Transcript Chapter 8: Product Innovation and Development Strategies

Chapter 8: Product Innovation
and Development Strategies
Structure
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
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
8. Product Innovation & Development
Strategies
9. Service Marketing Strategies
10. Pricing & Distribution
11. Marketing Communications
12. E-Marketing Strategies
13. Social and Ethical Strategies
Learning Objectives
 Examine the role of innovation and product
development in marketing strategy.
 Review the range of innovation and product
development objectives.
 Assess the two main adoption theories and their
implications for marketing strategy.
 Examine the main options for market and innovation
strategies.
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
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.”
Scope of Disruption
Technology
Products
Business
Models
(Markides, 2006)
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%
(Booz, Allen & Hamilton, 1982)
NPD Process
1. Generation of ideas
2. Screening/Business
Analysis/Concept
3. Development/Test/Marketing
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
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)
Subtraction
Phillips Consumer Electronics:
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–
–
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.
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?
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The level that emerged from this process, called TopGrade, now enjoys
strong worldwide sales.
Division
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.
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.
•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)
Figure 8.6: Product Rollovers
Adoption Life Cycle
Rogers
CHASM
Chasm
Adapted from Chasm Group
Chasm Behaviour
Stay with herd
Get ahead of herd
Hold on
No Way
CHASM
Try it
Techies
Visionaries
Pragmatists
Conservatives
Sceptics
Chasm Group
Whole Product
Consulting Equipment
Complementary
Services
Post sales
service
& support
Software
Pre-sales
services
People
Process
Complementary
Goods
Connectivity
Main Street
Tornado
Crossing Chasm
CHASM
Early
Market
Bowling
Alley
Techies Visionaries Pragmatists Conservatives
Sceptics
competitive advantage
fix a broken business process
develop channel/operations infrastructure
Chasm Group
get better value
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
Business Bowling Alley Strategy (Invented!)
Maintenance
Water
Engineering
Education
Design
Health
Maintenance
Health
Design
Education
Maintenance
Education
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)
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.