Globalization has changed the traditional balance between customer and supplier. It has suddenly opened new opportunities which has helped the establishment of open global trading regimes- customers have more choices to buy their desired product. Therefore in today’s modern world, where everything is inter-related from business to markets, there is a major possibility of destroying own brand image because of inefficiencies in our own product. Every point-of-contact between you and your customers is an opportunity to increase or decrease your customer value of doing business.
A successful organization is that organization which uses ideas, innovation and creativity to develop its products through its employees and customer. An organization can use innovativeness to create a market and incur revenue from it.
The role of marketing is to strengthen the position of a product and to apply effective programs for the creation of revenues. So, marketing is the first step to ensure the market performance of an innovation. Today’s marketing physiology depends upon creating the customer satisfaction for the product. Meeting customer requirements is an imperative for effective innovation activities & various companies are continuously investing in Research & Development (R&D) to introduce different products in market.
Marketing plays a vital role in the design of effective business models. Identifying the need and translating them into revenues is the core principle of a marketing activity. Therefore before deciding a product innovation, the company also has to consider the customer orientation for the product. In India, P&G continues to invest in innovation, R&D and distribution which helped it to develop and introduce razor-and-blade system, attracting more customers from lower-income segments for its Men’s personal care products.
Marketing through Disruptive innovation
A disruptive innovation is an innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network (over a few years or decades), displacing an earlier technology. As explained earlier, the product is driven by customer perceived value. So a lot of market research has to be done for knowing the required need of customer. The main problem for an industry is to identify a sustainable customer base to establish the business in case for their innovation. Clayton Christensen introduced the concept of disruptive innovation after studying the phenomenon solid-state disk drive industry.
In the case of hard disks (solid-state disk drive), the Personal Computer fundamentally changed the design parameters. Catering to the computer specification, hard disk companies prioritized on storage space and performance on hard disk. Therefore a niche was created in market which led to a revolution in storage capacity of personal and cooperate computers. Niche develops unexpected growth potential. Thus companies started investing in improving performance of hard disk, neglecting innovation. But the recent introduction of cloud computing is a threat to this market in near future.
Eventually the innovation can beat established technologies in the mainstream market. For example CD’s have replaced Flash drives, while laptops are being replaced by Tablet PC’s. The mobile-phone market provides an excellent example: Nokia used to be the market leader in terms of volume and sales. Its strategy is based on a wide range of affordable, high-quality products covering almost any market segment, from simple user to advanced professional. It provided the technology according to price range and designs weren’t trendy. But the introduction of Apple started to break the niche market by simplifying user interfaces, attracting software developers eventually driving the growth of the application market. Thus Nokia went down while Apple continued to increase its sales market. Another example is the introduction of Android based cell phones which changed the face of existing market. While most of manufacturer’s starting providing Android based cell phones, companies like Nokia and Apple used their existing software. This resulted in decreasing their market share (especially Nokia) due to lack of innovativeness.
In case of disruptive innovations, company may have a broad range of innovative projects but are forced to prioritize on innovations that appeal to their present customers. There is a pressure to serve their existing customer need and also focus on emerging niche market opportunity. Once they realize the new market, these companies re-investment and maximise their profit. In disruptive innovations, customer information can be misleading. These innovations only cater to market niches that are not representative for the mainstream market, hence can prove a failure sometime.
Marketing through sustaining innovations
Sustaining innovations are rather incremental and refer to the established pattern of demand. For such innovations, the existing customer base is a valuable source of ideas for product improvements, additional features or simply better user interference. This is the type of innovation in which Apple company excels in, where there is a clearly defined problem and a reasonably good understanding of how to solve it.
When Steve Jobs first envisioned the iPod, it was simply a device that allowed you to put “1000 songs in your pocket.” But what Steve Jobs did was using the features of iPod and transforming it into a cell phone i.e. iPhone. Thus, the product actually created a niche in the market and is now considered as a luxurious product. In sustaining innovation, the present customers are a valuable source of intelligence, but companies should note that before introducing an innovation, a brief study of customer need and the market scenario should be done.
Innovation Hub Model
Innovations and ideas can come from any part of an organization. It is not restricted only to R&D department or Marketing, nor is it merely limited to an employee or customer ‘suggestion scheme’. Sources should include both from internal and external as well. They should be collaborated and form core of the future of an innovative business. Successful organizations operate an ‘Innovation Hub’ where all ideas and innovations are collated and coordinated like that of IBM. Innovation can be done in product, process or in business as well.
Good Ideas should be properly screened for their feasibility and ‘bad’ ideas should be killed off quickly. The number and type of ideas will be determined by the ‘performance gap’ and available resources. This prevents ‘innovation overload’ whereby a company is almost paralyzed by the sheer volume of innovations and ideas generated from the multiplicity of sources as previously mentioned.
The Innovation Process should be built into business routines during Business Planning process, Quarterly Innovation Workshops and in day to day activities. The few critical success factors when running an innovation process within any organization are as follows:
i. Focus should be on opportunities of high value and lesser ideas should be discarded quickly.
ii. There should be active commitment of top management through visible leadership and use of the process by senior management.
iii. Innovations should be done in day to day business processes with the help of budgeting and planning.
iv. Innovation should be kept as top priority for all staff and especially in managers.
v. Rewards should be given to people for sharing ideas & knowledge through a reward system that recognizes group effort and sharing ideas rather than just the individual.
vi. By integrating the customer and satisfying their needs, organization can benefit a lot.
Thus use of Innovation in marketing can help an organization to sustain its brand in market. It also helps to introduce and renew existing products in market, thereby creating additional revenue for the company.
[The article has been written by Dinoop Nair. He is presently pursuing his MBA from VIM, Pune.][/sociallocker]