Post on 11-Jan-2016
Drivers of Innovation
1. Technology advances
2. Changing customer needs
3. Increased world-wide competition
4. Shortening of product life cycles
(Cooper 2001)
Innovation - definitions
An innovation is …
… an idea, practice or object that is perceived as new by an individual or other unit of adoption (Rogers 2003)
… new if it has been on the market for five years or less, and includes extensions and significant improvements (Cooper 2001)
… interchangeably used with the term “new product”
What is a new product?
Newness can be defined in two senses:
New to the company
Firm has never made or sold this type of product before, but other
firms might have
New to the market
The product is the first of its kind on the market
(Cooper 2001)
All new products are new, but some are newer than others
26 %
High
Low
Low High
New to the Market
Newto theCompany
New to theworld products
New productlines
26 %
20 % 10 %
7 %11 %
Revisions / improvements to existing products
Additions toexisting product
line
RepositioningsCost reductions
Innovativeness
Radical vs Incremental innovations
(Chandy and Tellis 1998)
Customer need fulfillment per dollar
Low High
Newness of technology
Low
High
Markets
Tech
nolo
gy
Incremental innovation
Radical innovation
Market breakthrough
Technological breakthrough
‘New-to-the-World Product’
Sony AIBOLaunched in 1999
Success or Failure?Launch price $2500: prevented these robots from going mainstream and conquering the world!
Production stopped in 2006!
‘New-to-the-World Product’
Honda AsimoAdvanced Step in Innovative MObility
Success or Failure?In October 2010: 10th anniversary!
‘New Product Line’Founded in April 2004 by Stelios Haji-Ioannou
Sold to Hellenic Seaways in August 2009
Most firms feature a mixed portfolio of new products:
Line extensions and product improvements are common to almost all firms
However, many firms stay clear of the most innovative categories:
what % of firms do not develop new-to-the-world products?
and, another 25% develop no new product lines.
Higher technology industries launching more innovative products
50%
Golden New Product Failure Rules
These condensed decision rules may seem intuitively right, but they are not:
• The faster, the better!• Position a new product as a successor of …!• Change your positioning frequently!• A low price is key!• A good new product sells itself!• Aim for the mass-market to achieve success!
Risk Minimization!
High failure rates and high costs make NPD risky, but
NPD can be managed so that:
the risks are minimized, and
the profit maximized!
Adopter categories based on innovativeness
(Rogers, 1995)
Innovativeness is the degree to which and individual is relatively earlier in adopting new ideas than other members of a social system (Rogers, 1995)
Crossing the chasm model
(Geoffrey Moore 1991)
Visionaries
Look for:The newest thingPerformance featuresIt’s coolness
Pragmatists
Look for product that:Works pretty wellEase of useIs not so expensive
Moore: the firm should consider developing a value proposition that will work for pragmatists, anddevelop a launch strategy designed to reach pragmatists.
Tailoring marketing plan to intended adopters
(Schilling 2011)
Innovators, early adopters
• Technical content
• Leading-edge nature of innovation
• Channels that enable high content and selective reach
Early majority
Communicate:•Product’s completeness•Ease of use•Consistency with life•No detailed technical info
• Channels with high reach and high credibility
Late majority, laggards
Communicate:•Reliability•Simplicity•Cost-effectiveness
• Channels similar as early majority
Trying to convince the mass of a new idea is useless
Convince innovators and early adopters first!
But, who will be the innovators and early adopters?
Can we identify these innovators and early adopters in advance so as to focus our
early marketing on them?
Van Everdingen - Marketing of Innovations 2011
Profile Early Adopters of iPhone
http://www.trendsspotting.com/blog/wp-content/uploads/2007/06/iphone.PNG
Van Everdingen - Marketing of Innovations 2011
Adopter category Characteristics
Adopter categories
Venturesome, financial resources, ability to understand complex knowledge, ability to cope with high uncertainty
Opinion leaders, other adopters ask them for advice, decrease uncertainty, serve as role model
Adopt just before the average member, deliberate, important link in diffusion process, many informal social contacts
Skeptical towards innovation, scarce resources, lower SES
Traditional, limited resources, need certainty, tend to be suspicious Neighbors and friends are main info sources
Innovators
Early majority
Early adopters
Late majority
Laggards
(Rogers, 1995)