Ebook Innovation in Marketing: Part 1 includes the following content: Chapter 1 introduction, chapter 2 innovation in marketing defined, chapter 3 antecedents and consequences of marketing innovation, chapter 4 marketing innovation strategy, chapter 5 interrelation of marketing innovation and other innovations. Đề tài Hoàn thiện công tác quản trị nhân sự tại Công ty TNHH Mộc Khải Tuyên được nghiên cứu nhằm giúp công ty TNHH Mộc Khải Tuyên làm rõ được thực trạng công tác quản trị nhân sự trong công ty như thế nào từ đó đề ra các giải pháp giúp công ty hoàn thiện công tác quản trị nhân sự tốt hơn trong thời gian tới.
Innovation in Marketing Innovation in Marketing JONAH C PARDILLO Publishing www.societypublishing.com Innovation in Marketing JONAH C PARDILLO Society Publishing 2010 Winston Park Drive, 2nd Floor Oakville, ON L6H 5R7 Canada www.societypublishing.com Tel: 001-289-291-7705 001-905-616-2116 Fax: 001-289-291-7601 Email: orders@arclereducation.com e-book Edition 2019 ISBN: 978-1-77407-075-8 (e-book) This book contains information obtained from highly regarded resources Reprinted material sources are indicated and copyright remains with the original owners Copyright for images and other graphics remains with the original owners as indicated A Wide variety of references are listed Reasonable efforts have been made to publish reliable data Authors or Editors or Publishers are not responsible for the accuracy of the information in the published chapters or consequences of their use The publisher assumes no responsibility for any damage or grievance to the persons or property arising out of the use of any materials, instructions, methods or thoughts in the book The authors or editors and the publisher have attempted to trace the copyright holders of all material reproduced in this publication and apologize to copyright holders if permission has not been obtained If any copyright holder has not been acknowledged, please write to us so we may rectify Notice: Registered trademark of products or corporate names are used only for explanation and identification without intent of infringement © 2018 Society Publishing ISBN: 978-1-77361-016-0 (Hardcover) Society Publishing publishes wide variety of books and eBooks For more information about Society Publishing and its products, visit our website at www.societypublishing.com ABOUT THE AUTHOR JONAH C PARDILLO Jonah is Master of Business Admisnistration from the University of the East, Manila Philippines She’s an Entrepreneur and hands-on with her own business for more than 10 years and has over years of experience in teaching in several universities and colleges for Economics, Financial Management, Marketing, Management, Human Resource Management and Strategic Management Currently she’s a Course Content Developer and a mentor for the first Online University in the Philippine She has designed and developed business subjects such as: Management Accounting (for Graduate Studies); Math of Investment, Economics, and Marketing Management (for undergrad); Fundamentals of Accounting and Organizational Management (for SHS) TABLE OF CONTENTS List of Figures .xi List of Tables .xiii Preface xv Chapter Introduction Chapter Innovation in Marketing Defined 59 • Introduction 59 • Nature of Innovation 60 • Marketing Innovation and Theodore Levitt 64 • Marketing Innovation Reconciled 65 • The Value of Redefining Marketing Innovation 71 • Improvements, Inventions, and Marketing Innovation 77 • Core Business Processes 82 • Spaces of Marketing Innovation 86 Chapter Antecedents and Consequences of Marketing Innovation 89 • What Is Marketing Innovation? 89 • Common Consequences of Marketing Innovation 103 Chapter Marketing Innovation Strategy 117 • Learning Orientation 117 • Innovativeness and Learning Orientation 119 • Firm Entrepreneurship 123 • Research and Innovation Strategy 130 • Developing an Innovation Strategy 137 • Innovation Strategies Classification 139 • Innovation and Business Strategy 140 • Holistic Approach to Innovation 146 • Innovation In Marketing Channels 151 • Culture of Innovation 152 • Prototyping Strategy 156 • Innovation and Marketing in a Value Chain 161 Chapter Interrelation of Marketing Innovation and Other Innovations 165 • Introduction 165 • Interrelation of Marketing Innovation and Other Innovations 166 • Industry Distinctions In Marketing 167 • Discussion 171 Chapter Identification of Innovative Marketing Strategies 175 • Entrepreneurial and Innovative Marketing 175 • The Evolution of Entrepreneurial Marketing 176 • Development in the Evolution of Entrepreneurial Marketing 177 • Marketing Network 185 • Innovative Marketing Strategies 188 • Literature Review and Hypothesis 190 • Marketing Innovation Strategy 191 • Learning Orientation 191 • Firm Entrepreneurship 192 • Research and Development, Innovation Strategy 193 • New Product Development 194 • Marketing Advantage 197 • Marketing Performance 198 • Long Term Vision 199 • Marketing Resource 200 • Technology Growth 201 Chapter Implications For Marketing Strategists 203 • Innovation, and Competitive Advantage 203 • Innovation as a Competitive Advantage Factor 208 • Performance Superiority 208 • What are the Perspectives of Business Processes Management? 210 • Firm’s Objectives To Innovation 214 • Innovation and Knowledge Acquisition 217 • Budgeting for Research and Development 218 • Innovation, Shared Values and Co-Created Value 223 viii Chapter Business Strategy, Technology Adoption, Innovation And Marketing Capabilities 227 • Innovation and Business Strategy 227 • Traditional Industries 230 • The Information/Internet Industries 231 • Business Models, Strategy and Sustainable Competitive Advantage 233 • Strategic Decision of Technology Adoption 234 • Technology (It) Adoption Within Sme’s 236 • Influencing Factors 237 • Guidelines Forits Adoption In Sme’s 243 • Marketing Innovated Products And Services 245 • Recommendations For Marketing Innovative Software Products 247 • General Recommendations 247 • Innovation Related Capabilities 248 • Market Orientation 249 • Innovation Communication 250 • How To Market Innovative Products And Services 251 Chapter Discussion And Conclusion 257 • Research Contribution 257 • New Construct Measurement and Importance 260 • Standardized Coefficients and Unstandardized Coefficients In Simulations 263 • Marketing Innovation And Firm Performance Importance 267 • Business Perspective On Innovation 269 • Innovation And Performance 270 • Theodore Levitt And Marketing Innovation 270 • Marketing Innovation Reconciled 271 • Why Redefine Marketing Innovation 272 • Improvements, Inventions, And Marketing Innovation 273 • Core Business Processes 274 • Spaces of Marketing Innovation 275 • The Definition of Marketing ix 160 Innovation in Marketing fabricating Be that as it may, a portion of the best input a group can get for product innovation is to have a physical product accessible for client cooperation • Prototype assembling can be outsourced, fast prototyped or finished in-house Outsourcing can be resource substantial as far as cost and time without the thing, however authorizes the group to chip away at different parts of the undertaking and gives access to resources that may not be accessible inside Quick prototyping innovations take into account quick creation of parts for assessment, however accessible materials are restricted, which may not enable parts to be completely assessed against plan prerequisites At long last, models might be finished in house, accepting the resources and ability are accessible This choice has a tendency to be less expensive in taken a toll, yet additional time serious for the group • Prototypes can be physically scaled With certain extensive products, for example, boats and planes, making a full size model may not be achievable until the last phase of prototyping, where any full-scale model is fundamentally a last product Furthermore, for certain testing techniques, for example, wind burrow testing, groups might not have gear sufficiently vast to test a full size gadget • Prototypes can be practically scaled It might be helpful for groups to plan models that contain just a couple of outline necessities at any given moment, to have the capacity to legitimately guarantee and assess the fruitful usage of asked for highlights This can take into account less demanding testing of models and a more hearty last product, however may prompt issues while interfacing different models into one last outline • Prototypes can utilize comparable or unexpected materials in comparison to the last outline Since models have the upside of not meeting last plan necessities at all stages, some room might be given to material determination for model innovation • Prototypes can utilize comparable or distinctive assembling and get together procedures than the last plan Marketing Innovation Strategy 161 With the ascent of fast printing and quick tooling, groups can choose on the off chance that they need models to be made and amassed in a comparable manner to the last products This rundown of components is centered around the components that involve critical designing choices with respect to the movement from model idea to reality There are auxiliary elements, for example, resource utilization, that have a tendency to generally fall more on the undertaking administration side While these resource variables ought to be considered, it ought to be as an associate to deciding the heaviness of the essential prototyping factors INNOVATION AND MARKETING IN A VALUE CHAIN A value chain is that network that involves the manufacturers, suppliers, distributors, Retailers, service providers and practically anyone involved in the production and presentation of a product into the market To understand each and every person in the value chain is a critical step in knowing how to upscale your business If you have the best value chain, then it will be very easy to introduce new products and added valuesthat will reach customers with the right features to answer their needs.It is very important that firms know a value chain has the capability of providing the support needed in the innovation department as the best value chain can be used to create a competitive advantage for your organization As far as (Gereffi& Fernandez-Stark, 2011) is concerned, the definition ofthe value chain can also be read as the array of activities that a firm and its employees must to bring out the product, right from inception to its final usage and even beyond A standard value chain must have the following: • Production • Design • Distribution • Marketing • Support to the final consumer (De Backer &Miroudot, 2014) 162 Innovation in Marketing The international trade and manufacturing processes are what defines the global value chains (GVC) The activities within the GVC can be done within a firm or split up across different firms placed in different localities either nationally or globally (De Backer &Miroudot, 2014) GVC places an emphasis on the core business functions that are found along the supply chain They include research and development, operations, procurement, customer services, marketing (De Backer &Miroudot, 2014) This implies that the GVC is derived from the definition of product and firm strategies which may be different across different industries (De Backer &Miroudot, 2014) Service industries such as the transport and the financial sector are by default found in al value chains The raw material and extractive industries are the starting point of all GVC’s (De Backer &Miroudot, 2014) The perspective of the entire value can change its focus from production to other activities that falling between design and marketing (Gereffi, Humphrey, &Kaplinsky, 2001) As (Shin, Kraemer and Dedrick, 2009) made an emphasis on their study that some years back large electronic firms did product design and development on their own, this was done within the internal supply chains In recent times and even today the same simply the bear the tag brand manufacturer that only seems to focus on the core aspects of production such as product innovation, marketing and such like related to brand development They are able to achieve this through the use of specialized suppliers for non-critical business functions (Gereffi, Humphrey, & Sturgeon, 2005; Sturgeon, 2002; Yeung, 2007) The big and leading firms get to enjoy the benefit of branding, while those in the middle of the value chainsstruggle getting the core activities away from their main line of processing as they try to gain control over more feasible aspects of production and be able to capture a critical function slice branding and marketing (Gereffi et al., 2001) To realize a sustainable growth and reliable income, a company must have the capacity to develop and upgrade its role in the value chain (Gereffi et al., 2001) Moving higher in the value chain means changing or merging the other business functions such as being in charge of: logistics, outsourcing, accounting, and quality control The focus should be concentrated on the value chain within or the external ones (Gereffi et al., 2001) The development of new concept, research and development Marketing Innovation Strategy 163 and the manufacturing of critical parts and are usually part of the upper layers of the value chain while the branding, marketing, and customer service are on the lower side of the value chain The important factor here is that they all contribute to value addition of the value chain (GVC report, 2014) From another marketing angle, (Webster Jr, 1992) stated that the competition at the global level results in better product development and performance at a reduced cost to the final consumer The quick changes in technology, transport, information processing and communication haveincreased the choice that is available in a competitive market The new concept in marketing should be how to position the firm between the suppliers and consumers in the chain with one aim of delivering superior products and services In response to this trend, marketing strategies, marketing plans must have at least three levels: Corporate level The strategies should be paying attention to the structure of the entire market, customer orientation, and positioning the firm in the value chain Business level The focus here should be to ensure that there is proper market segmentation and targeting, positioning the product, choosing the appropriate time in partnership with the right partner Operating level Here the focus should be on the marketing mix which is a combination of product innovation, promotion, distribution, and pricing strategy without forging to work on the customer reseller relationship (Webster Jr., 1992) Webster Jr (1992) at one point said that the managers at the business unit level should take responsibility inmaking the decision on which market functions and strategies are to be used, and which of these takes are to be performed by partners The idea is they should know what should be made or bought (Anderson &Weitz, 1986) However, (Webster Jr 1992) never gave reasons or which of these factors should be considered to make such a decision 164 Innovation in Marketing Figure 15 - Schematic Representation of the Value Chain Chain linked model showing flow paths of information and cooperation Source: ICROFS News CHAPTER INTERRELATION OF MARKETING INNOVATION AND OTHER INNOVATIONS INTRODUCTION Schumpeter (1942) brought forward a contentious argument by saying that monopolies are given more conducive environments for innovation compared to privatize and seemingly competitive market Several studies have been done to investigate the effects of the market structure on innovation, this research has proved too many scholars to be difficult with convincing results (Cohen and Levin 1989) highlighted the challenges that researchers in this field have encountered The unchanging relationship and the external market structure are two of the common problems Several theories have been put forward to demonstrate the relationship between competition and innovation and that is unchanging when put in a constant environment (Gilbert 2006) The primary reason for this is the impact of efficiency and replacement, efficiency will lead to lower rate of innovation in a competitive environment with lower total industry profit, and replacement leads to a low incentive to innovate for a monopoly with profits placed at risk (Aghion et al 2005) used the model of an explicit form model that optimizes behavior of the relationship between innovation and competition 166 Innovation in Marketing Many other factors have made it difficult for the identification of a stable correlation between innovation and market structure Reverse effects have also been demonstrated on products and innovations (Boone 2000a), for distinct innovations that not displace technology (Gilbert 2006), and those that not have complimentary (Kretschmer, Miravete, and Pernias 2009) In addition makes it difficult to identify the relationship INTERRELATION OF MARKETING INNOVATION AND OTHER INNOVATIONS In relation to interactions and the different innovative ideas that are already in existence, we are yet to teach that point where scholars have reached an agreement on the issue of whether innovation type has a an effect on business performance Theoretically innovations are supposed to influence the firm’s operations and probably that is why during implementation the two sides must agree (Walker, 2004) Let’s look at an example of an administrative innovation that is more likely to lead to advanced technical innovations in libraries and the pharmaceutical industry (Damanpour, Staropoli, 1998), the organizational structure may be an important factor in determining the innovation process up to the launching part (Germain, 1996) Organization, marketing and product innovations are interrelated when they are looked at in public organizations (Walker, 2008); process and product innovations were found to be largely to be correlated to each other (Walker, 2008); there is a positive relationship between process and organizational innovation, marketing innovation, and product innovation (Gunday et al., 2011) The studies on innovation types has been looked at before by early researchers in pairscategories such as administrative or technical, product or process, and radical or incremental (Rowley, Baregheh, &Sambrook, 2011) Other scholars proposed innovation types like hybrid, service, management, business strategy, and commercial innovation (Gunday et al., 2011; Rowley et al., 2011) In the (OEeD, 2005), there are four categories of which are said to be product innovation, marketing innovation, process innovation, and organizational innovation The relationship between Product and process innovations is tightly knit to the construct of theological developments (Gunday et al., 2011) Interrelation of Marketing Innovation and other Innovations 167 Below are some of the definitions that several scholars have been using to define: • Production innovation • Process innovation • Organizational innovation “A product innovation is the introduction of a good service that is new or significantly improved regarding its characteristics or intended use, including significant improvements in technical specifications, components and materials, incorporated software, user friendliness or other functional characteristics” (OEeD, 2005) “A process innovation is the implementation of a new or significantly improved production or delivery method This includes significant changes in techniques, equipment and/or software” (OEeD, 2005) “An organizational innovation is the implementation of a new organizational method in the firm’s business practices, workplace organization or external relations” (OEeD, 2005) Definitions Source: What Motivates Marketing Innovation and Whether Marketing Innovation Varies across Industry Sectors – By Shu Wang This should be in References According to (Industry Canada, 2014) the examination of the relationship among the different innovation types shows a complementary relationship is found between organizational and product innovations, while replacement relation is found to be between process and organizational innovations and also process and marketing innovations, the complimentary relationship between organization and product innovations and the substitution relationship between process and marketing innovations should be considered weak than the process and organization innovations substitution, because of their sensitivity towards the choice of environment that they are implemented) INDUSTRY DISTINCTIONS IN MARKETING Hundreds of studies have been done to look into the market distinction and its relation to the performance of the business (See Dawes, 2000; Langerak, 2003 for partial lists) The performance measure is typically looked at based on the following Innovation in Marketing 168 (1) (2) (3) (4) New product success Profitability Market share Aggregate terminal performance measure by looking at things like profitability, sales and sales growth, return on investment [ROI], product success, market share (5) A total of intermediate performance measures such as the level of customer satisfaction, employee satisfaction, customer service, customer retention, product quality In most research studies, market distinction (orientation) is usually related to the studies of some known market research principles that include market orientation and related performance Several other studies have shown that arbitrate performance measures tend taffeta the effects of market orientation on the final performance measures (Homburg and Pflesser, 2000; Matear et al., 2002; Pelham, 1997) Since the customer is the center of all marketing efforts, it is thus important to note that such studies are quite helpful to marketing executives who want to respond to the exact needs of the market Yet other studies have also found out that there are several roles a new product can play marketing distinction / separation or orientation (Atuahene- Gima, 1995; Baker and Sinkula, 1999a; Han, Kim, and Srivastava, 1998) But since the summed up final performance measures were used, the exact nature of this discussion is still beingunclear For instance, will a new product success lead to a market orientation that will bring in increased profitability and market share? Moorman and Rust (1999) made a good attempt to clear the differences between market distinction and a strong market function (marketing activities) They argued that a market orientation is a strategic philosophy based on the value that can show itself in already predefined plans that are aimed to keeping the company closer to the consumer The marketing function or activities, is thought of as a series of activities that a firm needs in the implementation of the outcomes of a strong marketing campaign Research has given us to market orientation scales that firms can use to measure their performance The MARKOR scale (Kohli, Jaworski, and Kumar, 1993) that will evaluate how organized a firm is in the Interrelation of Marketing Innovation and other Innovations 169 acquisition, dissemination, and response to both customer and market information The (Narver and Slater 1990) scale evaluated the scale of how a firm is aligned to the customer, competitor orientation, and how different departments function as a unit The evaluation measurements in these two show a wider scope that is supposed to give the true orientation and not touching on the processes, procedures, and strategies According to (Moorman and Rust 1999) the firm’s abilities relate to the following: Marketing-customer connection - This is the ability of the firm to be able to use the right product, promotion method’s pricing strategy, and distribution programs that customers can identify with their immediate needs Marketing-finance connection - The ability of the firm to obtain enough sales, be able to retain customers, and have good cost control measures that meets their financial objectives Marketing-research and development connection - This is the firm’s ability to have a concept development plan, research and development, and production capabilities This study was a confirmation that market distinction (orientation) and market activities (function) have a common relation to the success of a new product innovation and its success and profitability When looking at market orientation as a resource based organizational format, we look at it as a collection of skills that the organizational supports and sees them as resources (Barney, 1991; Wernerfelt, 1984) This view makes a distinction skills and resources, whereby resources are seen as implied, distributable and socially complex According to (Hunt and Morgan, 1995), market orientation is a resource capability that is used together with highly rated skills, processes, and procedures that brings the product rise above the rest and gains a competitive advantage In other words, resources without skills cannot give a firm competitive advantage The strong market differential on is supposed to increase the profit levels of a firm A new product in a potentially stronger market with clear orientation, leads to the development of new products that are innovative, which in business terms is referred to as new product development (NPD) The cost associated with the development, production and marketing of 170 Innovation in Marketing new products tend to reduce a firm’s profit level unless quick measures are put in place to facilitate market share gains Figure 17 below is a depiction of direct effect on profitability that also shows an indirect effect market share and profitability This direct proved by the fact that understanding market orientation will create a better value for customers, which of course translates to high profit margins (Slater and Narver, 1994) However, the indirect effect on profit margins requires that there should be an increase in both the aggregate new product success and increased market share Market orientation is supposed to facilitate generative learning that will further lead to successful new product development (NPD) (Slater and Narver, 1995) Figure 17 - Direct and Indirect Effects of Market Orientation on Profitability Figure 18 - The Direct and Indirect Effects of Market Orientation on New Product Success Interrelation of Marketing Innovation and other Innovations 171 The other element of the new product innovation is based on the potential of generative learning that seem to lower the product rate of success There is need to have a strong market orientation and together with the firm’s ability to make a strong case for a marketing and research and development connection A firm that does not have a clear connection between the two, will lose its ability have a successful and groundbreaking innovation capability Figure 18 above is a depiction of that relationship For there to be a direct effect, there has to be a positive change in the firms’ attitude towards generative learning and increase its priority in radical innovation Market orientation is not supposed to have a direct influence on the priority a firm place on radical innovation, because it is impossible to facilitate the proper functioning of the indirect route DISCUSSION Putting together market orientation (distinction), new product success, market share, profitability, radical innovation, and generative learning, and radical innovation will increase our understanding of market orientation and its overall impact on the performance and limitations of an organization Market orientation’s had a direct impact on how a new product will get along in the market Its success is all attributed to the priority that the firm has placed on gathering market intelligence and how the information is used in the decision making process A good market orientation the NPD through the creation of values that customers can relate to A decisive market orientation plan will directly influence profitability levels because of value addition to the brand and maintaining lasting customer relationships through: • Superior customer service • Customer retention management • Cross-selling efficiency • Promotional programs Apart from the influence it has on profitability, market orientation can also indirectly be able to change the firm’s new innovation success by successful conversion of the products’ success to profitable market share If market orientation can also affect how generative learning priority is 172 Innovation in Marketing used, therefore, it can be said that market orientation also influence new product There may be limitations to market orientation, but research studies have identified the effects both positive and negative on the final performance of a firm which of course varies from firm to firm Its effects seem to slow down as a product moves from being successful to profitability and, finally to the market share Most of its limitations can be seen on the barriers to the positive indirect effects on profitability and new product success The indirect effect on profit margin has to ensure that the market power is able to reach the market share value The indirect effect on new product success demands that research and development together with the manufacturing capabilities can transform generative learning into realizing breakthrough innovations The firms with a stable market orientation plan is capable of developing innovative products, but if the firm has an inherent risk of not having adequate skills and knowledge to improve productivity sales strategy because they not have marketing tools, (such as adequate channels, effective promotions), their orientation plan may not be successful The capacity of a firm to use its generative learning process in the new product may prove to be a difficult task (Tripsas and Gavetti, 2000) Any firms with a strong market orientation plan, but still have flaws and poor plan in its procedures and practices that need to be used in the translation of the implications of generative learning to radically motivate innovation, are more than likely to capitalize their learning for profitability and market gains This inability is a reflection of the poor coordination of the firm’s functional departments, marketing and production, and research and development This also points to bad leadership that stands in the way of converting radical new innovation concepts into realizable products (Tripsas and Gavetti, 2000) The success of NPD largely depends on the concepts of effectiveness and efficiency (Ravindranath and Grover, 1998) Relying on a strong market orientation strategy will influence NPD The effectiveness of a firm is the ability to conceive products that aptly meet inherent needs of customers The inability of new development product strategy to give the desired results is the reason why new innovations fail (Henard Interrelation of Marketing Innovation and other Innovations 173 and Szymanski, 2001) Efficiency is the ability of a firm to be able to produce new products cost-effectively (Gagnon and Xuereb 2001) made report on the negative relation between the cost of innovation and its performance (Sethi 2000) on his study saw the efficiency issues that are present on highly innovative firms He was able to predict that changes in technology and method used for manufacturing can also cause an interruption into the inter-connectivity of the product, technology, and manufacturing This interruption is what leads to bad quality in a product The requirements that a firm requires to efficiently translate marketorientation inspired generative learning resources into new innovations is only present in dominant firms (Chandy and Tellis, 2000)