chapter 6 - marketing principle #3: managing offering-based sustainable competitive advantage

Question 1

offering

Answer 1

= purposely broad term that captures both tangible products and intangible services provided by firms

Question 2

innovation

Answer 2

= the creation of substantial new value for customers and the firm by creatively changing one or more dimensions of the business, this enables firms to identify and develop valuable new offerings that establish and ensure their sustainable competitive advantage

Question 3

innovation radar

Answer 3

= summarizes the key means by which a firm can innovate.
1. Change what the firm offers; offering, platform, solutions.
2. Changing who the customer is; value capture, experience, customer.
3. Changing how you sell to customers; organization, supply chain, processes.
4. Changing where to sell to customers; presence, networking, brand

Question 4

offering equity

Answer 4

= refers to the core value that the performance of the product or service offers the customer, absent any brand or relationship equity effects

Question 5

developing innovative offerings

Answer 5

–> concept and definition
–> design and development
–> validation and production
–> final audit
= new product
1. In each stage the feasibility of the new development project is evaluated form multiple perspectives; customer, technology, financial, and operations.
2. The evaluations who determine if the project will be continued is external to the project team
3. Provides the firm plenty of opportunity to cancel projects at early stages, this allows key recourses to be reallocated.

Question 6

repositioning strategies

Answer 6

= An innovative offering can result from dramatically repositioning an existing offering, such as removing some features or adding others, so that the total offering appeals to a different customer segment with a “new” value proposition.

Question 7

red ocean markets

Answer 7

= very competitive and populated by fighting over the same customers. They launch new products or service extensions that represent incremental innovations

Question 8

blue ocean markets

Answer 8

= less competitive, refine the market space which creates a significant risk of failure. Introduce unexpected feature and fundamentally change the entire value proposition

Question 9

new technology-based innovation strategies

Answer 9

= can undermine a firm’s leadership position in a market, even if that firm is doing everything else well.
1. Sustaining technologies= well understood and typically exploited by market leaders, and produce continuous, incremental improvements over time.
2. Disruptive
technologies= present
highly different price
and performance
characteristics or value propositions, and improves very quickly.

Question 10

Launching and Diffusing Innovative Offerings: two main categories

Answer 10

• Diffusion rate
  –> People-based factors that influence innovation diffusion= to explain new offerings’ diffusion rates consumers are classified into groups according to their propensity to adopt the new product. The adoption lifecycle suggests five groups (innovators, early adopters, early majority, late majority and laggards)
• Product-based factors that influence innovation diffusion= shows that specific product characteristics can capture variation in the speed with which the offerings diffuse. Changing the following five factors can alter the rate of product diffusion (relative advantage, compatibility, complexity, trial-ability, observability)

Question 11

Building offering equity: three main steps

Answer 11

1. Develop an offering or offering portfolio that provides customers with the largest relative advantage among all competitors in the market.
2. Segment, target, and position that new offering in a way that accounts for both people- and product-based diffusion factors.
3. Manage the customer migrations from innovators and early adopters to early majority stages.

Question 12

Research approaches for designing and launching new offerings

Answer 12

• Conjoint analysis= can measure the impact of these features mathematically, marketers can design and develop new products by thinking of products as bundles of attributes, then determining which combination of attributes is best suited to meet the preferences of customers.
• Bass model= captures many of the people- and product-based factors, but also integrates pricing and adverting levels to predict adoption rates.