BM3315

STRATEGIC MARKETING
Lecture Nine
Innovation Management

LEARNING OUTCOMES
Understand the concept and forms of innovation
Able to analyze the characteristics of innovation
strategies
Able to summarize the theories on the process
of the development of new products
Understand the role of time in market
appearance
Identify the common form of innovation in
company structure

CONCEPTS AND FORMS OF

INNOVATION
Innovation
Associate with new ideas or renewal, progress and
development
New knowledge, ideas, methods, procedures,
products and services (product innovation and
process innovation)
New way of satisfying customer needs at higher level
of quality

CONCEPTS AND FORMS OF

INNOVATION

ABSOLUTE AND RELATIVE

INNOVATIONS
Innovation not only relate to invention and
discoveries (new products/methods)
Improvement
and
perfection
of
previously
manufactured products
applied technologies
ways of production organization and management

MODELS OF THE INNOVATION

PROCESS

PRODUCT INNOVATION
STRATEGIES

PRODUCT INNOVATION
STRATEGIES
Reactive Strategies
Adaptation or
challenges
Four types:

reaction

Defensive
Copying
Second but Better
Responsive

to

market

needs

and

PRODUCT INNOVATION
STRATEGIES
Defensive Strategy
Aims to defend the existing goods of a company
against the growth in market share of the
competitions product through product modification,
launch of new brand and repositioning

Copying Strategy
Launch of the companys own brand results from
copying (with minor modification) of a successful new
product from a competitor

PRODUCT INNOVATION
STRATEGIES
Second But Better Strategy
A more developed and better brand is launched onto
the market in comparison of competitors new product

Responsive Strategy
Company develops a new product on the basis of
well-identifiable consumer needs

PRODUCT INNOVATION
STRATEGIES
Proactive Strategies
Adopted by those companies that take initiatives in
the market
Consist of:

Marketing
Research and Development
Acquisitions
Strategic Alliances

PRODUCT INNOVATION
STRATEGIES
Research and Development
Applied research into the direction of the application
of new scientific and technical results (product
innovation / technical innovation)

Marketing: Identification of Market Demands

Researching into market demands and consumer
needs creating new products

PRODUCT INNOVATION
STRATEGIES
Acquisition
Acquisition of the right to use patents, licenses and
company properties

Strategic Alliances
Temporary cooperation between competitors to
develop certain new products by joining efforts,
abilities and resources

TIMING OF MARKET ENTRY

Possibilities for timing

First Mover

Launch in parallel

Able to gain high profit, abundant of competence and

secure market conformity
Significant on market where a strong venture with great
expectations can be found besides market leader

Launch with delay

Imitators
Innovators
Combination of both

PRODUCT AND SERVICE

INNOVATION MODELS

PRODUCT AND SERVICE

INNOVATION MODELS
According to Functions
Conventional
approach
where
sub-tasks
development is given to various departments

of

According to Activities
Process of product development according to the
tasks and activities to be carried out

According to Decisions
Emphasis on decision-making where development
can be continued if the project meets the requirement

PRODUCT AND SERVICE

INNOVATION MODELS
Transformation Model
Functions, tasks and information are simultaneously
taken into account and represented as inputs in the
course of development

Parallel Development Model

Take into consideration that certain functions can only
be carried out in succession through parallel activities

TESTING FOR PRODUCT

INNOVATION

TESTING FOR PRODUCT

INNOVATION
New Product Testing
Need to consider the quality testing, ways the product
operates and conformity of the product with customer
needs in terms of utility and value
Aspect to be tested are physical appearance,
operations of the product, expected performance and
image
Method for testing: blind test, evaluation of alternative
product types, individual product evaluation and
comparison of brands

TESTING FOR PRODUCT

INNOVATION
Testing for Packaging
Testing on the protection of the product through
laboratory and consumer testing
Shape, size and color of the packaging
Shelf space in retail stores, attractiveness and
informative
Shopkeepers
expectation
on
the
handling,
transporting and storing of the product

TESTING FOR PRODUCT

INNOVATION
Brand Name Testing
Good brand name must be distinctive, short,
memorable, convincing and specific
Brand name is connected to quality, positioning,
packaging and advertising
Factors to be considered:
Branding policy (special brand name, brand families,
company name and combinations)
Trade name
Graphic and aesthetic viewpoints
Image policy of the company

TESTING FOR PRODUCT

INNOVATION
Advertising Testing
Finding out how potential customer react and
measure if the advertisement will be effective
Factors to be measured:

Access to consumers through selected media

Attracting the attention of the public
Understanding the message of the advertisement
Credibility of the message
Convincing power of the message
Arousing of purchasing willingness

TESTING FOR PRODUCT

INNOVATION
Market Testing
Examine the designed product within narrow market
conditions focuses on trial and repurchase of the product
Explore the following queries:
Expected interest from customers
Expected sales from the new innovated product
Efficiency of the marketing programme

Consider factors like examination cycles, expenses and

time demands

PRODUCT LAUNCH
AND FOLLOW-UP
Strategic decisions when introducing newly
innovated product:

Timing of market entry

Scale of launching the product
Intensity of market entry
Determining target group and product positioning
Evaluation of the product advantage
Choice of brand name
Price

TRACKING THE PRODUCT

ON THE MARKET
Tracking the newly innovated product is
important in the introductory stage and during its
lifecycle to ensure success and necessary
amendments
Tasks in tracking the product:
Analysis of product acceptability
Tracing competitors reactions
Taking necessary measures in order to achieve goals

PRODUCT INNOVATION IN
ORGANIZATIONS
Production teams were set for development of new
products
Consist of:
Vertical Production Team, led by the line manager,
who is responsible for coordinating the other
managers; a deputy line manager and an assistant
Triangle Production Team, consisting of a line
manager and two assistants
Horizontal Production Team, consisting of a line
manager and other experts such as marketing
manager

PRODUCT INNOVATION IN
ORGANIZATIONS
Concerning innovation, there are four steps to
set autonomous organizational units:
Each division sets up their autonomous innovation
Cooperative and divisional product development
The cooperative and divisional sector has the leading
role in developing new products
The divisions are responsible only for some simple
development tasks

PRODUCT INNOVATION IN
ORGANIZATIONS
Companys support and forms of corporate
subsidies to ensure the success of the new
product
Determination of a clear innovation policy (objectives,
resources)
Creation of product innovation projects
Creation of a suitable coordination and supervision
organization
A suitable corporate culture