The “classic method” of innovation
Many companies today still develop their new products according to the technology push principle (see Figure 1). Technology platforms are developed within the development departments from the results of basic research and development. One then asks oneself which products could be manufactured with the help of these technologies and product development from an application idea begins immediately, the manufacture of the products follows, whereby marketing or sales is then only entrusted with the market launch of the product after its completion . The target market, the exact application and the customer must first be precisely defined or sought.
Figure 1: Technology Push Approach
The disadvantages of this approach are obvious. The customer and his needs are given far too little attention in these considerations, and developments often ignore customer needs. This is one of the explanations for the low success rate of new products on the market. Innovation marketing is now starting there to bring the needs of the customer into play earlier. Because only an innovation that has arrived and been accepted on the market is a successful innovation and has the potential to earn back the money necessary for its introduction and also to secure a good yield for the coming years.
Consider customer needs
The following describes which methods are helpful in allowing the customer’s needs to be included in the considerations during product development.
The market-pull approach shown in Figure 2 takes a first step in this direction.
Figure 2: Market-Pull Approach
In this approach, the existing market is first examined and trends are identified in which direction the market could develop. From this, attempts are made to derive current and future market needs to develop ultimately manufacture a suitable product from them. The subsequent market launch is easier with this approach, since the target market and customer needs are already more clearly defined than in the previous Technology Push approach. The disadvantage of the market pull approach, however, is that too little consideration is given to the company’s technological capabilities, since the decision-making criterion for the development and manufacture of a product is mainly based on customer needs. However, the marketing departments generally have too little knowledge of the company’s technological core competencies, just as development departments often find it difficult to assess customer needs. An interlocking of the technology push and market pull process is therefore desirable.
Integrated push-pull approach
A combined push-pull model (see Figure 3) attempts to eliminate the disadvantages of the one-sided technology push and market pull approaches described above. Here, under the umbrella of a business strategy that is to be specified by the company management, the technology-oriented parts of the company such as R&D, engineering, production and the more market-oriented departments such as sales and marketing are requested to engage in an intensive exchange, so that on the one hand market and customer needs can contribute within existing markets or new trends in product development and the technological departments can assess a technical realization with the company’s own core competencies, technologies and know-how. Product development, manufacture and marketing of the product should only take place after this coordination.
Figure 3: Integrated push-pull approach
Nowadays, however, it is necessary to get know-how and information not only from internal know-how carriers and customers, but from all possible other sources. Not only customers, but also suppliers or business partners in general can become the source of customer needs and product ideas. A targeted search in patents and literature as well as an observation of the competitors can also be expedient.
Figure 4: Network approach
The latest approach is the open innovation approach, with which market developments, customer needs and new technologies can be brought to the company from several external sources distributed across all industries and social classes (crowd sourcing, lead user approach, netnography, social networks, forums,…). . As with the previous integrated push-pull approach, the ideas and potential are evaluated together by technological and market-oriented departments in the company and converted into product ideas, developed and marketed.
Customer insights or how customers tick
In the previous chapters it was clearly expressed how important it is to understand the customer and his needs. However, it is not easy for the marketer and product developer to find out the real needs of the customers, as these are often difficult to access and are not communicated by the customer in direct surveys, since the needs are sometimes only subconscious and are not articulated by the customer be able. The following is a short list without further explanation that there are a number of methods to determine customer needs and that this is a broad and important field of activity in innovation marketing to greatly improve the positioning of the product with the customer.
The following methods are used (without claiming to be complete)
- customer survey
- utility models
- conjoint analysis
- Criteria relevant to the purchase decision
- Empathy Map
- personas approach
- contextual interviews
These methods help to better understand the customer and his needs and his actions in order to develop the product and the business model in line with them.
Innovations have to reach the market
Even if the customer has been understood, the product has been correctly positioned on the market and there is a clear customer benefit in the product and/or in the business model, it is possible that the product will not be accepted by the market or only with hesitation. It usually takes a while for innovations and new products to be accepted by customers. Figure 5, the adoption process according to Rogers (2003), shows what happens in the customer. It is not enough to attract the customer’s attention through advertising, the remaining steps must also take place in the customer’s mind so that the product is bought and used continuously. After the attention, the customer must also be really interested in the product, he must be able to evaluate and compare it in order to be able to determine the customer benefit and the added value for himself. Before adopting the product, there is often another test or attempt to confirm its assumptions about customer benefits and usability and then to adopt the product for everyday use.
Figure 5: Adoption process
The hurdles on the way to adopting the product often vary in level, mostly depending on the degree and type of innovation (Garcia/Calantone, 2002):
- marketing innovation level
- technology innovation level
- organizational innovation level
- Environment degree of innovation
For many customers, the degree of novelty of innovations determines how easily they adopt innovations in their daily use. Especially with radical innovations, there are difficult learning processes for the customer, since the use of these new innovations deviates from conventional schemes of well-known products and services. This often results in “invisible” barriers to adoption (Veryzer, 1998).
Figure 6: Types of person at adoption cycle
When adopting new products, customers can be classified into different types based on how easily and quickly they adopt innovations and new products. Figure 6 shows that usually only a small proportion of potential customers accept the innovation at the beginning. You, the innovators among customers, make up only about 2.5% of all potential customers. With further diffusion of the innovation in the market, approx. 13.5% adopt the product as early adopters before the spell is broken and the large mass (early majority, 34%) comes and the product becomes a mass product. The second half of the customers are usually well behind the innovation. Approximately 16% are described as laggards and adopt the innovation very late, if at all, when it is already well established.
The additional benefit of innovation marketing
Marketing is not the same as advertising, but offers a significant benefit for a company when designing and developing new products and business models. The following points are considered by innovation marketing and improve the accuracy of the development and launch of new products:
- A corporate strategy is like a common thread for the company
- The new product fits in with the company’s strategy
- The new product harmonises with the corporate image and the corporate ID
- The new product uses and underlines the core competences and own abilities
- The market is no longer unknown
- Customer needs are known
- The customer benefit of the product is clearly visible and can be communicated
- The product can be optimized to meet customer needs, and costs can possibly be saved by omitting unimportant features
- The target markets are known and are correctly segmented
- The technical and economic barriers to market launch are known, and concepts for circumventing them have been developed
- You know how to reach the customer
- You have an idea of what you have to do to get the customer to accept the product
- A timely and financially structured plan for the market launch of the product provides clarity
- There are fewer surprises at launch from things that aren’t considered
- There is a clear program for designing the products, prices, communication policy and distribution (marketing mix)
Innovation marketing in everyday life
The conclusion from the previous chapters is that innovation marketing or, in general, the inclusion of customer and market-relevant topics in the innovation and development process of new products brings many advantages. The success of an innovation project usually depends on the quality of cooperation and communication between different departments and disciplines in a company. In order to improve the effectiveness of innovation marketing, an intensification of the cooperation between development, technology, marketing and sales is essential. The understanding must be created that both disciplines are necessary for the success of a new product. Without knowledge of the market and the positioning of the product, the R&D department will not be really successful, without profound technical and technological expertise, the marketing department will not be able to develop a product with a corresponding customer benefit.
A mutual understanding of the topic is important. For example, the company’s technicians can train their marketing colleagues and give them a basic technical understanding of the company’s competencies and capabilities, while the company’s leading developers would do well to attend a marketing seminar to learn the basics of this discipline. In this way, the developer is better able to empathize with the needs of the customer.
Joint customer visits, for example, also improve the cooperation between marketing and technology. The technician gets to know the world of the customer and can understand his requirements better. He no longer receives the information only filtered through the glasses of marketing or from various visit reports. This means that less information is lost, which is important for the technician to come up with ideas and design new products. The advantage for the marketing colleague is that he has immediate technical support with him and can therefore respond to the customer’s often technical questions immediately and interactively.
The cooperation between the technology and marketing departments can also be improved if marketing topics are anchored in a stage gate process at an early stage, i.e. in the first two stages, and must be processed. Technology is forced to involve marketing at an early stage. The appointment of a project manager who is not necessarily a technician but rather a generalist and networker also promotes cooperation between the departments.