Source:
E-mail dt. 9 June 2012
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.
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%)
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.
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.
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.
[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