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The Role of Innovation in a Contemporary Market Environment

 

Dr. R. Karuppasamy M.Com., MBA, M.Phil., Ph.D., PLME

 Director, Management Studies, SNS College of Technology, Coimbatore, Tamilnadu, India

 

and

 

R. Lumina Julie M.B.A., M.Phil.,

Assistant Professor, Sri Krishna Arts and Science College, Coimbatore, Tamilnadu, India.

 

 

Abstract

 

 The goal of this paper is to explore what we call innovation (of product or process), how it is diffused into the market and how the consumers confront and adopt it. Using several scientific approaches we conclude that there is a group of basic factors that the marketing managers should take into account during the implementation and promotion of innovative products/processes and that every company needs to develop constantly new products in order to diminish all negative effects of product dematurement and, as a result, gain longterm success.

 

Keywords: Innovation market; Product innovation; innovation & entrepreneurship

 

Introduction

 

In modern market environment, managers should be, above all, real innovators. They have to be able to develop innovation procedures and manage to market the products in a profitable manner. It seems that modern managers have a number of joint characteristics, some of which can be seen below:

 

1) Ability to classify innovations,

2) Perception of the competitive advantage,

3) Understand innovation diffusion   procedure,

4) Build communication channels,

5) Use of marketing strategy tools for the design, development and promotion of innovation,

6) Understand the key factors which lead to successful adoption of the innovation technology.

 

In order to acquire all of the attitudes described above, marketing managers should be aware of the real concept of innovation and how it is diffused in the market. The bibliography used for this paper deals with the different aspects of innovation [1,2,4,7,12], the diffusion of innovation [3,5,8,9,10], the consumers’ perception of innovation [5,6,11] mainly from the engineers’ and managers’ point of view.  The present paper is an attempt to gather a meaningful amount of published literature, concerning this matter, aiming at the same time, to integrate different fields of knowledge, providing thus, the marketing managers with modern decision making tools.

 

What we call innovation?

 

Innovation is not only a good idea, an invention. It is more like a procedure in which ideas are collected and the best ones enter the production process. T. Robertson suggests a classification of innovations, using marketing philosophy, where consumer’s needs must constitute the core interest of any company.  He gives a cohesion based on the disruptive influence of the use of the product on the consumption models.

A consumer can very often observe products or services, with slight differences almost imaginary.  A very common marketing strategy, is when a slight alteration of an existing product or service, is marketed as innovation. This kind of innovations are known as constant innovations.(e.g. fashion).In constant innovations consumer’s behavior is not affected. We also have dynamic constant innovations, where a change in consumer’s behavior is needed (e.g. replacement of manual operated machines with electronic ones). More rarely, companies introduce interruptive innovations. In that case existing products are altered and adjusted in different markets.

 

We can classify four categories of innovation:

 

1) Improvement of the present products (constant innovation),

2) Improvement of production techniques,

3) Totally new products and

4) New production techniques.

 

According to Abernathy and Townsed product innovation and innovation of the procedure interact each other. This argument stands on the opposite side of what most scientists believe that the market imposes innovations and they are applied mainly to the products and to a less extent to the procedures.  According to Axel Johne  renovations of products and procedures they are nothing else than variations of technological innovation.

 

Figure analysis market/product

 

Innovation plays only one important role. To improve the competitive position of the company in the market. Many marketers use Ansoff’s chart to draw marketing strategies

 

Innovation diffusion

 

Diffusion refers to the acceptance of the innovation by the market. A fast innovation diffusion results to large market share and big profits.

 

T. Robertson agrees with Rogers and determines diffusion like this: “The adoption of new products or services beyond the normal limits by the consumers through social systems is wrongly encouraged by the activities of the market…” So Robertson emphasizes on the ability of the manufacturer to influence both time and speed of adoption. He also emphasizes in consumer’s personal influence (i.e. imitation).

 

Innovation acceptance by consumers

 

Characteristics of consumers who accept an innovation

 

E. Rogers in his work , has classified consumers into five categories, using the time it takes to accept an innovation: (α) Modernists (2,5%),  (b) Consumers who accept early an innovation (13,5%), (c) Majority of consumers who accept an innovation (34%), (d) Majority which accepts it later(34%) and (e) Very late adopters (16%)

 

Acceptance process

 

E. Rogers  is considered a pioneer also in the matter of acceptance of process, suggesting a procedure compiled by five stages: 1) Acquaintance 2) Interest 3) Evaluation 4) Testing 5) Acceptance. 

 

This model, as many others of the 60’s, regard the market and the acceptance process as successive learning processes. Later, Rogers modified his initial model, so as to develop acceptance process and he called it “innovative decision process”. Consequently, the acceptance decision is of a great importance for every marketing manager. It is accomplished with the transmission of technical messages and marketing messages through appropriate marketing channels.

 

Roger explains in more detail his model like this,

 

1.      Acquaintance comes when an individual is subjected to the presence of innovation and acquires some information of its functions.

2.      Persuasion comes when a person forms a positive or negative opinion about an innovation

3.      Decision comes, when a person is involved in activities which lead to a choice of accepting or rejecting the innovation

4.      Acceptance comes, when a person uses the innovation

5.      Certification comes to support any consumer who searches information so not to change his purchasing behavior.

 

Factors encouraging acceptance percentage 

 

Marketing is trying to persuade as many people as possible to consume, as frequently as possible. Marketing is also able to analyze the adoption procedure of an innovation. A perfect innovation is not enough to secure fast adoption and large market share. There are many factors that affect the adoption rate.

 

There is a special interest in the factors that affect approval and buying of an innovation among an organization. That is because specific changes are demanded in organizational and management structure. Managers’ reaction to a possible innovation’s approval may differ deeply as personal, economical and company protection factors occur.  There may be a thousand motives for (dis) approval of an innovation in an organizational environment.

 

Conclusions

 

Every product has its life cycle. This life cycle is affected by changes in market environment. Products mature and demature. Therefore, every company needs to develop constantly new products in order to diminish all negative effects of product dematurement and, as a result, gain long-term success.

 

Yet, long-term success is not something easy to achieve. Successful innovations only occur after careful understanding/analysis of consumers’ needs and designing/programming of the product.

 

Concluding, a company should take into account five points before starting the production of an innovation, as shown below:

 

-             Innovations should aim at the consumer/user’s needs and NOT at technical superiority.

-             Innovations market introduction should be accompanied with useful information regarding the product/service, so that people can understand why it is good for them.

-             Before market introduction, a deep market analysis should take place.

-             An innovation will not be successful, if it does not take into account present technology.

-             Marketing should emphasize the competitive advantages of a product/service.

 

References

 

[1] Abernathy, W.J and Townsend, P. (1975): Technology, productivity and process change, Technology Forecasts and Social Change, vol. 7, no. 2, Jan

[2]  ACARD (1978): Industrial Innovation, HMSO

[3] Gold, B. (1985): On the adoption of the technological innovations in industry, S. Mac-Donald, D.

[4]  Johne, A.F. (1985): Industrial Product Innovation, Croom Helm

[5] Rogers, Everett. (1983): Diffusion of Innovations, pp 270, Free Press

[6] Rogers, Everett. (1971): Communication of Innovation, Free Press

[7] Robertson, T. (1967): The process of innovation and the diffusion of innovation, Journal of Marketing, vol. 31, Jan., pp 14-19

[8] Robertson, T. (1971): Innovation, Behavior and Communication, Holt, Rinehart and Wiston

[9] Robertson, T.; Gatignon, H. (1986): Competitive effects on technology diffusion, Journal of Marketing, vol. 50, no. 3, pp. 1-12

[10] Rothwell, R.; Schutt, K.; Gardiner. (1983): Design and Economy: the role of design and innovation in the prosperity of industrial companies, Design Council

[11]  Williams, G.E. (1969): Changing systems and behavior, Business Horizons, August, pp. 6-35

[12] Utterback, M.J. Abernathy, J.W. (1975): A Dynamic Model of process and product innovation, Omega, vol. 3, no. 6, pp. 639-56