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Liverpool John Moores University

Innovation Proposal for ‘Try-before-you-buy’
Augmented Reality Service
Word count: 4685

18th December 2019

Contents
1

EXECUTIVE SUMMARY
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3
2
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4

2
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1

PESTLE ANALYSIS
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1
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4

2
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5

2
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1

STRATEGY
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2
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5

2
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3

SYSTEMS
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2
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6

2
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5

STAFF
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3

EXTERNAL ENVIRONMENT
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3
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7
3
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7

3
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1

AIMS & OBJECTIVES
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1
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8

3
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3

STAGE GATE PROCESS
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1
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9

3
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9

3
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10

3
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1

4

SWOT
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10

DISCUSSION AND PROPOSALS
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1

FUTURE PROJECTIONS AND PRODUCT IMPROVEMENTS
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12

6

APPENDICES
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1

PESTLE ANALYSIS
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2

PORTERS 5 FORCES
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3

MCKINSEY’S 7S
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D)
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This proposal introduces a new service innovation that will enable users to virtually
“try” on an item of clothing before deciding whether they want to purchase it –
Augmented reality technology overlaps the computer-generated data and images
onto the real-world view while offering a new experience
...
Technology plays a vital role in the process; various technologies are
used in augmented reality, including handheld devices, display systems and
projection systems
...
Our
employees need to have analytical, creating and conceptual thinking to have the
ability to get the job done
...
We will achieve our mission through developing a
sufficient application to meet the needs of our targeted market
...
The target market is 18-30year-old females, this audience say social media is the best way for brands to reach
them; this demographic is looking to be inspired and to think big, so to achieve goals
we must align ourselves with this market (Forbes, 2013)
...
Innovation is the
primary sources of growth most organizations (Nobel & Birkinshav, 1998)
...
Retail is one of the biggest
industries where augmented reality is going to bring futuristic developments (Khan,
2018)
...

One of the biggest challenges with shopping online is it’s difficult to visualise how an
item of clothing that you’re interested in will look on you
...
This try before you
buy application will be featured on UK online clothes retailers and will be aimed
toward generations Y and Z who tend to shop online rather than in brick-and-mortar
shops
...
The
philosophical changes of radical innovation are transforming entire markets,
replacing familiar products and creating completely new product categories
...
D)
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Page 3 of 19

2
...
1
...
Trying something in
AR is the next best thing to physically holding the product; AR gives shoppers opportunity to
see how products look on them before they make a purchase decision and helps to reduce the
temptation to order multiple items to try on, only for them to be returned
...
42% of shoppers
believe using AR would make it easier for them to make a decision and shorten the time
between browsing and final purchase (Engine Creative, 2019) and 76% of consumers would
purchase more items if they were offered a try-before-you-buy option (Engine Creative, 2019)
...
Technological
advancements like augmented reality, virtual reality and 3D visualisation are being increasingly
applied in a creative way in the fashion industry
...
This year, 58
...
2% (Emarketer, 2019), so businesses
should take this into account as Technology drives Gen Z’s shopping experiences
...
The UK has quality innovation
skills and expertise in information technology; however, they have a slow technological
development in comparison to the US
...
Returning products are estimated to cost businesses in excess of £60bn each
year (Financial Times, 2016)
...


2
...
2

Porter’s 5 Forces Analysis

New entrants are equipped with new digitally based business models and value propositions
(Evans, 2015)
...
The barriers to
entry for new entrants are low; implementing AR technology involves high price as it needs to
be integrated into the entire product range in the company (Padala, 2018)
...
D)
...
Consumers have amassed
more bargaining power today due to the instant access to information and insights from social
media including access to reviews and feedback (Evans, 2015)
Rivalry among existing competitors in this market is low, although AR is a growing market there
is low customer loyalty due to that AR is a fairly new development
...


2
...
Each element needs its own time and attention to
function properly
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2
...
The main business strategy is
one of differentiation; the development is unique for customers in terms of product design,
features and quality
...
We need to know who our
competitors are and what they offer and how we can compete with them
...
Customers wants and needs can change
quickly so finding out regularly what matters to them - whether its lower prices or having the
latest products, will impact how to market yourself
...

2
...
2

Structure

The structure will be one of a functional organisation, where employees are grouped based on
their specific skills and knowledge
...

A functional organisational structure could enhance work efficiency and productivity due to
specialised skills and technology (Small Business, 2019)
...
Employees
are highly motivated as they can see their path clearly within their units
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2
...
There is a wide range of
systems that are critically important to run the service successfully; including employee
recruitment and selection systems, development systems, business intelligence systems,
customer relationship systems and knowledge management systems
...

2
...
4

Skills

As each unit handle an aspect of the service employees can feel confident about what they’re
doing because it’s standardised
...
Service information may change during the creation process –
the team should be able to listen to feedback and modify based information
...

2
...
5

Staff

As workers work within a department teamwork and communication is very important,
employees should be able to work effectively and with confidence within a group
...
D)

2
...
3
...
The
rapid growing use of mobile augmented reality leads to high research and development, user
centric technology, the creation of unique products and effective communication
...
Outside
of mobile augmented reality, the consumer market for augmented reality devices are effectively
non-existent
...

Opportunities open to us are that there’s an increasing number of people who seek this kind of
application, there is a rise of innovations and adoption of mobile augmented reality
...
Another threat to face is the complex design of augmented
reality devices
...


3

MAIN ANALYSIS
3
...
Business level strategies detail actions taken to provide value to customers
and gain a competitive advantage by exploiting core competencies in specific, individual
product or service markets
...

Generic strategies that are used to help organisations establish a competitive advantage
over potential industry rivals
...
D), differentiation
where value is provide to customers through unique features and characteristics of an
organisations products rather than by the lowest price; this can be done by rapid
innovation, advanced technological features etc (Starr, 1999)
...
1
...
The main aim is to create and develop an
augmented reality ‘try-before-you-buy’ application to help when it comes to customers who
want to buy online yet are unsure as to how something will look on them or if it will suit them
...

We aim to stay ahead of the competition by understanding where the service positions in the
marketplace, this will help to determine how to improve for customers
...
1
...
To create a competitive advantage, you should be clear
about three determinants: the benefit; who is the target market; and the competition
...
For the company it can
attract new customer base as well as help them gain a competitive advantage in that not many
retailers have a try-before-you-buy system (APS Fulfilment, 2016) and for customers; “trying”
on an item can increase customer satisfaction and loyalty by providing customers with a sense
of confidence in their purchase that it increases their overall satisfaction (APS Fulfilment, 2016)
The targeted market are mostly females, aged between 18-30, who enjoy shopping online
...
A service with a differentiation
strategy can charge a premium price
...
This innovation will help companies connect
better with customers and will empower shoppers to make more informed and accurate
decisions whilst reducing purchase anxiety (Sheldon, 2019)
...

Radical innovation involves the recombination of ideas that haven’t been combined before
(Eggers, 2016)
...
1
...
The purpose of idea formulation is to gage a clear vision about how the
application will be formed and presented
...
Currently there is a gap in the UK market regarding a ‘try-before-you-buy’ augmented
reality application and although customers have been able to cope without this app it will be
beneficial to them in the sense of ordering items with the knowledge of how it will look on them
...
The main plan is that within the first year to have the
application ready to use for customers on more than 10 online retail platforms
...
Customers will benefit from using the AR

Page 8 of 19

features due to the provision of visuals; customers can “try on” products anywhere, it saves
time and saves money both for consumers and businesses as well as the environment
The third stage is product development where the ideas and plans from stage 1 and 2 are
carried out and a prototype of the service is built
...
With
the expected rate of the AR market to grow to, the service has the capability to become fully
developed within the next 4-5 years, enabling it to have its own separate mobile app - here
retailers will pay to sell their products through the app
...

Accomplishing this goal directly translates into business success
...
1
...
Within
the next few decades, AR is going to revolutionise the retail platform (Khan, 2018)
...
In an uncertain environment the potential to secure and
defend a competitive position depends on the ability to ‘do something different’, i
...
radical
process innovation rather than imitations and variations of what others is also offering (Bessant,
et al, 2011)
...
2 Target Market
With digital disruption encouraging a reinvention of consumer habits, entire new
behaviours have been created (Hooker, 2019)
...
In 2018, the biggest group of online
shoppers were women aged between 25-34 (Picodi, 2018)
...
The
retailers in which the app hopes to perform on is those where the target market shops, for
example, Pretty Little Thing to ASOS
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3 Product and Company’s marketing
3
...
1

4Ps of Innovation

The 4Ps of innovation help a business to understand where you are and how to innovate to
improve your product, process, position and paradigms
...
’ The service is augmented reality-based try-before-you-buy
...
Customers
haven’t used an app like this before as there aren’t any services like so available in the United
Kingdom – generation Y enjoy experimenting with new products
...
Market forces decide the price, but
to gain differentiation we will charge the lowest price until competition rises, the service will free
to online retailers to offer for the time being however, for every purchase made after a customer
has used the service, we get 6% of it
...

Social media will play a key role in the advertising of the service as marketing through social
media is cost effective and helps to improve visibility and increase recognition of your brand
(Smith, 2019)
...
A ‘tell a friend’ feature will be available for those who have used the
service and want to spread information using a positive word of mouth, which creates greater
market share; “AR has the potential to provide consumers with an experience consumers with
an experience they want and will tell their friends about” (Benjamin, 2009)
...
1 Future projections and product improvements

Virtual Reality, Augmented Reality and Mixed reality will continue to disrupt the
market in the future – A survey in 2018 indicated that by 2020, 46% of retailers plan
to deploy either AR or VR to meet customer service experience requirements
(Gartner, 2019)
...

For the time being, only UK online clothing retailers will provide the ‘try before you
buy’ service, eventually, this can expand across Europe then Globally
...

The newly developed app will personalise shopping experiences to an extent by
asking questions regarding; preferences, measurements and what shops you want
to buy from and offering tailored to you outfit ideas
...
This level of personalisation will likely
increase online store conversion rates while increasing sales as well
...
Dedicated Teamwork and focus will enable the company to
achieve set goals
...
(2019)
...

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1 PESTLE analysis
Political
× Augmented reality has been called the next big paradigm shift in computing (Curtin,
2017)
× With Brexit on the arise, there’s a possibility that start-up businesses will be damaged

Economic
× Innovate UK Scheme; set up by UK Government and provides a funding mechanism
for R&D activities for amounts anywhere between £25,000 and £10 million
...
5% - normally put pressure on companies not wanting to increase
their wage bill more than their prices
...

× New technologies are uncertain if or how patents, copyrights, trademarks or trade
secrets will apply to new technologies
× Existing Intellectual Property frameworks must be applied
× General Data Protection Regulation and Data Protection Act
× Employment – Wage Increases (National Living Wage and National Minimum Wage),
Gender Pay Gap and Pension Contributions
× Registration and format

Page 16 of 19

6
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× Customer loyalty is low – in the future customers will be able to switch to a possible
alternative due to location, quality etc
...


×

Low price and / or high quality will result in lower profit margins
...


Bargaining Power of Suppliers
× Suppliers can either accelerate or slow down the adoption of a digitally based
business model
...

Threat of New Entrants
× Capital requirements can be low to start
× Innovate UK government programme – no regulation preventing new entrants
entering the market
...
3 McKinsey’s 7S
Style
×

Leadership is described as being a two-way relationship, where both the leader
and followers exert influence on one another

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