Promotion Technologies of Innovative Product

NATIONAL RESEARCH UNIVERSITY

HIGHER SCHOOL OF ECONOMICS

 

FACULTY OF PUBLIC ADMINISTRATION

Department of Science and Innovations Administration

 

 

DRAFT

Of the paper: “Promotion Technologies of Innovative Product”

 

 

 

 

Student: Gerasimov Igor, 492 group

Argument Consultant: Volodarskaya Elena

Style and Language Consultant: Novakovskaya

 

 

 

 

 

 

 

 

Moscow, 2013

CONTENTS

Introduction……………………………………………………………………………….3

Promoting Technologies…………………………………………………………………..5

Innovations: Context and Dimensions…………………………………………………….8

Conclusions………………………………………………………………………………11

References………………………………………………………………………………..12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTRODUCTION

Innovation, or the introducing of new and more effective ways of doing things, is critical to the success of new products. As the competition inherent in a global marketplace increases, product (and service) innovation is the driving force for maintaining company viability and better satisfying customer needs. Really new or discontinuous new products play an important role in building competitive advantage and can contribute significantly to a firm’s growth and profitability. However, while innovation plays a crucial role in the success (or continued success) of most companies, it does not come easily. As Wheelwright & Clark (1992, pp. 28– 29) point out: ‘Perhaps no activity in business is more heralded for its promise and approached with more justified optimism than new-product and new-process development. The anticipated benefits almost defy description . . . Unfortunately, in most firms the promise is seldom fully realized. Even in many very successful companies, new product development is tinged with significant disappointment and disillusionment, often falling short of both its full potential in general and its specific opportunities on individual projects’. This is true for new product development in general and is especially true for discontinuous new product development.

New product development in the context of high innovation usually involves greater uncertainty than is present for the development of more incremental innovation products. Developing highly innovative product offerings involves considerable risk along with requiring both insight and foresight. The implications of technological advances are often obscured by the high levels of technical and market uncertainty that surround them. Often, it is difficult to know what direction to take for an emerging technology on the path to commercialization as an innovative new product. Appreciating the potential of any disruptive technology for development into a useful product form is a large part of the innovation challenge. Even though innovation at the high end of the spectrum usually entails more ‘degrees of freedom’ in one sense, it also requires either a great deal of luck or an ability to effectively envision what the market will respond to and embrace in order to produce a successful outcome. The key to this is the ability to link advanced technologies to market opportunities of the future so that the project can be guided through the uncertainties inherent in the development of these types of products. The task of bridging the uncertainty between technological capability and market need is critical for the effectiveness of the development effort if it is to yield a useful and commercially viable new product.

The potential rewards and risks from developing successful new products are high, and many factors can impel organizations to consider new product development activities. Although some companies may survive by trying one product after another in the market until success is achieved, this can be both costly and risky. Studies of high-tech firms have found that a critical factor for success is an orientation toward marketing. Although one can look at ‘innovation’ in many ways, in the context of marketing there are specific aspects that need to be taken into consideration. The role of marketing usually begins with the inception of a product development project. In cases when the project is more than simply technology push, marketing’s role may precede the inception phase in the form of explorations of possible customer needs and wants, and usually continues through introducing a new product into the marketplace as well as supporting it with various marketing programs. The heart of marketing concerns and challenges lies in the development of the product itself, for it is here that information (e.g. customer needs, product specifications, market trends, product tests, price points) is most needed if the ultimate product produced is to be one that both benefits consumers (and society at large) and is commercially viable. The key requirement is the alignment of the marketing and market research approaches with the product development task so that they may be used effectively to help develop the product and understand market potentials — in many cases for a market that does not yet exist! Proper alignment is crucial, since without it marketing inputs may seriously undermine innovation efforts.

 

 

 

 

 

 

 

 

 

 

 

 

 

PROMOTING TECHNOLOGIES

Innovation, and especially radical or ‘high’  innovation, involves fundamental questions that must be answered at some point during the new product development process. Whether these questions are addressed formally by marketing personnel or touched on by people like R&D scientists or engineers, it is inherent to innovation that inputs are needed in order to effectively broach a new commercial frontier. Either these questions are considered and examined prior to or as an innovative new product is being formulated, or they will be answered when the product is judged (perhaps harshly) by the marketplace if the product even reaches the introduction stage. Critical questions center around understanding issues such as: “what are the potential applications of a technology as a product?”, and which application should be pursued first?; what benefits can the proposed product offer to potential customers?; what is a gross estimate of potential market size?; Will the market be large enough to justify moving forward with the project?. In addition, in the development of an innovative new product there is always a need to be sensitive to two further issues: (1) the possibility of a product lacking distinctiveness, that is, its being less than unique or the ease with which it may be quickly imitated by competitors; and (2) the possibility of a ‘moving target’ in terms of matching the product that is actually developed to a set of customers for which it is most beneficial and appropriate. As Wheelwright & Clark (1992, p. 29) point out: «. . . too often the basic product concept misses a shifting technology or market, resulting in a mismatch. This can be caused by locking into a technology before it is sufficiently stable, targeting a market that changes unexpectedly, or making assumptions that just do not hold. In each of the cases the project gets into trouble because of inadequate consistency of focus throughout its duration and an eventual misalignment with reality. Once the target starts to shift, the problem compounds itself: the project lengthens, and longer projects invariably drift as the target continues to shift». Despite the need to answer these sorts of questions, there has been some debate among marketing scholars concerning the nature of the relationship between marketing and innovation. One view holds that the effect of a market orientation on product innovation yields ‘superior innovation and greater new product success’. Market orientation has been defined as the process of generating and disseminating market intelligence (i.e. a ‘deep understanding’ of the intended customers and product environment) for the purpose of creating superior buyer value. It encompasses both a focus on customers and competitors along with the synthesis and dissemination of market intelligence to various functional areas within a company that may benefit from such information. There are a number of studies that support the view that a market orientation yields superior innovation as well as greater new product success. Some researchers go even further in their view of the degree to which customer information should be incorporated into the development of innovative new products. For example, von Hippel (1988) suggests that focusing on ‘lead users’ — those customers that identify and craft a solution to a problem being experienced in advance of the rest of the market — is the key to innovation. He suggests that “the locus of almost the entire innovation process is centered on the user and offers a model of the user as the primary actor”. Von Hippel (1988) reports that lead users accounted for 100% of the semiconductor and PC board innovations. At the same time, a number of researchers have argued that a strong market orientation may result in reduced innovation. The primary concern involves listening too closely to customers who are focused on current as opposed to future needs. Christensen (1997) has argued that the very decision-making and resource-allocation processes that are key to the success of established companies are the same processes that lead firms to reject the disruptive technologies that they should be embracing — and chief among these is ‘listening carefully to customers’. He points out the highly negative impact in the disk drive, steel mini-mill, and numerous other industries of a firm’s focus on current customers to the exclusion of considering longer-term technological innovations that offer no apparent immediate benefit to the loyal customer base. The result is often new products that are marginally innovative. Concern has also been expressed about the impact of focusing too closely on the competition. A number of researchers have suggested that being overly focused on competitors can lead to a greater introduction of imitations or ‘me-too’ products. Underlying each of the concerns about market- orientation is the notion that ‘an obsessive focus on customers or competitors encourages research and development (R&D) to develop more line extensions and me-too products at the expense of new-to-the-world products’. However, regardless of the difference in views concerning the amount of emphasis that should be placed on customer and marketplace input, there is little disagreement about the need to link technology development to potential markets — and this is a critical component for successful innovations. Certainly such things as customers being bounded by the familiar, being unaware of emerging new technologies, or having difficulty comprehending or appreciating radical new products and the implications of these innovations for their businesses or their lives can severely undermine marketing research efforts. Nevertheless, despite problems in procuring and applying appropriate market-based inputs for the development of highly innovative products, inherent in innovation is a fundamental need to address customer needs or to uncover latent needs. Although the innovation context presents significant challenges for incorporating customer or market information that is helpful to the radical new product development process, it does not preclude valid and meaningful customer understanding and input. As Jolly V. K. (1997, p. 42) notes, ‘deep research, without any context or problem to solve, is inevitably hostage to serendipity alone’. Thus, while he sees customers as neither the sole source of ideas nor the best arbitrators for how ideas should be pursued, they provide a necessary context. A number of researchers suggest that the imagination underlying all successful technology-based innovations — the ‘techno-market insight’ — comes from how a problem is approached technically and an ability to identify compelling benefits of that technology and characterize these in terms of a market that may not presently exist. Marketing’s role is to both aid in identifying or deriving these benefits as well as in keeping the innovation process grounded in producing a new product that truly provides benefits to the intended users.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INNOVATIONS: CONTEX AND DIMESIONS

How we understand innovation is dependent on the perspective from which it is viewed and applied. From the vantage point of business and marketing the primary concerns and challenges center around identifying viable new product directions and then executing the development of the projects so as to produce an offering that provides both a significant benefit for customers and is commercially feasible. This orientation shapes both how innovation is viewed as well as influencing the implications that one draws concerning the best course with respect to any particular product development project. In the context of marketing, ‘innovation’ refers to the creation of a new product, service, or process that may be either offered to a market, customer, or group of customers. Innovations may be thought of as falling on a continuum from evolutionary or ‘continuous’ to revolutionary or ‘discontinuous’. The vast majority of new products that are launched — some 25,000 a year — are incremental innovations or what are referred to in the literature as continuous or dynamically continuous products. These represent limited changes or improvements to existing products or product forms. The phrase ‘discontinuous innovation’ is generally used to refer to radically new products that involve dramatic leaps in terms of customer benefits relative to previous product offerings. Frequently these types of products involve the development or application of significant new core technologies. S-curves provide a theoretical background for understanding the evolution of these types of innovations as driven by companies seeking to maximize their position in a particular market. Technologies evolve along what appears to be a series of these S-shaped curves which occur because initially the new product — based on a new technology — offers limited benefits to customers, but offers an increased number of benefits as the technology underlying the product matures and the product offering is refined. Eventually, a product class reaches a mature phase where it levels off in terms of the rate of increase in new benefits offered. This remains the case, unless and until, a new technology is applied to create a new product form that offers significantly enhanced and/or new benefits to consumers. In instances when consumers are able to appreciate the value of the new product and the new capabilities that it offers, the new form usually supplants the mature product in the marketplace. This displacement process may occur relatively quickly as in the case of calculators displacing slide rules, slowly as in the case of steamships displacing sailing vessels, achieve co-existence as in the case of microwaves and conventional ovens, or it may not occur at all as in the case of BetaMax. In addition to the issue concerning the degree of ‘newness’ of a technology or its application, there are also questions concerning issues such as the range and scope of innovation. For example, Lee & Na (1994) distinguish between ‘incrementally improving innovativeness’ and ‘radical innovativeness’ and explicitly exclude commercial performance as a basis for classifying innovation. However, researchers such as Meyers & Tucker (1989) hold that discontinuous innovation, in addition to being based on new technology and aimed at a market that is unfamiliar with the product class, encompasses both the development and the introduction of the product into the market. Two critical dimensions may be used to delineate the various levels or degrees of innovation with respect to the application of technology in the form of a product offered to a market; product innovation may be viewed as lying along a ‘Technological Capability’ dimension and a ‘Product Capability’ dimension. The technological capability dimension refers to the degree to which the product involves expanding capabilities — the way product functions are performed — beyond existing boundaries. Discontinuous products involve advanced capabilities that do not exist in current products and cannot be achieved through the extension of existing technologies. The Product Capability dimension refers to the benefit(s) of the product as perceived and experienced by the customer or user. In this view of innovation there are essentially four types or levels of innovation (excluding moderately innovative products). The first type encompasses products that utilize existing technology and provide the same benefits as existing products. Such products are continuous in terms of the technology employed and the way they are experienced by customers. Although they may be new, they are not very innovative. In addition to continuous new products, new products may be discontinuous with respect to technology, the benefits perceived by the customer, or both. Products that are perceived by customers as being really new regardless of whether or not they utilize new technology are commercially discontinuous. For example, the SONY Walkman offered new benefits (i.e. functionality) utilizing available technology. In cases when the delivery of new benefits involves the application of a significant new technology, the product is technologically discontinuous in addition to being commercially discontinuous. PCs and pagers were examples of this type of innovation when they were first introduced. In some cases, products may be perceived as being essentially the same as existing products even though they utilize highly advanced technology. For example, the switch from vacuum tube televisions to televisions utilizing solid-state technology had little impact on consumers in terms of product benefits or use. Thus, even though solid-state circuitry represented a dramatic change in technology (Technologically Discontinuous), the product as perceived by consumers had changed little. To this conceptualization of innovation, a third relevant dimension involving change may be added. ‘Consumption Pattern’ refers to the degree of change required in the thinking and behavior of the consumer in using the product. Although the consumption pattern dimension is not often explicitly discussed by researchers, it seems to be implied in many discussions of new products. A product can be familiar or novel in the way it requires users to interact with it. The nature of the change involved with respect to this aspect of a new product can play a significant role in product evaluation and adoption. Products involving consumption pattern changes can require customers to alter their thinking and habits and this may affect their willingness to embrace a new product. In considering highly innovative products it is important to take the customer’s view and experience of the product into account. A technology-driven view of innovation that does not consider the customer’s perspective might result in a product that is at odds with the market’s perception of it. Even though technology may be the means for enabling an innovation, new products are more than simply (technical) innovations — they must benefit and be used by people who can appreciate them and the impact that the innovative new products will have on their lives. The different dimensions of innovation are also useful in terms of understanding marketing’s role in innovation. The role of marketing during the product development process is likely to be especially important for the success of products that fall into the commercially discontinuous portion of the grid. Certainly, marketing’s role in ensuring acceptance when a product is introduced into a market could be significant for virtually any product (regardless of which part of the grid into which it fits), particularly if the benefits offered are not readily apparent.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONCLUSIONS

Market vision, or the ability to bridge between technological capability and market need or opportunity, is a crucial ability. It is particularly important for high innovation products because such projects usually involve a significant degree of uncertainty about exactly how an emerging technology may be formulated into a usable product and what the final product application will be. The conceptual framework presented here can help to clarify the innovation and adoption context with respect to the marketing challenge(s). Since such products are often difficult to convey to customers — especially early on in the development process — many traditional market research techniques (e.g. concept tests, focus groups, surveys) may not be useful or valid. In this domain, particular care must be taken to make certain that the research that is conducted provides valid input that does not lead the development effort astray. In the case of highly innovative products this means relying more heavily on techniques such as prototype reaction studies. Prototypes are essential instruments for market learning during the course of radical innovation, even beginning with the first formative prototype pushed out by the R&D lab. They provide a critical means for product developers to assess the product direction and test critical assumptions. Such efforts play a key role in the ‘probe and learn’ process that serves to accelerate market learning. Apart from these sorts of methods for gaining information to help direct the product development effort, customers can be studied (using various techniques such as laddering which involves successive questioning to uncover the values or motivations linked to a product, and observational study which essentially involves watching or videotaping customers using products in settings of interest) in order to identify and understand latent needs that may suggest product ideas or serve to revise the design direction that a product under development is taking. Customer research also provides a means for determining product specifications since for many discontinuous products established benchmarks do not exist. In addition, customer and market research is needed in order to determine optimal levels of various aspects of the product offering such as the price or pricing structure, product positioning, advertising approach, promotion(s), and so on. Given the challenges inherent in innovation, gaining an understanding of the factors that are likely to influence customer evaluations of a new product and how customers are likely to react to the product is necessary for ensuring a successful market outcome. Marketing provides a necessary and useful function in helping to shape an innovative idea into a product offering that meets the needs and desires of the people who are intended to use it.

 

 

REFERENCES

Ali, A. (1994). Pioneering vs. incremental innovation: Review and research propositions. Journal of Product Innovation Management, 11, 46–61.

Christensen, C. M. (1997). The innovator’s dilemma. Boston, MA: Harvard Business School Press.

Jolly, V. K., (1997). Commercializing new technologies. Boston, MA: Harvard Business School Press.

Kleinschmidt, E. J. & Cooper, R. G. (1991). The impact of product innovativeness on performance. Journal of Product Innovation Management, 8, 240–251.

Lee, M. & Na, D. (1994). Determinants of technical success in product development when innovative radicalness is considered. Journal of Product Innovation Management, 11, 62–68.

Meyers, P. W. & Tucker, F. G. (1989). Defining roles for logistics during routine and radical technological innova- tion. Journal of the Academy of Marketing Science, 17 (1), 73–82.

Veryzer, R. W. (1998). Discontinuous innovation and the new product development process. Journal of Product Innovation Management, 15, 304–321.

von Hippel, E. (1988). The sources of innovation. New York: Oxford University Press. 

Wheelwright, S. C. & Clark, K. B. (1992). Revolutionizing product development. New York: The Free Press.