Lectures Marketing and Innovation | 2020
Lecture 1 | Introduction 03 November 2020
Marketing and Innovation are important and hot topics in business.
Market orientation = innovations facilitate the conversion of market-oriented business philosophy into
superior corporate performance. Innovation is one way of implementing market orientation. It is a
way to make sure that the vague philosophy is created in a concrete product/service/business plan.
Competing on: differentiation / price / name or brand > the combination makes it better. Most
managers go for the innovation itself, the product.
Performance indicators in a business are revenue, sales promotions, and profit. New products are
making the company more sales and firm value on the long term, compared to already existing
products. This is because value is given away in sales promotion. When innovating, value is created.
You do not need sales promotion if you have good innovations. On the long run, innovations are much
more valuable.
Importance of new products:
▪ Facilitates implementation market orientation
▪ Needed for differentiating from competitors
▪ Needed for long term performance/survival
One of the major barriers in innovation is inertia, which means keep on doing the same thing, absence
of change. Successful new products/services is mainly about overcoming this inertia.
Customer intimacy = it requires a deep understanding of the context in which our products and
services are used in the course of our customers day-to-day lives. You can obtain those insights with
in-depth interviews, research on websites, focus groups, more qualitative measures.
The NPD part is where the innovation really starts. This is a way of structuring the cases and the course:
Lecture 2 | Product strategy
Firms that do not see what is coming towards them often fail. There may be a great innovation, but
they do not recognise it as such. Do you recognise and adopt the innovation and make it a success?
This may be a reason for failing.
Example: Kodak and Digital Equipment
If you want to adapt, the company needs to change the whole way ‘of doing business’. Also the way
the company operates in the market should adjust. Why not stick to the market that you are operating
in? > Why do people buy a new product in the beginning? You need sales as a company to have a
learning experience and to improve the product. It could be that there may be a segment that is
interested. This whole industry was based on performance, but the consumers might not be interested
in this but be interested in something else. Companies find criteria to which they are competing. It is
actually about finding the performance, in this case it might be ease of use.
,Consumers buy this product because they are offered something else, the business plan offers
something that is not offered before. Basically the same goes for costs. In the end it might be more
affordable to buy a new technology compared to an old technology.
Why leading firms fail:
1. Managerial myopia
2. “small markets do not solve the growth needs of large companies”
3. Core capabilities become core rigidities: develop new products the old-fashioned way > it may
hamper you when you have to change. Example hotel business vs. Airbnb / newspaper and the
digital media
Similarities with the article of Marie Tripsas: Tripsas is arguing on page 1,2,3 in synthesis, there is the
logic spelled out, that is the essence of the whole article. You can also see it in one of the tables. The
ultimate commercial performance of incumbents is determined by:
1. Investment in new technology – Do they invest in it? Are they seeing it, working with it? >
managerial myopia
2. Technical capabilities – will they survive? The incumbents are in a disadvantage there, their
product is likely to be underperforming compared to the new entry because of the core
capabilities. Their product is not as good as the new entrance that can start from scratch and
can develop their product to a specific situation etc.
3. Specialised complementary assets – so the product of the incumbents may be
underperforming but if you have complementary assets that are very important and remain
important in the new situation then a barrier is created for the new entry. It protects you from
the new entrance. The incumbents should also remain value.
Table 6 article Tripsas.
How to link this to cannibalization? > Article by Nijssen.
Cannibalization has 3 dimensions (W2C previous investments / capabilities / sales), of which are also
described in the article by Tripsas. If you can make sure that you forget about all the investments time
and energy that you have put and start all over again, that is unlearn what you have learned and start
something else > it is about making your own investments of the past redundant. It is a
willingness/attitude a firm has. Willing to make them redundant and leave them in the past. As a result
there is this evolution/process of change. If you are not willing to do this, then there is no change and
the firm will stick and the consequences will be fatal. In a lot of cases this means changing the
identity/DNA of the firm. Inertia is important for understanding innovation > this is inertia and what is
holding you back as a firm. Build on the notion/knowledge of changing to a new technology.
You are not going to cannibalize on your product if there is no competition. The threat or change of
competition is a signal to introduce an innovation, even if that means you need to cannibalize on your
own product. Willingness to cannibalize has a great impact on innovations. Specialised investments,
internal market, product champion influence, and future market focus may lead to willingness to
cannibalize. Try to specify how radically innovative firms pay close attention to their markets.
Willingness to cannabalize and market orientation:
The push factor and what holds you back are
explained in this model. It means that it depends
on how market orientation is defined. It is about
who new customers are and what are the future
market demands. If you only listen to your current
customers, you will be less likely to cannibalize. But
if you mainly focus on future customers and their demands, you will be more willing to cannibalize and
more willing to innovate in the end. It is very difficult to be future oriented in practice.
, Why do firms fail?
• Firms size itself is not a problem
• Incumbents sometimes at a disadvantage
▪ Being too close to your customer can be harmful
▪ Organizational inertia may hinder innovation
Some solutions:
• Organize according to market requirements
▪ DEC versus IBM
• Be willing to cannibalize
▪ Focus on understanding current and future customers / current and future customer
needs
▪ That is: innovation based on in-depth understanding of customer value
Lecture 3 | New Product Development
What does product development look like in practice?
The traditional view of marketing is that it should not be on the foreground, since people believe you
should leave innovations to the engineers.
The article by Workman is the limited role of marketing. It starts with a quote and again it says the
biggest dangers to us is market surveys. The question is: is that true? > It could be that other
departments (e.g. engineering) do not let marketing be more abundant. This might be because they
think marketing department people do not understand it (cultural reason). What to do when you are
in a company like this and marketing is kind of oppressed, how to deal with that? > sometimes it is a
lack of time, or it is seen as limited. You can have indirect influence, you can do that with social skills
and you should be taken seriously. Marketing may have indirect influence (in this article).
Marketing = the product may not be appreciated at first, but make it appealing for the customers to
buy. Marketing is selling it to the market, that is what companies often think. The article was mainly
about the marketing department that was not involved. But are marketing activities also limited? What
the article and people think about marketing is that they sell the product basically. That is marketing.
But they forget that in a lot of cases, especially in this case, there is a lot of marketing going on, but
not by the marketeers, but by for example the engineers. So the employees marketing activities are
important, that they do it themselves. The role of marketing is often underappreciated. In a lot of cases
the organisation might be started from a different perspective. It is a very critical paper.
The role of marketing in NPD:
In reality the NPD
process is much more
fuzzy and interactive.
In a stylish way this is
what NPD looks like:
It is a combination of
activities and stages
and gates (E=
evaluation).
