Transcript Strategic Marketing, 3 rd edition

West, Ford, & Ibrahim
Strategic Marketing, 3rd edition
Chapter 8: Product Innovation &
Development Strategies
© Douglas West, John Ford, and Essam Ibrahim, 2015. All rights reserved.
A. INTRODUCTION
1. Overview and Strategy Blueprint
2. Marketing Strategy: Analysis &
perspectives
C. WHERE DO WE WANT TO BE?
B. WHERE ARE WE NOW?
3. Environmental & Internal Analysis:
Market Information & Intelligence,
Financial Analyses
4. Strategic Marketing Decisions,
Choices & Mistakes
5. Segmentation, Targeting
& Positioning Strategies
6. Branding Strategies
7. Relational & Sustainability
Strategies
D. HOW WILL WE GET THERE?
E. DID WE GET THERE?
14. Strategy Implementation, Control
& Metrics
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
8. Product Innovation & Development
Strategies
9. Service Marketing Strategies
10. Pricing & Distribution Strategies
11. Marketing Communications Strategies
12. International Marketing Strategies
13. Social and Ethical Strategies
Learning Objectives
1. Examine the role of innovation and product
development in marketing strategy.
2. Review the range of innovation and product
development objectives.
3. Assess the two main adoption theories and their
implications for marketing strategy.
4. Examine the main options for market and innovation
strategies.
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Chapter at a Glance
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WHAT IS INNOVATION?
DISRUPTIVE BUSINESS MODELS
DISRUPTIVE PRODUCTS
NPD
DISRUPTIVE TECHNOLOGIES
HORIZONS OF GROWTH
INNOVATION ‘MODES’
CUSTOMISATION
IMPLEMENTING CUSTOMISATION
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Introduction: Theodore Levitt
“A powerful force drives the world towards a
converging commonality, and that force is
technology...The result is a new commercial
reality - the emergence of global markets for
standardized products on a previously
unimagined scale of magnitude.”
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West, Ford, & Ibrahim: Strategic Marketing,
3rd
edition
Scope of Disruption
Technology
Products
Business Models
(Markides, 2006)
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Different Kinds of Innovation
Additions to existing lines
26%
Improvements/revisions
26%
New product lines
20%
Cost reductions
11%
New-to-the world
10%
Repositions
7%
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
(Booz, Allen & Hamilton, 1982)
NPD Process
1. Generation of ideas
2. Screening/Business
Analysis/Concept
3. Development/Test/Marketing
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Toolkit Strategy
•Makes sense when you
are faced with shrinking
markets
The toolkit strategy
enables customers of
NPD companies to
undertake their own
innovation
•Customers seeking
customised products
•Need to go through lots
of iterations to develop a
product
•If an organisation uses
high quality computer
based simulations
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Systematic Inventive Thinking
Subtraction is about removing components or attributes
Multiplication involves adding elements like developing a double waste
bin unit that can be used for rubbish
Division is the breaking-down of an existing product or service into its
component parts such as the replacement of the integrated hi-fi into
modular systems involving speakers, amplifier, tuner, tape & CD
Task Unification concerns assigning a new task to the product or
service such as when Rubbermaid placed assembly instructions for storage
cabinets on the packaging rather than on a separate enclosed sheet
Attribute Dependency Change involves the relationship between
the attributes of a product or service & the attributes of the immediate
environment as with the development of male & female razors
(Goldenberg, Horowitz, Levav & Mazursky, HBR, 2003)
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Subtraction
Phillips Consumer Electronics:
– Remove local display & all the control buttons DVD player.
– Use one button to control the most common functions.
– Remaining operations moved to the graphical user interface,
easily accessible by one button on the remote control. The
result was the company's award-winning Slimline Q-series of
DVD players.
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Multiplication
Kapro Industries
• Envisioned numerous additional vials and then thought about ways
they might modify them.
– What about two vials at one- and two-degree angles that would help
builders laying floors with small slopes-for example, in a bathroom, so
that water runs toward a drain?
• The level that emerged from this process, called TopGrade, now
enjoys strong worldwide sales.
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
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Division
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Task Unification
Defrosting filament in a car windscreen.
• Assigned extra task of enhancing radio reception.
• Car manufacturers able to get rid of the separate radio
antenna, long an ugly appendage on the car's body.
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
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Attribute Dependency Change
Standard pair of glasses
• No dependent relationship between the colour of the lens and
external lighting conditions.
• By creating a dependent relationship, you come up with a lens that
changes colour when exposed to sunlight, eliminating the need to
buy a separate pair of glasses for sunny days.
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•Should the old
product be sold out
before introducing the
new or should they be
sold simultaneously?
•If so, should they be
sold at different prices,
in different geographic
regions or different
channels?
Solo-product
Dual-Product
(Billington, Lee and Tang, 1998)
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Adoption Life Cycle
Rogers
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
CHASM
Chasm
Adapted from Chasm Group
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Chasm Behaviour
Stay with herd
Get ahead of herd
Hold on
No Way
CHASM
Try it
Techies
Visionaries
Pragmatists
Conservatives
Sceptics
Chasm Group
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Consulting
Complementary
Services
Post sales
service
& support
Pre-sales
services
Process
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Equipment
Software
Complementary
Goods
People
Connectivity
Main Street
Early
Market
CHASM
Tornado
Bowling
Alley
Techies Visionaries Pragmatists Conservatives
Sceptics
competitive advantage
fix a broken business process
develop channel/operations infrastructure
get better value
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Chasm Group
Bowling Alley Strategy
Whole
Product
App 1
App 2
App 3
Seg 3
Seg 2
Seg 1
App 1
App 2
Seg 2
Seg 1
App 1
Customer
Reference
Seg 1
Migrate into new applications, new segments
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Business Bowling Alley Strategy (Invented!)
Maintenance
Water
Engineering
Education
Design
Health
Maintenance
Health
Design
Education
Maintenance
Education
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Pragmatists Conservatives
Figure 8.9: Chasm Strategies
Visionaries
Sceptics
Techies
Tech
Motive
None
Ref Group
Low
Pricing
Lead’ship
IMC
Services
Personal
Vision
Business
Other
Visionaries
Other
Pragmatists
High
Market/Med
Potential
Innovation
Competition
Pragmatists
Only
Option
Pragmatists
None
Market/Low
Low
Strong
Contender
Market
Leader
Monopoly
Safe/Easy/
Effective
Safe/Easy/
Effective
Only Choice
Some
Few
None
None
New
Train
High Level
Consultancy
Source: Modified from Geoffrey A. Moore (1999), Crossing the Chasm: Marketing and
West,
Ford,
& Ibrahim: Products
Strategic Marketing,
3rd edition
Selling
Technology
to Mainstream
Customers, Oxford: Capstone Publishing.
Judo
Movement
One of the key tactics in movement is the ‘puppy dog play.’
Keep a low profile until you are strong enough to fight
Define the Competitive Space
Establish the positioning of the product & keep it simple
Follow Through Fast
Maintain innovation with a focus on design, functionality
& low prices
(Yoffee & Kwak, 2002)
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Options for Innovation
H
i
Market
Orientation
Follow Mode
Isolate Mode
Interaction Mode
Shape Mode
L
o
L
o
Technological
Orientation
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
(Berthon, Hulbert & Pitt, 1999)
H
i
Conclusion
• There are a variety of tools for NPD.
• The chasm provides a new twist to product
innovation and development. Its main value is
in filtering marketing strategy through the
Chasm framework.
• It helps identify which customers or markets
are on the different parts of the curve and
how to market to them?
• It might change some of the mix strategies
like pricing, communications or services
offered.
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition