Innovation and New Product Marketing (RLE Marketing)

David F. Midgley

• Publisher: Taylor & Francis
• Year: 2014
• eBook ISBN: 9781317657903
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

This volume formulates and presents a general theory of innovative behaviour which is applicable to diverse market situations. Having provided some support for the theory, the author demonstrates how it can be usefully applied by indicating which management techniques are relevant to new product management and which are not. The author suggests certain systematic procedures by which an organisation can radically improve both its short and long run chances of launching successful new products.

PART I INTRODUCTION

1	INNOVATION AND MARKETING

1.1 The Necessity of Innovation

That the life of any commercial product is finite is inescapable. The horizons of individual consumers are constantly broadened by new ideas, inventions and experiences, and their buying preferences show a marked progression. A product which was once ‘new’ soon becomes ‘established’, and a brief period of stability is inevitably followed by decline and extinction. Consumers may have become bored with the product, or a subsequent idea may have rendered it obsolete. This concept of the limited life cycle is well known, and will be discussed in greater detail in subsequent chapters. The opening point being emphasised here is that with a finite life the sales of any one product eventually become unprofitable, requiring it to be replaced in the company’s product range, and thus initiating the cycle again with another, newer product. The obvious consequence of this situation is the constant search for new products, an activity which most, if not all, companies engage in. However the very nature of the consumer processes which lead to this life cycle also make the development of new products perhaps the most hazardous area of management. It still remains difficult to specify the likely performance of a particular new product ahead of some measurement of consumer response. Indeed quite often it is not feasible to assess the product until it has been placed in a substantial number of retail outlets, and purchased by a sizeable number of consumers. Furthermore, as this book will, in part, attempt to show, most managers are unaware of what is known about consumer behaviour in this area, a fact which makes it impossible for them to make reliable predictions until the product reaches the mass market. By then, of course, it may be too late.¹

Launching a new product therefore involves a great risk to the company and management concerned. While the actual magnitude of the resources and effort committed to the project will vary tremendously from company to company, and industry to industry, when viewed in terms of the possible damage to the organisation’s profitability, or even its chances of survival, the dangers will be considerable.² On the one hand no company, whatever its size or market, can afford not to launch new products reasonably frequently; on the other hand, neither can it afford to have too many of these which fail to meet their set objectives.

The emphasis of this book is on reducing the dangers associated with new product management. For while it is not possible to guarantee success, it is possible to lay down guidelines and procedures which will make success more likely, and which will substantially reduce the risks involved in marketing innovation.

In discussing new product marketing many authors commence by citing studies on the number of new products which ‘fail’, quoting such statistics as 5 out of 10 new products never reach the launch stage, or 92 out of 100 new products fail to survive for more than one year on the market.³ The precise definition of a ‘new’ product, or of ‘failure’ will be the subject of subsequent discussion, but the main thrust of such contentions would not be disputed. What will be said is that while this overall, and depressing, picture may well be true, there can be little doubt that some companies are substantially more successful with their new products than others.⁴ This does not mean these organizations have any secret recipe for success, or a special fund of good luck. Rather, it can and will be argued that these organisations approach the task with some insights into consumer processes, and with a ‘scientific’ attitude toward finding solutions to their marketing problems. Whatever may be contended elsewhere, ‘hunches’ and ‘inspirations’ do not create successful products on a reliable and regular basis. A ‘flash of genius’ may well create the idea for an innovation, but for this idea to be turned into a market success requires painstaking and critical research, and an objective means of assessment. In other words a scientific approach to the problem.

Indeed in many ways the development of a new product mirrors the construction of a scientific theory quite closely. In both cases the starting point is existing knowledge (existing methods and products) from which a problem is defined (of satisfying a set of consumer needs).⁵ A set of hypotheses (new product ideas) is then postulated as theoretically solving the problem (satisfying the needs). This set is then tested by a process of observation, measurement and experiment. By repeatedly modifying and refining these hypotheses a viable solution is found (the new product).⁶ The role of creativity is primarily in identifying the problem and conceptualising a new product to solve it, the remainder of the process being a form of self-correcting procedure which leads to the goal of a potentially viable new product. The final ‘test’ is to place the product on the market, and thus confirm the theory that it satisfies the assumed consumer needs. This book will concentrate on the procedure, leaving the discussion of the origin and nature of creativity to more qualified authors.⁷ Neither will the problem of developing organisational structures which encourage creativity be touched on in any great depth.⁸

Nor will much space be given to discussing broader aspects of corporate strategy such as company objectives, or diversification. Here the company’s objectives are taken as given, and the new product ideas, or more correctly marketing problem areas, as existing. From such a starting point the techniques and methods for turning those ideas into a viable product proposition are explored. The reasons for taking this particular emphasis are as follows.

First, it is obviously necessary to define in some way the area to be covered by the book. Topics relating to organisational behaviour and corporate planning are well covered elsewhere, and their inclusion here would add little of value, and might well run the risk of diluting the message of the text. Second, the problems of defining corporate strategy, and of identifying new product areas, are less troublesome than those of assessing which ideas will produce a successful addition to the company’s product range. Any developed set of corporate objectives will stress the need for new products, and will indicate the areas in which effort should be directed. From such an indication it is normally an easy task to generate numerous new product ideas.⁹ The difficulty comes in selecting which product concepts are viable, and hence the emphasis on the methodological aspects of new product marketing. However merely to view these aspects as a set of independent techniques to apply in an intuitive manner would indeed be a sterile and dangerous conclusion. For the third, and most important, reason for the suggested emphasis is that we effectively know a substantial amount about the process of innovation and the behaviour of consumers, whether individually or in groups. This knowledge does not yet allow new product ideas to be fed into a computer programme, the output of which is a guaranteed market leader, but the existing research does sharply delineate the ‘boundaries of the possible’.¹⁰ Further, the present theoretical structure enables the various techniques to be applied in an ordered manner, with definite and realistic goals in mind. Potentially it is feasible to design a framework or overall methodology for new product development, and this text represents one attempt at achieving such an aim.

Unfortunately, apart from a few poorly understood concepts, the vast bulk of this extant knowledge remains unknown to practicing managers. Most of the blame for this situation must lie with academics in general, for few attempts have been made to integrate the results of previous studies, or to develop applications to management problems.¹¹

It will be argued here, and hopefully demonstrated in subsequent chapters, that by developing the above framework, and thereby integrating the relevant aspects of existing studies, it is possible to reduce the risks of new product introduction by an order of magnitude. It should certainly be possible to reduce the number of new product failures to a more acceptable level than exists at present. Such an achievement would be of obvious benefit to the companies concerned, but it would also be of immense benefit to consumers and society as a whole. A new product which is unsuccessful represents something the consumer did not need, did not like, and therefore rejected – although possibly having already wasted time and money in discovering the product’s deficiencies. A failure of this kind, quite apart from causing dissatisfaction amongst the consuming public, also represents a considerable waste both of corporate resources, and of society’s limited stock of material assets. A more efficient and reliable method of assessing the viability of new products would therefore be of benefit to all.¹²

1.2 The Management of Innovation

In many ways the various management problems relating to new product introduction are aspects of the same overall problem, that of assessing the likely final impact on the market. While it is obviously useful to delineate various stages in the development process, and thus facilitate discussion and analysis, the ultimate objective of this process must always be kept in mind. In essence the starting point is an idea or product concept, or more normally several such concepts, which are postulated as meeting some consumer needs, and at a profit to the organisation concerned.¹³ The very nature of such initial concepts is to be imprecise, and it is therefore necessary to refine and develop them conside...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Original Title Page
• Original Copyright Page
• Table of Contents
• Preface
• Part I Introduction
• Part II The Social Processes of Innovation
• Part III The Marketing of New Products
• Bibliography
• Author Index
• Subject Index