Unit 9: Innovation and Markets (HL)

• Corporate strategies


  Strategies companies and businesses can utilize to develop products, services and systems
• Pioneering strategy


  • Being the first to market with a new innovation
  • Potential for high profit if the product is successful
• Pioneering strategy


  • James Dyson Cyclone Vacuum Cleaner
  • James Dyson Bladeless Fan
  • Lego bricks
  • Tesla hybrid car
• Imitative strategy


  • Developing products that are similar to an existing new product
  • Aims to develop a product similar to the 'pioneered' product as quickly as possible
  • Takes advantage of all the R&D invested by others
• Imitative strategy


  • Lego and Megabloks
  • Duallit Toaster
  • GoPro Camera and yicamera and sony camera
• Ansoff Matrix


  A marketing planning tool which aids a business in determining its product and market growth

  
• Ansoff Matrix


  Focuses on whether the products are new or existing and whether the market is new or existing
• The Ansoff Matrix was invented by H. Igor Ansoff, a mathematician with an expert insight into business management
• Ansoff Matrix marketing strategies


  • Market Penetration
  • Product Development
  • Market Development
  • Diversification

  
• Market development


  Finding new applications for existing products, thereby opening up new markets
• Market development


  • Guinness being sold in African countries
  • Selling products via e-commerce or mail order
  • Repacking products in another method or dimension
  • Changing pricing policies
• Product development


  The creation of new, modified or updated products aimed mainly at a company's existing customers
• Product development


  • Victorinox Swiss Army Knife
  • Iphone 5 to Iphone 6
  • Swatch watch
  • GoPro
• Market penetration


  Increasing sales to existing customers or finding new customers for an existing product
• Market penetration is a tool used to determine the potential growth available for product sales
• Market penetration involves further exploitation of products without necessarily changing the product or the outlook of the product</b>
• Market penetration


  • Using promotional methods
  • Putting various pricing policies
  • Making the distribution more extensive
  • Encouraging increased usage of the product
• Product diversification


  • The process of setting uniform characteristics for a particular product, system or service to help increasing sales
  • Involves the modification of an existing product so that its market potential can increase
  • Involves a company both in the development of new products and in selling these products to new companies
• Product diversification


  • iPhone (small and large size)
  • Nestle making cornflakes, Milo, Hot Chocolate, Chocolate
  • Victorinox producing wallets, key holders and other accessories
  • Apple producing laptops, iPods
  • Lego producing Technik, NXT, Duplo, Wedo
• Diversification


  The most risky strategy as it involves two unknowns - new products being created and a new market being targeted
• Related diversification


  The business remains in the same industry in which it is familiar with
• Unrelated diversification


  The business moves into a completely new industry or market
• Diversification


  • Involves two unknowns: new products being created and the business does not know the development problems that may occur in the process
  • There is a new market being targeted, which will bring the problem of having unknown characteristics
• For a business to take a step into diversification, they need to have their facts right regarding what it expects to gain from the strategy and have a clear assessment of the risks involved
• Unrelated diversification


  There are usually no previous industry relations or market experiences
• Diversification


  • Though it may be risky, with an equal balance between risk and reward, then the strategy can be highly rewarding
  • Another advantage is that in case one business suffers from adverse circumstances the other line of businesses may not be affected
• Hybrid approaches


  When multiple previously mentioned strategies are used at once
• Hybrid approaches are the most common and practical one
• Pioneering strategy


  • The majority of product and service pioneers rarely reach market dominance due to being unable to capitalise
  • Innovation is achieved when the product has been successful in the marketplace
• Corporate social responsibility


  A form of self-regulation for a company that centres around the development of goals related to three areas: economic; social; and environmental
• Imitative strategy


  • Aims to develop a product similar to the 'pioneered' product as quickly as possible, taking advantage of all the R&D invested by others
• Pioneering strategy


  • Charting a new or innovative course
• If a company has a hybrid corporate strategy it will adopt an expensive and risky pioneering strategy for some products and a cheaper and safe imitative strategy for others
• Corporate social responsibility


  Refers to a company's approach for the future, often involves an assessment of the current situation and mapping of the policies and procedures to achieve predetermined goals
• The designer/company needs to consider the ethical implications of imitating the products of others and their implications on cultural, economic, and intellectual property level
• Ethical implications


  • Use of Leather/fur, Animal testing (body shop/cosmetics), Labour camps/Sweat jobs, Fair Trade
• General market sectors


  A broad way of categorizing the kinds of market the company is aiming for, e.g. education or medical
• Geographical sectors


  Identify purchases in a particular region, characteristics might be region, value and cultural-specific
• Geographical sectors


  • Durian flavoured Oreo in South East Asia, green tea Kitkat in Japan
• Client based sectors


  Focus on consumers, whether they be individuals or groups, industry related, commercial or government run enterprises