7 Product/ Service Launch Flashcards
What are the characteristics of an innovation?
- create long-lasting competitive advantage
- take place outside the daily routine
- leads to creative destruction
- success depends on different actors in- and outside the organization
- processes are characterized by high uncertainty
- is imitated
Which groups/ levels of adoption differentiates Roger?What are each groups characteristics and their function for the innovating company?
- Innovators:
- actively seek information, cosmopolitan social relationships, able to cope with uncertainty, have money, gatekeeping role in the flow of new ideas into a system
- Early Adopters:
- opinion leaders, integrated part of local social system, sought as “local missionary”, decreases uncertainty by adoption (“stamp of approval”)
- Early Majority:
- interact frequently with peers, seldomly opinion leaders, big group (1/3)
- Late Majority:
- adoption may be economic necessity or result of increasing peer pressures, system norms must favor the innovation
- Laggards:
- very localized, isolated in social network, past = point of reference, limited resources, suspicious of innovations
In which aspects differs Moore’s Innovation Curve from Roger’s?
- Moore separates the market into:
- early market (innovators & early adopters)
- mainstream market (early majority, late majority & laggards)
- Argumentation: early adopter categories are qualitatively different from later adoption categories, not just gradually, hence there is a “chasm” (=gap) between early and late adopters
Between which commercialization modes should be distinguished?
Commercialization by:
- the innovator itself: use in own products/ processes/ services
- a third party: (cross-)licensing, selling
- hybrid strategy: spin-off
If the innovation is used in the innovators own product, what does it require and why does the innovator profit from employing this approach?
- requires complementary assets, like:
- production capacity
- sales channels
- brand recognition
- rights to complementary technologies
- innovator profits due to:
- improved product quality
- product differentiation
- lower costs
- entry into new markets
- increased use of an innovation
If the innovation is licensed or sold, what does it require and what is a good example for a very profitable licensind/ selling setting?
- requires:
- strong patent protection or other IPRs
- considerable resources
- markets for technology
- => difficult to implement especially for small firms
- best practice example: IBM made > US 1.25 billion with this strategy in 2011
Why are markets for technology illiquid?
- Technology and Knowledge are hard to value
- High search and transaction costs
- value of knowledge is subject to strong complementarities and portfolio effects -> reduced number of potential buyers
- transaction is faciliated by IPRs, these are hard to achieve for small-firms
When is an spin-off used to get rid of the innovation? And how does the innovator profit?
- usually a spin-off is chosen in case of:
- a misfit (climate/ strategic/ resource-related)
- focus on core business
- the innovator profits:
- because the innovations can be tested at the real market at relatively low cost
- the external partner assumes the main risk
- by financial benefits
- by retaining the option to reintegrate the spin-off
Which three types of timing the entry can be distinguished?
- First-movers: the first entrant to sell in a new product or service category
- Early followers: entrants that are early to market, but not first
- Late entrants: entrants that do not enter the market until the time the product begins to penetrate the mass market or later
What are advantages and disadventages of a first-mover strategy?
- advantages:
- brand loyalty and technology leadership
- preemption of scarce resources
- exploiting buyer switching costs
- reaping increasing returns on investment
- disadvantages:
- R&D expenses
- underdeveloped supply and distribution channels
- immature enabling technologies and complements
- uncertainty of customer requirements
Which factors influence the optimal timing of entry?
- resources
- reputation
- customer preferences
- USP
- enabling techniques
- complementary assets
- competition
- returns on adoption
Why do we care about ip rights?
- Many intangible assets:
- require upfront investment in production (e.g. innovation - R&D, reputation/ image - advertising cost)
- are produced by non-altruistic individuals behaving in a profit-maximizing way in order to generate revenues from exploiting the intangibles (appropriate rents from intangible asset/ innovation)
Which types of IPRs exist and for what type of achievement are they rewarded?
- Reward for:
- technical-innovative achievement: patent, utility model
- innovative design achievements: design
- communicative-identifying achievements: trademark
- innovative creative achievements: copyright
The underlying problem of IPR is the problem of appropriability, why?
- Knowledge can be seen as a public good: non-rival, non-excludable
- But: if third parties cannot be excluded, innovators cannot appropriate the returns from their R&D investments
- they get access to intangible assets at low or even no cost
- inital producer of intangible assets might not be able to appropriate enough rents to recoup cost of production
- initial producer invests less than optimally in R&D
- or might have no incentive to invest in R&D at all
=> IPRs can only partly restore the incentive to perform R&D, but it is also important to create a right balance between exclusion and diffusion.
What is a patent?
- exclusion right
- granted by a state for a technical invention that is new, based on inventive activity and industrial application
