Building and Managing Capability for Marketing Innovation Essay

Building and Managing Capability for Marketing Innovation - Essay Example This research will begin with the statement that business model innovation is becoming increasingly important in a world where competitors can easily imitate strategies. Business model innovation represents a higher order of innovation compared to product or process innovation. Many standard business functions have been undergoing radical transformations. Manufacturing no longer involves the mass production of standardized large lots, but the lean production of customized units of one. Not surprisingly, new voices have been calling for the reinvention of marketing. Today’s marketers face new challenges. Consumers are time poor and information-rich; they expect better quality, better services, lower prices and more value for their effort and money. New channels are proliferating, traditional distribution channels are consolidating, and competitors now come from all over the world, increasingly, with lower costs and sometimes of higher quality. By tapping multiple sources of com petitive advantage, a new business model can help a company leapfrog competition. Companies need to keep examining their business model and their relevance for customers in an era of cutthroat competition. An innovation represents a significant improvement over what exists. A successful innovation generates a product or service that is valued highly by customers. As Peter Drucker puts it, â€Å"innovation is the process of finding a new with a new capacity to create wealth. Innovation may improve the yield of existing resources or may provide more value or satisfaction to customers.†Ã‚  " Innovation may endow resources with a new capacity to create wealth. A radical process innovation may be much more disruptive than a minor or moderate product innovation. But, in general, it may be reasonable to say that a radical product innovation is more challenging than a radical process innovation. This is because process innovations are typically internally focused and many of the vari ables are under the organization's control. On the other hand, product innovations are externally focused and markets never cease to surprise. 2.2. Current market challenges: Markets always change faster than marketing. Peter Drucker, (1954) wrote that the business enterprises have two and only two basic functions: Marketing and Innovation. Marketing and innovation produces results; all the rest are costs. Today, companies unabashedly declare their wish to get closer to customers; marketing is actually loosing power to other functions in the corporation. New products are failing at a disturbing rate. Recent studies put the failure rate of new European consumer products at 80% (Nielsen, 1999). Consumer behaviors vary across time and space as well as by contingencies and changing images. In a world filled with choices, there are no sustaining themes or consumption patterns. Some of the reasons for new product failure are: a high level executive pushes a favorite idea in spite of negative market research findings; the idea is good but the market size is overestimated; the product is not well designed; the product is incorrectl y positioned, ineffectively advertised or overpriced; the product is not well designed; the product is incorrectly positioned, in effectively advertised or overpriced; development costs are higher than expected; or competitors fight back harder than expected. Poor performance by Western nation firms in the area of new product development reflects excessive emphasis on profit maximization and risk avoidance. 2.3. Role of innovation in marketing: Marketing styles and innovations have an important role in achieving trade objectives. Marketing style may also influence the nature of a firm's approach to innovation. Only after an organization accepts that innovation should be driven by the need to meet customer aspirations rather than financial community's demand for profitability, does it become possible to evolve a more effective innovation management philosophy. Many companies are beginning to