marketing innovation

Marketing Innovation in B2B Markets

  • Prof. Michael Taylor discusses the concepts of marketing innovation.

  • Focus on accelerating acceptance and adoption of innovation.

  • Introduces an analogy using an improved mouse trap to discuss disruptive innovations.

  • Highlights the shifts in the innovation landscape, termed as a disruptive new world order.

Types of Innovations

  • Innovations come in various forms, not just from new technology:

    • Technology: Advances in tools and machinery.

    • Channels: New ways of reaching customers.

    • Systems: Integration of processes and operations.

    • Materials: Use of new or improved substances in products.

    • Suppliers: Innovations involving supply chain dynamics.

    • Processes/Methods: Improvements in how work is done.

Myths About Marketing Innovations

  • Myth #1: Selling a great product is easy.

  • Myth #2: Brand equity directly equals brand power.

  • Myth #3: New innovative products always progress linearly with early adopters leading.

  • Innovation involves complex dynamics across various dimensions like processes, materials, suppliers, channels, technology, and systems.

The Product Life Cycle

  • Consists of key stages:

    • Introduction: Initial launch of the product.

    • Growth: Increasing market acceptance and sales.

    • Maturity: Sales plateau and market saturation.

    • Decline: Decreasing sales and eventual product phasing out.

  • Key Question: What factors drive products through the different stages of the life cycle?

The Adoption Cycle

  • Classifies consumers based on their adoption of innovations:

    • Visionaries (Early Adopters): Willing to take risks.

    • Enthusiasts (Technology Innovators): Seek cutting-edge breakthroughs.

    • Early Majority (Pragmatists): Prefer proven solutions.

    • Late Majority (Conservatives): More resistant; require strong rationale for change.

    • Laggards (Skeptics): Hesitant to adopt new concepts.

  • Key Question: What motivates each group to adopt?

The Chasm Concept

  • Based on Geoffrey Moore's theory, highlights the gap between early adopters and the mainstream market:

    • Visionaries: Seek competitive advantages.

    • Pragmatists: Look for integrated, proven solutions; often slow to adopt unless there is a compelling reason.

  • Failure to cross the chasm can lead to:

    • Declined ROI due to low adoption.

    • Investor dissatisfaction leading to loss of funding and support.

    • Risk of competitors gaining market dominance.

Factors Influencing Product and Supplier Stickiness

  • Several reasons drive customer reluctance to switch:

    • Product Stickiness:

      • Status quo preference.

      • Economic value of existing solutions.

      • Familiarity and ease of use.

      • Existing training and equipment associated with familiar products.

    • Supplier Stickiness:

      • Established relationships and service levels.

      • Contractual obligations or loyalty programs.

    • Absence of Need to Change:

      • No urgent problems to solve.

      • Lack of compelling reasons to migrate to new offerings.

B2B Marketing Challenges

  • Customers often satisfied with current solutions, making it difficult to persuade them to switch.

  • New products necessitate abandoning known solutions, demanding substantial incremental value for acceptance.

  • Organizational change tends to occur slower than consumer change.

B2B Buying vs Selling Behaviours

  • Understanding the typical patterns:

    • Buying Behaviours:

      • 2% of sales on the 1st contact.

      • 3% on the 2nd contact.

      • 5% on the 3rd contact.

      • 80% occur after the 5th to 12th contact.

    • Selling Behaviours:

      • 48% of salespeople make only one contact.

      • 10% make three or more contacts.

Strategies to Overcome the Chasm

  • Analyze strategies for bridging the gap between early adopters and mainstream users to ensure successful market penetration.

    • Recognition of distinct needs and concerns of each segment is crucial for overcoming the barriers.

Factors Governing Rate of Adoption of Innovation (Source: Rogers)

  • Five key factors affecting how quickly innovations are adopted:

    1. Relative Advantage: Is the innovation seen as an improvement?

    2. Compatibility: Does it align with existing values and needs?

    3. Complexity: Is it perceived as easy or difficult to use?

    4. Trial-ability: Can it be tested easily on a limited basis?

    5. Observability: Are the benefits evident to potential users?