L8: Commercialization Flashcards
Commercialization of Innovation definition (Hultink et al., 1997)
The set of decisions which define how the new product is positioned and ultimately introduced into the market.
The complexity of launch
- Less risky: internally controlled dimension related to the launch: tactical and strategic decisions.
- More risky: externally endogenous dimension
Tactical decisions definition (Chiesa and Frattini, 2011)
- Encompass key elements of marketing mix, and concerned with operational aspects of the innovation launch.
- Include: Product, Distribution, Advertising and Pricing.
Strategic decisions definition (Chiesa and Frattini, 2011)
- Taken prior to the launch of the innovation. They define the context of the innovation launch.
- Include: Inter-Firm relationships; Timing; Target and Positioning
Two endogenous reasons for market failure of new products (Chiesa and Frattini, 2011)
- Lack of support from the innovation’s adoption network: Interconnectedness of High-Tech markets, Systemic innovations (great readjustment of products).
- Negative Post-purchase attitude of the innovation’s early adopters: Diffusion of innovation, Product trials and attitude change, Customer satisfaction and Radical innovations.
3 factors to consider in Lack of support from the innovation’s adoption network (Chiesa and Frattini, 2011)
a. Inter-Firm relationships: (1) Fail to establish relationships with critical players in adoption network. (2) Unlicensed technology. (3) Relatively high price of software development tool. => L-T partnership, Out-licensing technology and Low price.
b. Timing: false belief that adoption network will support => L-T partnership with critical members in adoption network before the diffusion.
c. Unclear Target and Positioning. => Clear.
4 factors to consider in Negative Post-purchase attitude of the innovation’s early adopters (Chiesa and Frattini, 2011)
a. Target and Positioning
b. Product
c. Advertising and Promotion
d. Timing
The Target and Positioning in Negative Post-purchase attitude of the innovation’s early adopters (Chiesa and Frattini, 2011)
1) No targeting of early adopters in the launch of the innovation.
=> Proactive targeting
2) Wrong positioning = an improvement on existing products or as an extension of a well-respected product line. => Positioning as revolutionary technology.
The Product in Negative Post-purchase attitude of the innovation’s early adopters (Chiesa and Frattini, 2011)
1) Product lacks some critical functionalities for early adopters. => Must include.
2) Some functionalities are not working perfectly at launch time. => Must work perfectly.
3) The configuration contains many additional functionalities. => Only allow limited additional functionalities.
4) The product at launch time lacks some features appearing in the pre-announcement campaign. => Complete set.
The Advertising and Promotion in Negative Post-purchase attitude of the innovation’s early adopters (Chiesa and Frattini, 2011)
1) The message in pre-announcement focuses on features that are unavailable in product configuration. => Consistency between pre-announcement and real product.
2) The message focus on the product’s belonging to a family name or well-respected brand.
=> Focus on technical capabilities and sophistication of the innovation.
The Timing in Negative Post-purchase attitude of the innovation’s early adopters (Chiesa and Frattini, 2011; Cantalone and di Bernedetto, 2012)
1) Attempt to launch when the product is not finished.
2) Early pre-announcement creates high expectation of early adopters who are disappointed by the configuration.
=> Only launch when the development / configuration of product is complete.
3) Consequences to “too late” or “too soon” launch
A focus on critical product launch concerns 3 factors
1) Product evolution
2) Market evolution
3) Competitor evolution
Product evolution as a product launch concern
- Product platform evolution.
- Scheduling further benefits for post launch to sustain value in the product.
- Brand extensions
Market evolution as a product launch concern
The diffusion of innovations in the user network: from innovators to early adopters, early majority, late majority, and laggards.
Competitor evolution as a product launch concern (Debruyne et al., 2012)
- The success of a new product is partly determined by the reactions and moves of competitors.
- Being able to react quickly and insightfully to competitive moves becomes increasingly important.
3 factors triggering the competitive reaction (Debruyne et al., 2012)
- Characteristics of new product introduction.
- Characteristics of the market.
- Characteristics of the innovator.
=> Competitive reaction in 4P.
3 characteristics of new product introduction in competitive reaction (Debruyne et al., 2012)
- Product newness
- Marketing effort
- Targeting strategy
Product newness as a characteristic of new product introduction in competitive reaction (Debruyne et al., 2012)
- It triggers the retaliation behaviour of competitors.
- Two types of new products: Radical and Incremental.
1) Radical product newness as a characteristic of new product introduction in competitive reaction (Debruyne et al., 2012)
- Represent a discontinuity within the industry and advances by an order of magnitude the technological state-of-the-art which characterizes a new industry.
- Competing firms may “wait and see” due to uncertainty concerning the success, the consequences and the target market of the innovation.
- Firms fail to respond due to:
[1] did not recognize them as potential competitors
[2] overly engaged in fulfilling their customers’ existing needs.
[3] busy in fighting to keep up with their current competitors.
2) Incremental product newness as a characteristic of new product introduction in competitive reaction (Debruyne et al., 2012)
- A logical extension to existing knowledge by introducing refinements or extensions of established designs that result in substantial increased value for customers.
- Firms will likely to respond due to: [1] It represents clear-cut attack on the existing market. [2] It captures the market’s attraction.
Marketing effort as a characteristic of new product introduction in competitive reaction (Debruyne et al., 2012)
- It accelerates the diffusion process and the adoption rate, and stimulates superior L-T market performance.
- The action visibility (towards customer and competitors) in:
+ distribution - invest on new channels => not intrude the traditional playground of competitors.
+ promotion - directly intervene with competitors effort to promote products to consumers.
Targeting strategy as a characteristic of new product introduction in competitive reaction (Debruyne et al., 2012)
- It determines the number and identity of competitors that are directly affected by NPL.
- Three types: selective (clear attack), undifferentiated (indirect attack) and niche (relatively low rivalry) strategy.
Market traits as a characteristic of competitive reaction (Debruyne et al., 2012)
- Market growth rate considerably influences the reactive behavior. They are more likely to react faster and more aggressively in markets that exhibit high growth rates.
- Based on BCGs growth-share matrix to evaluate.
Innovator as a characteristic of competitive reaction (Debruyne et al., 2012)
- The interpretation of a company’s moves depends on its reputation in the market. It is based on the past actions of the company, that is, its market heritage.
- NPL by companies that have an outstanding track record in introducing new products are perceived as more threatening, which competitors more likely to react.
