Innovation can have an impact in every aspect of the business. It is however the impact of innovation in growing DEMAND for a product or service that holds the true power, and this is the ultimate responsibility of Marketing.
Broadly, Marketing and Product or Service Innovation is simply the introduction of new concepts or ideas to market. The degrees of new-ness or significance of the innovation may vary depending on the marketing objectives. It is useful for Marketers to see Innovations as being broadly of 2 types:
Product/ Service Innovation
– Ones that require resources to make a change to the offering (New Product Innovation)
Commercial/ Marketing Innovation
– Ones that create an impression of newness however require limited resources to create the “new” initiative.
Within Product or Marketing Innovation there are several possibilities depending on the degree of newness being sought. This 9 box matrix shows the various options available:
1. Category Innovation
This innovation is so significant that it effectively changes the rules of the game in the category.
Some of the most notable category innovations include:
Hotel Formule 1 which transformed the budget hotel category and the ATM which transformed our relationship with banks (although no single bank brand owns this innovation).
2. Innovation Nirvana
There are plenty of opportunities to transform the consumer experience through elements such as design without significantly changing the base product.
Help I Need Help has created a range of consumer remedies using well designed packaging to simplify the everyday drug purchase. Many other categories such as chocolate, wines, tea etc, have been transformed in the same manner.
3. Ideal Commercial Innovation
Where no or limited changes are made to an exisiting service or product. Within services the marketers may simply create a new bundled offering to create something fresh for the market as UOB Bank did with their Lady’s Card credit card. For products, this often requires a packaging change to signal the newness as Tide did with their “Coldwater” offering. The product formulation often remains unchanged.
4. True Product Innovation
When a brand needs to add something or change the formula of a product a true product innovation is born. This is only worthwhile when the perceived newness and benefit to the consumer is apparent. When Lay’s introduces Lay’s Light with a claim of half the usual calories we might expect that they have had to change the way they manufacture their crisps. It all likelihood this has involved significant R&D investment to achieve this claim. Ofcourse if these are simply their “baked” products repackaged then this would be a simple commercial innovation.
The Tide On-the-Go product offers a radically new way to remove stains on the go. The product does not use conventional laundry detergent and water to clean but a stain dissolving substance is applied by “pen” application. Now this is not designed to change the way we do laundry but is a handy complementary product.
5. Line Extensions
Line Extensions are the least risky of new product introductions, they tap into the success of existing prodcuts and refresh a line up with new flavours, fragrances and so forth. They are particularly important in categories where consumer like news such as in snacks, beautycare, fashion and consumer electronics. The challenge with line extensions is for them not to simply cannibalise existing revenue. For example a Lays Cucumber flavour launch may bring new users into the potato crisp category whereas “fillet mignon” may simply cannibalise “BBQ” or “Fried Chicken”.
The real challenge for marketers is to expand their innovation portfolios from “safe” line extension and “commercial innovation” work into true innovation territory where both the risks and rewards are greater.