2016 - Lecture 5. Learning from markets.pot
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This document discusses how technology and markets affect commercialization of products. It covers different types of innovations based on the maturity of technologies and markets, including differentiated, architectural, technological, and complex innovations. Key points discussed include segmenting markets for architectural products, unique features of marketing technological products, and the important role of lead users in developing and adopting complex products.
2016 - Lecture 5. Learning from markets.pot
- 1. Theme 5 Learning from markets Managing Innovation
- 2. Outline 1. How Do Technology and Markets Affect Commercialization? 2. Differentiating Products 3. Creating Architectural Products 4. Marketing Technological Products 5. Commercializing Complex Products
- 3. How Do Technology and Markets Affect Commercialization? product innovation results in new or improved products and services, and may change the basis of competition innovations in logistics may affect how a product or service is made available to customers, including distribution channels and nature of sales points; product innovation allows some scope for premium pricing, and process innovation may result in price leadership innovations in media provide new opportunities for promotion. 4 Ps (Marketing mix)
- 4. How Do Technology and Markets Affect Commercialization? • Segmentation is the only method more effective for routine development projects • prototyping, industry experts, focus groups and latent needs analysis are all more effective for novel development projects
- 5. How Do Technology and Markets Affect Commercialization?
- 6. How Do Technology and Markets Affect Commercialization?
- 7. How Do Technology and Markets Affect Commercialization? • Differentiated Both the technologies and markets are mature, and most innovations consist of the improved use of existing technologies to meet a known customer need. Products and services are differentiated on the basis of packaging, pricing and support.
- 8. How Do Technology and Markets Affect Commercialization? • Architectural Existing technologies are applied or combined to create novel products or services, or new applications. Competition is based on serving specific market Niches and on close relations with customers. Innovation typically originates or is in collaboration with potential users.
- 9. How Do Technology and Markets Affect Commercialization? • Technological Novel technologies are developed which satisfy known customer needs. Such products and services compete on the basis of performance, rather than price or quality. Innovation is mainly driven by developers.
- 10. How Do Technology and Markets Affect Commercialization? • Complex Both technologies and markets are novel, and co evolve. In this case there is no clearly defined use of a new technology, but over time developers work with lead users to create new applications. The development of multimedia products and services is a recent example of such a co-evolution of technologies and markets.
- 11. Differentiating Products Differentiation measures the degree to which competitors differ from one another in a specific market
- 12. Differentiating Products Analysis of the Strategic Planning Institute’s database of more than 3000 business units helps us to identify the profit impact of market strategy (PIMS): High relative quality is associated with a high return on sales. Good value is associated with increased market share Product differentiation is associated with profitability
- 13. How Do Technology and Markets Affect Commercialization? • Process innovation helps to improve relative quality and to reduce costs, thereby improving the relative value of the product. • Product innovation also affects product quality, but has a greater effect on reputation and value. • Together, innovation, relative value and reputation drive growth in market share.
- 14. Creating Architectural Products • Architectural products consist of novel combinations of existing technologies that serve new markets or applications. In such cases the critical issue is to identify or create new market segments. • Market share is associated with profitability: on average, market leaders earn three times the rate of return of businesses ranked fifth or less. Therefore the goal is to segment a market into a sufficiently small and isolated segment which can be dominated and defended. • This allows the product and distribution channels to be closely matched to the needs of a specific group of customers. • The basis of segmentation should have clear operational implications, such as differences in preferences, pricing, distribution or sales strategy. Customers could be segmented on the basis of how experienced, sophisticated or price-sensitive they are.
- 15. Creating Architectural Products The process is complicated by the number of people involved in the buying process: • The actual customer or buyer, who typically has the formal authority to choose a supplier and agree terms of purchase. • The ultimate users of the product or service, who are normally, but not always, involved in the initiation and specification of the purchase. • Gatekeepers, who control the flow of information to the buyers and users. • Influencers, who may provide some technical support to the specification and comparison of products.
- 16. Marketing Technological Products Several features are unique to the marketing of high technology products, and affect buying behaviour: 1. Buyers’ perceptions of differences in technology affect buying behaviour. In general, where buyers believe technologies to be similar, they are likely to search for longer than when they believe there to be significant differences between technologies.
- 17. Marketing Technological Products 2. Buyers’ perceptions of the rate of change of the technology affects buying behaviour. In general, where buyers believe the rate of technological change is high, they put a lot of effort in the search for alternatives, but search for a shorter time. In non-critical areas a buyer may postpone a purchase.
- 18. Marketing Technological Products 3. Organizational buyers may have strong relationships with their suppliers, which increases switching costs In general, the higher the supplier-related switching costs, the lower the search effort, but the higher the compatibility- related switching costs, the greater the search effort.
- 19. Commercializing Complex Products Lead users are critical to the development and adoption of complex products. As the title suggests, lead users demand new requirements ahead of the general market of other users, but are also positioned in the market to significantly benefit from the meeting of those requirements. Where potential users have high levels of sophistication, for example in business-to-business markets such as scientific instruments, capital equipment and IT systems, lead users can help to co-develop innovations, and are Therefore often early adopters of such innovations.
- 20. Commercializing Complex Products Characteristics of lead users: • Recognize requirements early – are ahead of the market in identifying and planning for new requirements. • Expect high level of benefits – due to their market position and complementary assets. • Develop their own innovations and applications – have sufficient sophistication to identify and capabilities to contribute to development of the innovation. • Perceived to be pioneering and innovative – by themselves and their peer group.