Learning Objectives :Learning Objectives How can firms create value through innovation? What is the diffusion of innovation theory, and how can managers use it to make product line decisions? How do firms create new products and services? What is a product life cycle, and how can the concept be applied to product line decisions?


Deitz Family Farm, Greenbrier Co., WV :Deitz Family Farm, Greenbrier Co., WV


Creativity and Innovation :Creativity and Innovation Creativity is a major emphasis for undergraduates at FCBE 4 C’s Initiative Speakers, various class activities Why? Trades and professions …


Creativity and Innovation :Creativity and Innovation Consensual definition of creativity (Teresa Amabile) A product is creative when experts in the domain agree it is creative, that is, it is novel, and at least incrementally, more useful. Socio-cultural based theory of creativity Three Components of Creative Performance (Value Creation) Domain-relevant knowledge Creativity Relevant Processes Task (Intrinsic) Motivation


Domain Relevant Knowledge (Skills) :Domain Relevant Knowledge (Skills) Who or what is the domain in the case of business organizational creativity? The more skills and knowledge, the better! Gives creative agent more choices.


Creativity Relevant Processes - Examples :Creativity Relevant Processes - Examples Breaking perceptual and cognitive mindsets … being able to change the way you look at and analyze a situation. Using “wide” categories. Knowledge of heuristics (trial and error learning) Using analogies When all else fails, try something counter-intuitive Adopting a work style conducive to creativity Tolerance of ambiguity Perseverance in the face of dificulties A high degree of autonomy


Task Motivation :Task Motivation Intrinsic (internal) motivation is required to achieve the highest level of motivation. Why do you work hard in class?


Creativity - Problem Identification :Creativity - Problem Identification “There is something mechanical, as it were, in the art of finding solutions. The truly original mind is that which finds problems.” Paul Souriau (1881) “The formulation of a problem is often more essential than its solution. … To raise new questions, new possibilities, to regard old questions from a new angle, requires creative imagination and marks real advance in science.” Albert Einstein and Leopold Infeld (1938)


Creativity – Collaborative and Improvisational :Creativity – Collaborative and Improvisational Jazz musicians Brainstorming activities


Inventables :Inventables Build a living showcase of what’s possible to deliver inspiration and innovation to the dreamers of the world. Inventables Website


Innovation and Value :Innovation and Value


New Product Introductions :New Product Introductions Pioneers radically change competition and consumer preferences. Blue Ocean Strategy


Diffusion of Innovations :Diffusion of Innovations Diffusion of Innovation is a theory of how, why, and at what rate new ideas and technology spread through cultures. Roots in epidemiology. Everett Rogers book, Diffusion of Innovations, amongst most commonly cited in all social sciences.


Diffusion of Innovation :Diffusion of Innovation


Using the Diffusion of Innovation Theory :Using the Diffusion of Innovation Theory


Marketing Implications of the Adoption Process :Marketing Implications of the Adoption Process 5


The __________ focuses on the rate at which consumers are likely to adopt a new product or service. :The __________ focuses on the rate at which consumers are likely to adopt a new product or service. geographic boundary of innovation doctrine laggards to innovators movement psychological innovators syndrome diffusion of innovation theory all of the above.


Check Yourself :Check Yourself


Homework Assignment (bonus) :Homework Assignment (bonus) NetSavvy Exercise #1 (page 364)


Glossary :Glossary Alpha testing is testing where the firm attempts to determine whether the product will perform according to its design and whether it satisfies the need for which it was intended. Return to slide


Glossary :Glossary Beta testing uses potential consumers, who examine the product prototype in a “real use” setting to determine its functionality, performance, potential problems, and other issues specific to its use. Return to slide


Glossary :Glossary Firms with products in the decline stage either position themselves for a niche segment of diehard consumers or those with special needs or they completely exit the market. Return to slide


Glossary :Glossary Diffusion of innovation is the process by which the use of an innovation spreads throughout a market group, over time and over various categories of adopters. Return to slide


Glossary :Glossary The growth stage of the product life cycle is marked by a growing number of product adopters, rapid growth in industry sales, and increases in both the number of competitors and the number of available product versions. Return to slide


Glossary :Glossary Innovation is the process by which ideas are transformed into new products and services that will help firms grow. Return to slide


Glossary :Glossary The introduction stage for a new, innovative product or service usually starts with a single firm, and innovators are the ones to try the new offering. Return to slide


Glossary :Glossary The maturity stage of the product life cycle is characterized by the adoption of the product by the late majority and intense competition for market share among firms. Return to slide


Glossary :Glossary Pioneers or breakthroughs are new product introductions, especially new-to-the-world products that create new markets. Return to slide


Glossary :Glossary Premarket tests are conducted by firms before they actually bring a product or service to market to determine how many customers will try and then continue to use the product or service according to a small group of potential consumers. Return to slide


Glossary :Glossary The product life cycle defines the stages that new products move through as they enter, get established in, and ultimately leave the marketplace and thereby offers marketers a starting point for their strategy planning. Return to slide


Glossary :Glossary A prototype is the first physical form or service description of a new product, still in rough or tentative form, that has the same properties as a new product but is produced through different manufacturing processes—sometimes even crafted individually. Return to slide


Glossary :Glossary Reverse engineering involves taking apart a product, analyzing it, and creating an improved product that does not infringe on the competitors’ patents, if any exist. Return to slide


Glossary :Glossary Test marketing introduces the offering to a limited geographical area prior to a national launch. Return to slide