BCo

A focused case study on the need for an innovative lighting company to pivot when the fundamentals of the original value proposition were rendered ineffective by the advances of a competing technology. A potent strategy was developed to preserve the vision of the original charter while transitioning to a new technology base. A re-positioned product line was launched on an aggressive development schedule to maintain the future viability of the company.

OVERVIEW

The lighting industry was undergoing a disruptive transformation driven by the emergence of solid state lighting (SSL). The primary enabling feature was significant energy savings with LEDs leading the way as the preferred technology. However, in addition to being considerably more expensive, LEDs were at a noticeable disadvantage in light quality with the market standard set by incandescent products.

BCo was formed to address the need for high quality residential lighting that could match LED based offerings from an energy efficiency standpoint. They saw an opportunity to deliver these features at a lower cost than LED based products by using induction lighting. It was a proven technology with an established track record for industrial /commercial applications but had never been targeted for the residential market as the existing incandescent products more than met the need for cost and quality.

The challenge for BCo was to repackage the inductive technology into the dominant form factor for the consumer market. This required a complete redesign of the key components while solving EMI and thermal management related challenges.. The quality of light was optimized with a careful selection of phosphors to enable it as a key marketing feature. A core product line was developed and successfully launched with distribution through big-box retailers.

PROBLEM

In the time required for BCo to fully develop the initial market offerings, the sell price of LED based products had dropped at a much faster rate than anticipated. The cost of induction based products was now greater than the market price being demanded by the big box retailers. In addition, the quality of light for LED based products had improved dramatically through the development of custom phosphors and they continued to claim better energy efficiency. The first round of products also lacked of a full feature set (i.e. dimming, fast run up) for the consumer market. BCo was faced with the daunting challenge of how to move forward.

ANALYSIS

LEDs are semiconductor based products with the full force of well-developed industry practices and processes to drive cost down. They were only going to get cheaper. Induction lighting is well established (in use for >100 years) but lacking a clear path to further cost reduction that could keep pace with the cost-down velocity of LEDs.

Distribution through big-box retailers, while representing a coveted high volume channel to the consumer market are focused on cost with little regard or opportunity to compete on value. It was not clear the consumer market would support a preferred business case for a higher quality product offering.

Time to market had become a key factor for the company. A technology/product redirect and redevelopment would have to be accomplished with a sense of urgency to demonstrate market traction to investors. BCo would have to deliver evidence of future viability within a year when innovation in both form and function would require at least 18 months.

INSIGHTS

While the initial value proposition was rendered moot for the low cost volume retail market, the charter to provide best in class lighting for consumers was still an opportunity. LCo had researched consumer insights into whether quality alone would be enough to entice customers to buy or whether an additional wellness benefit would support a premium for a product. At that time awareness of human centric lighting (HCL) was emerging as a leading candidate with the understanding of how carefully tuned non-visual elements of the lighting spectrum could impact health and well-being factors such as circadian rhythm. The potential benefits ranged from a better night’s sleep to addressing cardiovascular disease. The market for global wellness had grown to a $595B business and served as a natural fit for the benefits of HCL. A viable path forward for BCo would be to realize the benefits of HCL along with the neuro-aesthetics of visual lighting,

It was believed to be just a matter of time before HCL would take hold and fully resonate with a customer base. It did not appear there was a clear leader for HCL in the consumer market at reasonable price points. The company believed there was an opportunity to introduce the benefits of wellness lighting to consumers but acknowledged it would take some heavy lifting to educate the market on the new technology.

To realize the non-visual benefits of HCL, the amount of blue light could be adjusted depending on the time of day to provide the optimal circadian benefits. The product would need to provide the optimal melanopic/photopic lux (M/P) for both the morning/day period when you want melatonin to be suppressed and the afternoon/nighttime period when you want melatonin released.

For fixtures, an additional benefit would be offered by combining the ideal morning/day and afternoon/evening light settings in one fixture product to allow consumers to “dim down” throughout the day to achieve different circadian benefit levels through the M/P ratio.

For visual quality benefits, exceptional neuro-aesthetics could be implemented throughout homes at different color temperatures. A single product could deliver a powerful combination of beauty features including high accuracy, color saturation, and whiter whites to customers in the same product.

ACTIONS

Switch to an LED based technology platform. Regardless of the core features offered, any viable product offering will have to consider pricing as a major factor. It would be very difficult for induction lighting to achieve both the feature and pricing requirements for the consumer market. The engineering team was deemed capable of supporting the redirect with minimal impact on effectiveness and development resources.

Focus on standard products. It was recognized that longer term innovation would be required after an initial launch given the need to get something to market on a very demanding schedule. A platform focus was prioritized on function over the form of the light utilizing standard product elements in the most popular volume categories in residential homes:

Define a core value proposition based on combining the spectral benefits of health and well-being with the quality of light. The consumer insights identified several opportunities to pursue.

Define a target product market segment, rebrand and focus. The H&WB factors were emerging preferences that were more likely to be valued by a millenial demographic. Product configurations were tested and refined.

Develop a higher value added channel to market. A decision was made to go direct to the customer (D2C) to reduce the TT$/TTM. The existing channels were box stores with a sea of options and limited potential/opportunity to support/highlight the unique product benefits. This decision was not made lightly as the existing distribution channels had already been established and validated but it was determined that BCo would need to own the channel to the customer to establish the value for a truly innovative product. The message could be managed to greater effect and the direct engagement would be needed to "Learn-By-Doing" to confirm and prioritize future feature and product development.

STATUS UPDATE

The repositioned product line was launched with sufficient breadth to establish a beachhead for the combined benefits of HCL and visual quality with energy efficiency. The line encompassed three standard bulbs, one downlight bulb, three popular fixture types (retrofit downlight, wafer, flushmount) and an added value wall vanity. These products ranked highest on a blended basis across the core metrics when compared to the premium competitive products on the key visual and non-visual benefits. The novel features garnered a major design award and significant coverage in national publications to generate favorable market presence.