Radical Innovation

Lecture Nine:
Radical Innovation
Strategic Marketing 2020

Key Concepts
 Radical innovation
 Strategies for new-to-the-world innovations
 Strategies for new-to-the-firm innovations
Product-market strategies
Radical innovation
New-to-the-world innovations
•Breakthrough innovations: New-to-the-firm innovations
products that enable the creation of a •Market follower strategies:
market did not exist before
innovative imitation (emulative new
•Transformational innovations: products) or product adaptation
game-changing or radical new products (modifying or improving)
that disrupt entire industries
•Blue ocean or value innovations:
products to capture an untapped market
space (untapped or unfulfilled demand)
The fuzzy-front end of innovation
Market entry strategies
First-in strategy
 Experience curve implications
 Brand recognition/association potential
 Sony walkman, Rollablades
 Opportunity for patents / copyrights giving SCAs
 Threat of the above if NOT first in
 BUT major resource requirement to stay ahead, or later
entrants may do it better
 Must generate generic or primary market demand, not just
demand for own product
 Must educate market, take initial losses whilst sales start to
grow
Early-entry strategy
 Second-in but better strategy
 Superior marketing strategy and resources wins over
first-in every time
 Lower risk, able to offer better product based on
experience of “first-in”
 MUST have necessary resources for dogfight
 Other firms may also enter seeking niches within this
rapidly growing market
 Firm able to achieve cost leadership often wins
 Microsoft’s Windows vs. Apple’s OS
Laggard-entry strategy
 Entering the market in the late growth stage
 Niche marketing opportunities as majors establish their
territories
 Either as imitator (“me too”) or initiator (“better product”)
 Taiwan electronics companies vs Japanese
 Must have an SCA to be able to compete in long-term
 Less resources required
 Potentially lower per unit cost than major players, particularly
if experience curve effects can be transferred (No R&D
required; access to skilled employees and suppliers; efficient
distribution channels for industry already exist)
Strategies for new-to-the-world
innovations: first mover advantage
Superior customer value
The objective:
To create,
communicate and
deliver superior and
sustainable
customer value
Brand positioning & segmentation
Brand positioning and segmentation

The market pioneer may be in a position to:
•Define market expectations for the product category –
the ideal product attributes and benefits
•Establish primary demand
•Develop value creation, communication and delivery
strategies that will define the ‘rules-of-the-game’
Technological leadership &
value chain
Technological leadership
First-mover advantage may be achieved by:
•Patent protection – where possible
•Secrecy and advances in the product innovation learning
curve
Value chain strategies

The market pioneer may be in a position to:
•Pre-empt sources of supply
•Shape the way the product is distributed
•Establish close relationships or strategic alliances with
distribution partners
Switching costs & economies of
scale
Switching costs
In some markets the market pioneer may be in a position
to:
•Establish high switching costs
•Shape the way the product is distributed
•Impose long term buyer-supplier contracts
Economies of scale and experience

First-mover advantage may be achieved by:
•Building volume to achieve economies of scale and an
experience-base cost advantage over later entrants
•Network effects – establishing an industry standard
operating system
Strategies for new-to-the-firm
innovations: market follower
Advantages of being a market follower:
The potential to capitalise on the market pioneer’s
inability to create an FMA due to:
 Inadequate resources – failure to build volume and achieve
economies of scale
 Ineffective targeting and positioning
 Failure to take up technological improvements
 Product problems – poor quality or lack of sought product
attributes
 Customer value creation mix problems – such as overpricing,
distribution problems, ineffective marketing communication
strategies and unsatisfactory customer service
Strategies for new-to-the-firm
innovations
Potential strategies for a market follower:
Capitaliseon the mistakes made by the market pioneer
Enter the market on a larger scale than the market
pioneer – achieve greater economies of scale
Leapfrog the pioneer with:
 a technologically superior product
 superior product positioning – value proposition
 superior product quality
 vastly superior customer service
Lecture Ten Preparation
1. Read the case: Dale Enterprises (#10)
2. Read the following pages of the text:
(i) pp 243-244 Chapter 11 intro
(ii) pp 250-254 Evaluation and control

Radical Innovation

Uploaded by

Copyright:

Available Formats

Radical Innovation

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Radical Innovation

Uploaded by

Copyright:

Available Formats

Lecture Nine:

Strategic Marketing 2020

Brand positioning and segmentation

Value chain strategies

Economies of scale and experience

You might also like