 (38%) respondents consider

the opposite.

31

6

23

0

5

10

15

20

25

30

35

Series1 31 6 23

Highly Valuable Somewhat Valuable Less valuable in regard of price

Figure 4.5: Analysis of respondents’ perception of product value of money of The Body ShopSource: Primary Data Analysis (2012)

4.3.3 Customer Satisfaction for innovative product ranges of The Body Shop and satisfaction induced word of mouth

Respondents were asked how satisfied they are for innovative product ranges of The

Body Shop and 39 (65%) of them expressed their satisfaction. However, a significant 21

(35%) 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.

31

8

0

21

0

5

10

15

20

25

30

35

Series1 31 8 0 21

Highly Satisfied Sometime Satisfied Never Satisfied Only Satisfied when the price is low

Figure 4.6: Analysis of Respondents’ level of satisfaction for the innovative product range of The Body ShopSource: Primary Data Analysis (2012)

27

Satisfied customers most likely spread good words to their peers. A question was

asked to the respondent customers in this regard. Remarkably 17 (28%) of 60 customers

remarked that they only discussed when the price was low. This finding suggests that The

Body Shop does not get the benefits of word of mouth marketing for the products which are

perceived high price. Another remarkable finding is that 15 (25%) of the respondent

customers opined that they only discussed positively when they got benefits from the product.

From this finding it can be assumed that positive word of mouth are more likely generated

when customers find the product nearer to their requirement. Combining this with the finding

of Section 4.3.1, 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.

14

6

8

17

15

0

2

4

6

8

10

12

14

16

18

Series1 14 6 8 17 15

Always Discuss Sometime Discuss I do not care Only discuss when the price is low


Figure 4.7: Analysis of Respondents’ intention of word of mouth if satisfied for the innovative product range of The Body ShopSource: Primary Data Analysis (2012)

4.3.4 Product improvement ideas from customers and implication in The Body Shop

While respondents were asked whether The Body Shop was eager to know product

improvement ideas from them, only 15 (25%) of 60 respondents agreed and 13 (21.6%)

respondents disagreed. 32 (53%) responses of ‘neither agree nor disagree’ reflect their

confusion in this regard. It could be that either The Body Shop 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.

28

1

14

32

10

3

0

5

10

15

20

25

30

35

Series1 1 14 32 10 3



Figure 4.8: Analysis of respondents’ opinion How Eager The Body Shop is to know product improvement ideas from themSource: Primary Data Analysis (2012)

Similar kind of reflection from the respondent customers appeared while they were

asked whether The Body Shop introduced any such products that they were looking for in the

last few months. A significant 45 (75%) of them opined that they did not find this or could

not say precisely. In accordance with the finding of Figure 4.6, it can be assumed that The

Body Shop 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 52 (87%) of the respondent

customers did not find any promotion from The Body Shop for customers to provide new

product ideas and win a prize.

3

12

17

28

0

5

10

15

20

25

30

Series1 3 12 17 28


Sometime introduces


Figure 4.9: Analysis of respondents’ opinion whether The Body Shop introduced any such products that they were looking for last several monthsSource: Primary Data Analysis (2012)

29

4.3.5 Customers’ involvement in making suggestions for new products for The Body Shop

In response to the question whether they have been involved in making suggestions

for new products for The Body Shop, a significant 41 (68%) respondents of 60 said ‘no’. In

addition to this, 11 (18%) respondents ticked ‘cannot say precisely’. This finding as well

reflects that The Body Shop does not take formal approach to getting suggestions for new

products from customers.

Yes13%

No69%

Cannot say precisely18%

Figure 4.10: Analysis of respondents’ opinion whether they have been involved in making suggestions for new products for The Body ShopSource: Primary Data Analysis (2012)

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 (13%) of 60 customers as only 8 respondents said that they were involved in

suggestion making activities for new products for The Body Shop and all of them opined that

they enjoyed the experience. From this finding it can be assumed that most of the customers

would be interested to be involved in the process of new product development.

30

5

3

00

1

2

3

4

5

6

Series1 5 3 0

Highly Enjoyed Fairly Enjoyed Never Enjoyed

Figure 4.11: Analysis of respondents’ degree of experience if they have been involved in making suggestions for new products for The Body ShopSource: Primary Data Analysis (2012)

4.3.6 Distribution of factors that satisfy respondents most about The Body Shop

The respondent customers were asked about the factors of The Body Shop that satisfy

them most. A list of 10 factors has been given to choose the best 3. The list of factors

includes (1) Innovative Product Range, (2) Use of Natural Ingredients, (3) Value for the

money, (4) Attractive Promotional campaign, (5) Discount Voucher, (6) Company reputation,

(7) Fair Trade Policies, (8) Social and Environmental Welfare Activities, (9) Customer Care,

and (10) Eagerness to have customer feedback regarding product.

38

33

15

5

3029

0

4

18

8

0

5

10

15

20

25

30

35

40

Series1 38 33 15 5 30 29 0 4 18 8

Innovative Product Range

Use of Natural Ingredients

Value for the money

Attractive Promotional campaign

Discount Voucher

Company reputation

Fair Trade Policies

Social and Environmental

Welfare

Customer Care

Eagerness to have customer

feedback

Figure 4.12: Analysis of factors that satisfy respondents most about The Body ShopSource: Primary Data Analysis (2012)

31

The top 4 selected factors of The Body Shop that satisfy the respondent customers are

Innovative Product Range, Use of Natural Ingredients, Discount Voucher, and Company

reputation. This finding has resemblance with the finding of Section 4.3.2 which establishes

The Body Shop as a highly differentiated innovative company. Discount 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 Section

4.3.3. 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 (4.4%) responses of 180 responses from 60 respondent customers. This

finding leads to the assumption that The Body Shop tends to rely less on customer feedback

for its product improvement and thus suggests to have closed innovation process.

4.4 Summary Findings

To evaluate customer perception regarding company’s innovation strategies and the

degree of customer involvement, primary data was collected from a random sample of 60

customers and analysed in Section 4.3. The key findings are as follows:

Customers of premium priced beauty products of The Body Shop are proportional to

ethnic origin in a balanced manner. The Body Shop is significantly recognised to its

customers as an innovative company with highly differentiated competitive advantage. A

significant response came to say The Body Shop products give less value for money, though

price decrease for discount voucher frequently gives more product value for money.

Innovative product ranges of The Body Shop are found highly satisfying to the customers.

However, 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 Body Shop has been found less willing to take

customer feedback for product improvement and thus suggests it has a closed innovation

process. In Section 4.2 it was found that The Body Shop had many initiatives for socio

economic welfare. However, in Section 4.3.6, it was found that the respondent customers

were less aware about their corporate social responsibilities and fair trade policies. If more

aware, then The Body Shop could have more company reputation and less sensitivity of the

customers for high price.

32


Information regarding innovation strategies and their implication in The Body Shop was

collected mainly from the company website information and parent company’s 2010 annual

report and discussed in Section 4.2 which was followed by primary data analysis and findings

in Sections 4.3 and 4.4. The following chapter will draw conclusion of the dissertation and

propose recommendations for a more improved innovation strategies and implications to The

Body Shop and like companies.

33

5 Conclusions and Recommendations

5.1 Chapter introduction

Conclusion section of this chapter evaluates the achievement of the study taking each of

the research objectives separately. Based 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.

5.2 Conclusions

Each 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.

First research objective was to evaluate the responsiveness of ‘The Body

Shop’ to customer suggestions for product development

Customers could be external sources of new product development ideas in an open

innovation process as discussed by Chesbrough (2003) who further asserted that open

innovation process in association with external sources could be more productive in

innovation compared to closed innovation [see Section 2.2.2]. The first research objective

was to identify to what extent the case company ‘The Body Shop’ 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 Body Shop were discussed

[see Section 4.2]. In addition, a set of related questions were asked to the respondent

customers of The Body Shop which were analysed in Sections 4.3.4 and 4.3.5. It has been

found that The Body Shop did not claim to have closed innovation process, but also did not

claim to be responsive to customer suggestions for product development. No where in its

mission statement, core values, and innovation strategies, customer involvement in new

product development was mentioned [see Section 2.2.2]. While 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 [see Figure 4.6]. It has

been further revealed that customers did not find any promotion from The Body Shop for

customers to provide new product ideas and win a prize [see Figure 4.7]. In another question,

only 8 (13.3%) of 60 respondent customers stated that they were involved at some point in

making suggestions for new products for The Body Shop, which is a very low percentage

34

[see Section 4.3.5]. These 8 respondents also expressed that they enjoyed their involvement

in product development process [see Figure 4.9].

From the above mentioned findings, a conclusion can be drawn that The Body Shop

does not take formal approach to get suggestions for new products from customers and

follows closed ended innovation process. Further 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 objective was to investigate customer perception in relation

to their involvement in product development at ‘The body Shop’

Customer 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 (Schiffman and

Kanuk, 2009). Innovation strategies and their implication at a company could be a key factor

that influence in perception development process [see Section 2.3]. A set of questions were

asked of respondent customers to gauge how they perceive their involvement in the product

development process at ‘The Body Shop’. From the analysis it has been revealed that a

majority of the respondent customers perceive the products of The Body Shop highly

differentiated [see Figure 4.2]. Nonetheless, a significant 38 percent perceived that the

products of The Body Shop bore less value for money [see Figure 4.3]. Moreover, only 13

percent of the respondent customers positively stated their involvement in the product

development process and expressed their enjoyment to be involved [see Section 4.3.5]. This

finding is further emphasised when respondents only 8 times of 180 (3X60) that express only

a little eagerness of The Body Shop to have customer feedback for product development [see

Figure 4.10].

The above findings draw a conclusion that, despite being highly innovative,

innovation factor of The Body Shop 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.

35

Third research objective was to evaluate customer satisfaction level for the

innovation strategies used by ‘The Body Shop’

Innovation is one key factor that helps a company to have differentiation based

sustainable competitive advantage (Porter, 1985, Kay 1993). New products or services offer

from a company not only help to have differentiation based competitive advantage but also

help to induce customer satisfaction [see Section 2.2.4]. To evaluate the degree of customer

satisfaction for the innovation strategies used by ‘The Body Shop’ in accordance with the

third research objective of study, it has been revealed that 65 percent of the respondent

customers expressed their satisfaction for the innovative product ranges of The Body Shop

[see Figure 4.4]. They also expressed that they used to talk to their peers about The Body

Shop and its products while they are satisfied [see Figure 4.5]. Nonetheless, a significant

number of them expressed less satisfaction in terms of products’ value of money [see Figure

4.3], though ‘discount voucher’ offer was perceived as one of the most attractive factors of

The Body Shop [see Section 4.3.6]. 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 Body Shop though a majority of the respondent customers did not find

themselves involved in it [see Section 4.3.5].

From the above findings for the third research objective, it can be concluded that

customers of The Body Shop 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


Fourth research objective was to recommend to ‘The body Shop’ how to be

more effective in innovation as a result of customer perception

This research objective is to recommend to The Body Shop 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 2

and empirical findings of chapter 4.

5.3 Recommendations

For more improved innovation strategies and their implications in terms of the identified

perception of customers a set of recommendations to The Body Shop has been proposed

below:36

Recommendation 1

On the basis of available documents and annual reports of The Body Shop and empirical

findings from primary data, it can be assumed that the company practiced closed innovation

process. Despite being a highly innovative company, The Body Shop 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.

Recommendation 2

It is widely established that open innovation process is more productive than closed

innovation process which was found in the literature review. Empirical 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 Body Shop to consider open innovation process by

involving external entities such as its existing and potential customers, universities, and other

independent research institutions.

Recommendation 3

While the distribution of ethnic origins of the respondent customers was analysed, it was

found that along with European origin customers, a significant number of customers from

Asian, African, and Caribbean origin were proportionately found. Customers 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 Body

Shop 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.

Recommendation 4

Satisfying factors of The Body Shop that got least responds from the respondent

customers were ‘fair trade policies’ and ‘social and environmental welfare’. However,

37

official documents and annual report of The Body Shop 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 Body Shop

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. On the basis of this finding, the study suggests The Body Shop 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 Body Shop.

Recommendation 5

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. On 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.

5.4 Further Research

In regards to the innovation process of The Body Shop, 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 size in

some more companies of same industry.


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

Body Shop and thus innovation implication of the company has only a little influence in

building customer perception with the exception that customers perceive significantly well

38

that the company is highly differentiated with its innovative product range. This chapter

recommends The Body Shop to involve customers more in its innovation implications as the

study found that more satisfied customers are those who were involved in its product


6 ReferencesBaregheh, A., Rowley, J., and Sambrook, S. (2009), "Towards a multidisciplinary definition of innovation", Management Decision, Vol. 47 No. 8, pp.1323-1339

Belkahla, W. and Triki, A. (2011), “Customer knowledge enabled innovation capability: proposing a measurement scale”, Journal of Knowledge Management, Vol. 15 No. 4.

Chesbrough, H.W. (2003), “The era of open innovation”, MIT Sloan Management Review, Vol. 44 No. 3, pp. 35–41

Davila, T., Epstein, M. J. and Shelton, R. (2006), Making Innovation Work: How to Manage It, Measure It, and Profit from It. Upper Saddle River: Wharton School Publishing

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FAO, corporate document repository (1995), “The Body Shop Experience”, Beyond timber: social, economic and cultural dimensions of non-wood forest products in Asia and the Pacific, [online], Available at <http://www.fao.org/docrep/X5336E/x5336e0h.htm>, accessed on 2 April 2012

Hargadon, A. and Sutton, R. I. (2000) “Building an innovation factory”, Harvard Business Review, 78, pp. 157-167

L’Oreal Annual Report (2010), Information related to organisation and innovation. [online], Available at <http://asp.zone-secure.net/v2/index.jsp?id=613/786/14057&lng=en>, accessed on 2 April 2012

Lagrosen, S. (2005), “Customer involvement in new product development: A relationship marketing perspective”, European Journal of Innovation Management, Vol. 8 No. 4.

Lin, R. and Chang, C-L. (2004), “A study of Consumer Perception in Innovative Product”, Future Ground International Conference, Australia, Paper-144.

Porter, M. (1985), Competitive Advantage, The Free Press, NY.

Ramsey, R. D. (2003), “The supervision of innovation”, Supervision 67, pp. 3-6, [Online] Available at <http://www.allbusiness.com/management/595286-1.html>, accessed on 21 December, 2011

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Saunders, M., Lewis, P. and Thornhill, A. (2009), Research methods for business students, 5th edition, Essex: Prentice Hall.

Schiffman, L. G., and L. L. Kanuk (2009), Consumer behavior. 10th Edition, Prentice Hall.

Stark, J. (2000). “Innovation Management.” [Online] Available at: <http://www.johnstark.com/in4.html>, accessed on 27 February 2012

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The Independent news (2006), L'Oreal buys Body Shop for £652m, 17 March, [online], Available at <http://www.independent.co.uk/news/business/news/loreal-buys-body-shop-for-pound652m-470244.html>, accessed on 4 April 2012

Trott, P. (2005), Innovation Management and New Product Development. Prentice Hall

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http://www.independent.co.uk/news/business/news/loreal-buys-body-shop-for-pound652m-470244.html

http://www.independent.co.uk/news/business/news/loreal-buys-body-shop-for-pound652m-470244.html

http://www.thebodyshop.co.uk/_en/_gb/services/aboutus_company.aspx

http://www.johnstark.com/in4.html

http://www.allbusiness.com/management/595286-1.html

http://asp.zone-secure.net/v2/index.jsp?id=613/786/14057&lng=en

http://www.fao.org/docrep/X5336E/x5336e0h.htm

Appendix

Sample of the questionnaire to customers of The Body Shop to collect primary data for the

research project

Date: 02 April 2012

Dear Sir/Madam,

Your cooperation is highly requested to get information regarding Customer Involvement in Innovation Strategies and Implications in The Body Shop. Any information will be aggregated to meet a Masters Degree dissertation objective only and will not be shared with others.

You will require not more than 10 minutes to fill the questionnaire.

Please 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.

Your 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 …..

Thank you very much for engaging your valuable time and effort.

Sincerely,

M A Z

A

Please give tick mark where you agree

Section 1: Respondent’s profile

11. Gender

12. Which age group do you belong to?

16-24 years 25-40 years 41-55 years 56- 70 years 71 years & older

13. What is your occupation?

Unemployed Employed

Student Retired Home maker

14. Would you mind to share your / your household annual income?

less than £10,000

£10,000 –£15,000

15,001-20,000

20,001-25,000

25,001-30,000

30,001-35,000

35,001 and above

15. What is your social economic class?

Lower economy class

Middle economy class

Upper middle class Upper economy class

16. Educational background

a)

17. Ethnic origin

European Asian African Caribbean Latin American

Section 2: General query

18. How often do you shop at THE BODY SHOP?

Male Female

Below than bachelors degree Bachelor’s degree Masters degree

B

Once every week Once every 3 monthsOnce every 2 weeks Once every 6 monthsOnce every month Once every year

19. How different to other beauty ranges do you think THE BODY SHOP products are?

Highly Different Somewhat Different

Similar products are available in the market

20. Do you think THE BODY SHOP products are good value for money?

Highly Valuable Somewhat Valuable

Less valuable in regard of price

21. Do you agree that THE BODY SHOP is eager to know about you opinion for product improvement ideas?



22. Has THE BODY SHOP introduced any such products that you were looking for last several months?


Sometime introduces


23. Have you ever been involved in making suggestions for new products for THE BODY SHOP?

Yes No Cannot say precisely

24. If Yes, how would you rate your experience?

Highly Enjoyed fairly Enjoyed Never Enjoyed

25. Are you aware of any promotion from THE BODY SHOP for customers to provide new product ideas and win a prize?

Yes No Never heard of this

C

26. For the innovative product range of THE BODY SHOP how satisfied do you feel as a customer?

Highly Satisfied Sometime Satisfied Never Satisfied Only Satisfied when the price is low

27. If satisfied for the innovative product range of THE BODY SHOP, do you positively discuss about it with your peers?

Always Discuss

Sometime Discuss

I do not care

Only discuss when the price is low


28. What satisfies you the most about THE BODY SHOP? (please tick most preferred 3)

Factors Your choiceInnovative Product RangeBrand ImageUse of Natural IngredientsValue for the moneyAttractive Promotional campaignDiscount Voucher Company reputationFair Trade PoliciesSocial and Environmental Welfare ActivitiesCustomer CareEagerness to have customer feedback regarding product

Thank you very much for your kind cooperation

I really appreciate your help

D

Documents

Academic Research Report SAMPLE