MARKETING OF INNOVATIONS: BASIC CONCEPTS AND PROCESSES, The...

INNOVATION MARKETING: BASIC CONCEPTS AND PROCESSES

Studying the material of the chapter will allow the student:

know

• the most important concepts associated with the marketing of innovation;

• Sources of innovation;

• stages of the innovation process;

• phases of the life cycle of innovation in the market;

• types of life cycles of new products;

• forms of organizing marketing activities in innovation-oriented companies;

• The role of innovation in modern marketing theory;

be able to

• plan the life cycle of innovation in the market;

• organize a marketing service in an innovative-oriented company;

own

• methodology for planning the life cycle of innovation;

• forms of organizing marketing activities in innovation-oriented companies.

The essence of innovation marketing and its basic concepts

In a market economy, new products, technologies and services are the main tools in competition. Given the rapid changes in tastes, technology and competition, a firm can not rely solely on existing goods. The consumer wants and expects new and improved products. And competitors will do their best to provide it with these novelties. Let us briefly dwell on why the development of new products is so important and why so much research effort is spent on it.

Any product of the market has its own life cycle. There is no uniform shape of the life-cycle curve. The length of the life cycle varies from product to product, but it is practically axiomatic that any product is experiencing a recession, faced with competition, developing technologies and changing consumer tastes. Different means can be used to delay the impact of the product's decline on profits, for example, cutting advertising costs or increasing prices. The most promising is recycling ( recycling ) - finding and promoting new ways of using products, conquering new market segments or improving the product to keep sales in the face of inevitable life-cycle laws. Nevertheless, even the recycling resources are not infinite, and the profit will decrease.

It follows that most companies need regular development of new products because, just like existing products, new phases of the profit are replaced by a phase of decline. Developed new products may be new brands in the existing product group, "new new products" (new new brands), for which there is no similarity in the market, or they can be an extension of the range (range extentions) or the associated brands (companion brands) for the company's products. What exactly will the new products be, determines the program (plan) of the new product and related research.

The changing demands of consumers, coupled with increased competition, technological changes and the need for growth are forcing companies to innovate. All this makes the development of new products vital for the prosperity and even survival of most companies.

As a rule, a new product, technology or service is the fruit of many years of scientific and technical research, to which the firm spends significant financial resources. Therefore, one of the most important problems of the company is marketing support for newly developed products. This is all the more important because the experience of the market shows an exceptional degree of risk precisely in the innovations - on average, out of five new goods and services, four do not bring their creators anything but losses.

Newly developed products form a specific market for high-tech and scientific and technical products. Its features, in comparison with the market of traditional goods, are diverse and affect all aspects of market relations that develop between the seller and the buyer. The problems of promotion to the market (both internal and external) by a new product unfamiliar to the consumer are primarily related to risk, with a certain unpredictability of the reaction of buyers. This, of course, is typical for companies operating in any industry, but for a manufacturer of high-tech products, where the frequency of product renewal is particularly high, this factor plays the largest role. Specific problems arise for the innovator in the sales sector, since technically advanced goods can fail fiercely in the field of advertising, the necessary preparation of the consumer, an effective sales system. Patent-licensing trade, trade in scientific and technical services, both by virtue of the subject matter of trade, and because it directly affects one of the most important factors in the competitive struggle of any firm - its scientific and technical leadership (or monopoly) implies the formation of a single marketing policy.

Let's dwell on the basic concepts associated with the market of new high-tech and scientific and technical products, as well as with the marketing of innovations.

It's logical to start with the notion of innovation. Let's isolate its basic properties, and then try to give a definition of the investigated concept.

1. Innovation is always something new.

2. Innovation is based on the use of results of intellectual activity.

3. Innovation is aimed at improving public practice.

4. The innovation is intended for immediate implementation.

5. Innovation meets the needs not provided by the current supply.

By innovation we mean the result of intellectual or scientific and technical activity aimed at improving public practice by satisfying the needs of society (not all provided for by the current proposal), which are not provided by the current proposal and intended for immediate implementation in production (in the form of new technologies, products or services ). This is innovation in a narrow sense.

In a broader sense, innovation can be seen as an innovation process. It is defined as the "complex of sequential works from getting theoretical knowledge to using a product created on the basis of new knowledge by the consumer."

An innovative process is a "consecutive chain of events in which an innovation ripens from an idea to a particular product, technology or service and is disseminated in economic practice. Unlike STP, the innovation process does not end with the introduction, it does not stop after implementation, because as the diffusion progresses, the innovation is improved, becomes more efficient, acquires new consumer properties. "

The Innovation Cycle is an innovative process with the presence of feedback between the consumer of the new product and the scientific field.

It should be noted that innovation should be distinguished from the invention (a new technical solution of a practical problem that can be realistically realized in the present or in the distant future with significant differences), discoveries (the establishment of previously unknown, objectively existing regularities, properties and phenomena of material world) and innovation (the previously existing result of fundamental or applied research, development or experimental work in any field of activity, coupled with an increase in its effectiveness.)

Consider what kinds of innovations exist, what properties each of them has. For clarity, we will arrange a classification in the form of tab. 1.1.

It should be noted that the most significant are the two classification features of innovation - in terms of novelty (radical and incremental innovations, pseudo-innovation) and the final result (product, process and institutional innovations).

Table 1.1

Innovation Classification

Classification

Types of innovation

Entity

By source of occurrence

Innovations that meet internal needs

Innovations for in-house use (designed to increase productivity, sales, to accumulate technology at a firm, etc.)

Innovations that meet external needs

Innovations intended for sale, created to meet the needs of the target market

For reasons of occurrence

Reactive

Ensure the survival of a firm, is a reaction to innovation implemented by a competitor

Strategic

The implementation is proactive and is made to gain competitive advantage in the future

On the level of novelty

Radical

(basic)

They are based on scientific discovery and are aimed at developing fundamentally new products or services, technologies of a new generation. Are the source of STP

Improving

(incremental

ny)

Implied improvement of the parameters of the existing product and the technologies used (creation of new modifications)

Pseudoinnov

(quasi-innate

tions)

Innovation without innovation - minor changes to existing technology (goods, services or technology) that create the illusion of continuous improvement, although they have no effect on society

On the final

result

Grocery

Creating new products and services

Process

Creation of new technological processes, new equipment, use of new materials, new elements of managerial, organizational, marketing, production processes

Institutional

native

Creating new forms of management and organization, new financing schemes, forms of investment, etc.

For sources of financing - innovations funded by

Own

means

Financing innovation through the redistribution of company profits

Non-government external financing

Financing of innovation through short-term and long-term bank loans, investor investments and "business angels"

Government funding

Financing includes both direct government financing (state order for innovation) and indirect (tax breaks and subsidies)

Mixed

Financing

Using multiple funding sources

The scale of implementation

International

n

Discoveries, inventions, patents

Country-level

Innovations new to the country

Within the industry

Innovations New to the Industry

Within the company

Innovations New to the Company

By frequency of use

One-time

Innovations applied only in the sphere for which they were originally developed

Duplicate

(diffusion of innovation)

The process of spreading an already realized, realized innovation, i.е. application of innovative products, services, technologies in new places and conditions

Now that we have defined the concept of innovation & quot ;, it is necessary to define other equally important concepts. These are such concepts as innovation and scientific and technical activity, etc.

Innovative activity is the activity associated with obtaining and transforming the results of scientific research and development or other scientific and technological achievements into a new or improved product introduced on the market into a new or improved technological process used in production with the corresponding effect .

Scientific and technical activity - "systematic activity, closely related to the creation, development, dissemination and application of scientific and technical knowledge in all fields of science and technology."

Innovative business - "these are projects for the commercialization of new technologies that can be implemented in various forms."

Innovation-oriented enterprises are enterprises that, as a rule, carry out development work (ROC) under contracts with industrial enterprises. Customers and performers are mutually interested in ensuring that the results of OCD are implemented in practice and bring in revenue (that is, they would be realized to the consumer). "

Consider now the concepts of high-tech and scientific and technical products. Under high-tech products, we will understand the production of material production, in the costs of creating a prototype of which a significant proportion of the costs of intellectual scientific work. To determine high-tech industries, it is usually calculated the ratio of the average annual cost of research and development to the annual volume of sales of the industry. In Table. 1.2 provides a classification of the manufacturing industries of the countries belonging to the Organization for Economic and Social Development (OECD), according to the level of science intensity.

Table 1.2

Classification of manufacturing industries in OECD countries in terms of science-intensive

Industries

Science intensity as the ratio of research and development costs to the volume of shipped products,%

Aerospace

14.98

Computer

11.46

Pharmaceuticals

10.47

Electronic Communications

8.03

Medium-Medium Technologies

Scientific Instrument Making

5.10

Ground Transport Technologies

3.41

Electrical equipment

2.81

Chemical Technology

3.20

Other transportation equipment

1.58

Non-electrical equipment

1.74

Medium-Sized Technologies

Articles of rubber and plastic

1.07

Shipbuilding

0.74

Other production

0.64

Non-ferrous metals

0.93

Non-metallic mineral products

0.93

Metallurgy

0.63

Oil refining

0.96

Ferrous metallurgy

0.64

Low Technology

Paper industry and polygraphy

0.31

Textiles, clothing and leather

0.23

Food, beverages and tobacco

0.34

Woodworking and furniture production

0.18

Scientific and technical products are defined as a set of scientific and technical information of commercial importance and sold to the consumer primarily in non-material form (in the form of a license or scientific and technical services).

High-tech (science-intensive) and scientific and technical products can be classified as follows: new commodities; new devices and equipment; new technologies; new materials; new standards; new forms of work organization; new projects of social and cultural objects and capital structures.

Scientific and technical service is an event of a scientific and technical nature, offered to the consumer in an unmaterialized form and possessing the following properties:

• Inseparability from the source;

• non-conservation, intangibility;

• Quality impermanence.

Scientific and technical services can be classified according to the following characteristics: service sources (scientific and technical worker, scientific and technical equipment, etc.); by areas of scientific and technical activities (in the field of laser technology, chemistry of small objects, etc.); on the stages of the innovation cycle (services in the field of applied research, services in the field of R & D, services for processing industrial production technology, etc.); by types of serviced innovations (services for the development of new forms of work organization, services for the development of new materials, etc.).

Features of high-tech (science-intensive) and scientific and technical products are due to the fact that:

• unique products whose properties need to be explained to consumers (often special training is required for use);

• Technically complex products that require, in their creation of costs, especially highly qualified scientific work

• Most often expensive products, at their nominal cost superior to the replaced analog, although cheaper per unit of useful effect.

From the point of view of demand, the innovation market is a set of individuals, commercial companies, organizations that acquire or are potentially ready to acquire scientific and technical and science-intensive products.

The features of the innovation market include the following.

1. This is often a new market for the company, on which it has not yet traded. The firm deals with unfamiliar buyers (market segment) because of the novelty of the developed product.

2. For the market of innovations is characterized by a small elasticity of demand from the price. The price policy has a limited impact on sales.

3. The market for innovations is rather narrow in comparison with others. Especially it concerns scientific and technical and high-tech production products.

4. In this market, initially there may be no direct competitors (due to the monopoly on intellectual property).

Speaking of marketing in the innovative market, you should use two concepts: "marketing innovations" and "marketing in the scientific and technical sphere."

The last, broader concept is defined as follows: a set of measures for creating, pricing, disseminating and promoting innovations in the market, implemented by the enterprise both during the commercial implementation of innovation, and in non-profit areas of scientific and technical activity, aimed at obtaining maximum returns from the scientific and technical potential of the company when achieving its strategic goals. The definition of this concept is due to the fact that the results of the theoretical work carried out by the firm often do not bear direct commercial returns, but have a significant indirect effect on the company's economic position in the market. This indirect effect can be manifested in the following.

1. The results of theoretical research serve as a basis for creating commercial innovations.

2. Achievements in the theoretical field with a well-built propaganda campaign (publicity) can significantly raise the company's rating among consumers.

3. The results of theoretical research can be commercialized by publishing popular science articles and brochures that bring profit.

4. The labor of theoretical scientists can be a kind of commodity in relations with other firms, i.e. the company can second its employee to a laboratory of another firm for a corresponding reward.

5. The firm can get a state contract for fundamental research, which is also very beneficial for it.

All these points require the company's marketing efforts in non-profit areas of scientific and technical activities.

Innovation marketing is a narrower concept and is interpreted as a set of marketing activities aimed at commercially successful implementation of products, technologies, services developed by the company. The features of innovation marketing include the following. First, it is necessary to take into account the intersectoral nature of the result of scientific and technological development. This principle is realized by studying the need for applying specific innovations in several sectors. Secondly, in the sale of science-intensive, scientific and technical products, one needs to be guided by an experienced, often collective consumer (procurement commission on behalf of the firm). The sale of this type of product is a result of lengthy and difficult negotiations. High-end products in consumer markets are, as a rule, referred to the goods of preliminary choice, and, consequently, the purchase is carried out through procedures of multiple comparisons and discussions with the family. Thirdly, the sale of scientific and technical products and high-end products requires advertising, if the buyer does not explain in detail the meaning of innovation, he simply will not buy this product, because he is not familiar with it. In addition, the technical complexity of high technology products, as a rule, implies the mandatory implementation of after-sales service by the manufacturer. This is the fourth feature. Here it is possible to tell shortly: there is no service - there is no commercial success at the goods-novelties. The last, fifth, feature is the dependence of the sale of science-intensive, scientific and technical products on the volume and quality of the innovative potential of the consumer. Many pioneer innovations are not being sold because of the general technological backwardness of many markets.

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