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MG308A > Innovation > Flashcards

Innovation Flashcards

1
Q

What is an innovation

A

Any product, service, attitude, or idea that consumers within a market segment perceive as new and that has an affect on existing consumption
-New manufacturing technique
-New product variation
-New way to deliver products
-New way to package the product

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2
Q

Innovation equilibrium

A

Equilibrium of: technology (feasible), business (viable) and consumers (desirable use)

Makes innovation difficult

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3
Q

Three types of innovation:

A
  1. Discontinuous
  2. Dynamically continuous
  3. Continuous
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4
Q

Discontinuous

A

Creates major change in the way we live (pioneering), radically new advancements
-Spawn a host of peripheral products and associated innovations

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5
Q

Dynamically continuous

A

A more pronounced change to an existing product, often incorporates a new technology

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6
Q

Continuous

A

Extensions of existing products so they have limited effect on behavioral change, modified versions
-Most new products are evolutionary not revolutionary

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7
Q

Innovation continuum

A

1.High = discontinuous e.g telephone
2. Behavioural change required = dynamically continuous e.g cordless phone, cell phone, smart phone
3. Low = continuous e.g. cell phone with internet access, touchscreen

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8
Q

Product life cycle stages

A

Introduction
Growth
Maturity
Decline

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9
Q

PLC Introduction stage - objectives

A

-Develop awareness
-Quickly identify and remedy defects
-Gain trial by “innovators” and early adopters more later

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10
Q

Introduction stage - outlook on competition

A

Rarely attracted in this early stage - usually unprofitable

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11
Q

Intro stage - the product

A

-Limited number of models, focus on appealing to the most receptive segments
-Utmost attention to quality control and rapid response to market-revealed defects

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12
Q

PLC Growth Stage - objectives

A

-Establish brand loyalty by market and distribution partners
-Often forced to clarify positioning relative to entering competition

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13
Q

Growth Stage - outlook on competition

A

-Competitors enter aggressively
-Competition may aid in growing the market
-Comparative or attack advertising is common

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14
Q

Growth stage - the product

A

-Variations may be called for as segments emerge
-Improvements may be necessary to respond to competition

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15
Q

Maturity stage - objectives

A

-Defend market position
-Identify new markets and/or new uses for product to maintain growth

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16
Q

Maturity stage - outlook on competition

A

-Stablised, with few or no new entrants and semi-fixed market
-Price competition and distribution competition are common as competitors fight to maintain/earn market share

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17
Q

Maturity stage - the product

A

“tighten” product line to eliminate offerings with small shares
-Focus on new product platforms to re-introduce growth

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18
Q

Decline Stage - objectives

A

-Reduce costs
-Focus on profits rather than revenue or share

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19
Q

Decline stage - outlook on competition

A

Competition declining or dropping out because of decrease in consumer interest

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20
Q

Decline stage - the product

A

-Constant pruning of product line to eliminate any items not turning a profit
-Reduce marketing budget to lower fixed costs

21
Q

Adoption - of innovators

A

When an individual or household chooses to purchase a new product
-High effort = greater perceived risk, discontinuous, joint decisions
-Low effort = less perceived risk, continuous, independent

22
Q

Factors that aid successful adoption

A
  1. Compatibility
  2. Trialability
  3. Complexity
  4. Observability
  5. Relative advantage
23
Q

Compatibility

A

Innovation should be compatible with consumers’ lifestyles

24
Q

Trialability

A

People are more likely to adopt an innovation if they can experiment with it prior to purchase

25
Complexity
A product that is EASY to understand will be chosen over competitors
26
Observability
Innovations that are easily observable are more likely to spread
27
Relative advantage
Product should offer relative advantage over other alternatives
28
When does the most adoption occur during the PLC
Growth Late majority Least: innovators
29
Types of adopters (5)
1. Innovators 2. Early adopters 3. Early majority 4. Late majority 5. Laggards
30
Product adoption lifecycle
-R&D = innovators -Introduction = early adopters -Growth = early majority -Maturity = late majority -Decline = laggards
31
Innovators "techies"
– Higher education/income levels – Socially active, use multiple information sources – Venturesome, favor taking risks – Enthusiastic about new tech products, even if there are a few bugs or inefficiencies
32
Early adopters "visionaries"
– Involved in product category (pay attention to the innovators to get ahead of the herd) – Concern for social acceptance, young and restless (do not want to wait for subsequent versions even if cheaper) – OPINION LEADERS : communicate benefits to the masses
33
Early majority "pragmatists"
– Deliberate decision making, seek incremental, predictable, reliable improvements to existing tech – Value shoppers, wait until certain of product’s benefits – Stick with the herd, have many informal social contacts
34
Late majority "traditional"
-More conservative, wary of progress, rely on tradition – Tend to adopt in reaction to peer pressure, emerging norms, or economic necessity – Generally fear high-tech products, prefer preassembled
35
Laggards "skeptical"
– Slowest group to adopt, often resist innovation (important for marketers to understand WHY) – Neighbors and friends are information sources – Fewer resources, cannot afford to take risks on new ideas
36
Diffusion of innovations
Successful innovations must spread through the population and appeal to every consumer group e.g. more than 75% of people in the US, Argentina, Chile, South Africa, and many European countries use cell phones
37
Diffusion
the % of the population that has adopted an innovation at a specific point in time – While adoption reflects the behavior of an individual, diffusion reflects the behavior of the entire marketplace as a whole
38
Saturation point
the maximum proportion of consumers likely to adopt a product
39
How offerings diffuse through a market - S-shaped diffusion curve
Slow initial growth followed by a rapid increase in diffusion, them slows -Typical of major innovations -Greater perceived physical, economic, performance, social, or psychological risk -High switching costs
40
How offerings diffuse through a market - exponential diffusion curve
Rapid initial growth followed by increases at a slower pace -Fewer perceived risk -Consumers are similar in their beliefs/values, communicate throughout social network -Low switching cost
41
Applied to fashion system
Although often applied to aesthetic or hedonic innovations, can also describe functional and symbolic innovations
42
Theories of fashion movement
1. Trickle-down 2. Trickle-up 3. Trickle-across
43
Trickle-down
trends start among the upper class or fashion leaders and move down to the masses or fashion followers – World’s oldest and most accepted fashion theory (Veblen)
44
Trickle-up
trends start among the young or lower income groups and move upward to older or higher income groups
45
Trickle-across
fashion moves horizontally through groups at similar social levels – Look to members of our reference groups for inspiration
46
The typical fashion cycle
Introduction stages: 1. Innovation 2. Rise Acceptance stages: 3. Acceleration 4. General acceptance Regression stages: 5. Decline 6. Obsolescence
47
Fad
A successful innovation that has a very short PLC -Diffuses rapidly, quickly accepted, but short-lived -May experience a revival years after initial appearance - e.g. fidget spinners
48
Trend
a successful innovation that has a moderately long and potentially cyclical PLC e.g. clothing styles, shoes
49
Classic
a successful innovation that has a lengthy PLC e.g. jeans, burgers

MG308A (12 decks)

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