Innomarketing

-Create needs/interest within our customer

-Communication of Corp./ Customer

-Collecting ideas for innovation from the customer

-Two strings: Cust - corp and corp - customer

-Marketing is the awareness of needs and desires of the customer

(Madi)

Identifying, anticipating and satisfying customer requirements profitably.

Product: Focus on solution (Define solutions by the needs they meet, not by their features, functions, or technological superiority)

Place: Focus on access (Develop an integrated cross-channel presence that considers customer`s entire purchase journey, instead of emphasizing individual purchase locations and channels)

Price: Focus on value (Articulate the benefits relative to price, rather than stressing how price relates to production costs, profit margin, or competitor`s prices)

Promotion: Focus on education (provide information relevant to customers`specific needs at each point in the purchase cycle, rather than relying on advertising, public relations and personal selling that covers the waterfront)

No it does net create a new product but changes the physical perception of the product because the brain activity changed.

A change in price also includes a change in brain activity. The more expensive something is, the higher are the expectations. The Brain expects good quality, rareness and superior aspects.

Very general: Anything that anyone wants

General: All means and efforts (physical goods, services and rights) which serve directly or indirectly for the satisfaction of needs

Simple: Things made by people to sell in a market

Economic: Any object or service that, upon consumption, increases benefit and therefore can be sold at a price in market

Accounting: A good is a definable entitiy capable of being delivered to a purchaser and involves the transfer of ownership from seller to customer

Upstream Marketing is Better because it happens earlier and is More effective because it identifys and satisfys the customer needs. It is for long term relationships and takes place much earlier than Downstream Marketing. ~15% profitable

Downstream Marketing: (Newspaper, Tv-Adds, etc.)

Adveritising or promote an existing product or service. Important for shot-term goals, longterms less relevant. ~8% profitable

An innovation is something perceived by a social group as “totally new” so that members of the social group have to adopt it.

An invention is not an innovation yet, but rathera new idea/ new concept of the pre-market phase. An innovation realizes an invention for practical and successful market use. It is necessary to introduce it to the customer and work out the benefits he has from it. It differs from an invention, as an invention is not ready to be sold yet.

Innovation markets are way more dynamic than other markets.

In innovation markets you often don`t know the way to reach your goals, the transparency is low.

You need better risk assessment in dynamic markets.

The traditional markets have functional quality as the innovativ markets have integrated quality.

Traditional Market:

High transparency, Low-medium risk, profit/ market share, functional quality, image/Loyalty, hierarchies.

High tech Market:

Low transparency, high risk, penetration, integrated quality, explanation/ information, networks

-Triggering reward center in the brain, positive connotation from the childhood. Geeting a Coke was a treat on special occasions.

(Coca Cola performs definitly better when the bottle/ brand is visible! Coca cola color scheme targets reward center because of the santa clause colours.)

-Marketing aims at influencing buying behavour & preferences: this routes back to behavioral economics. (homo economicus is unreal.)

The homo economicus is completely rational.

The real life human makes decisions based on hard and soft facts, not only rational. They are also emotionally driven and social status or society plays a role in their buying decisions.

In general, price is an indicator of quality, expensive is mostly better than cheap but free products are always better.

Higher price suggest a higher quality and a shortage of the good.

A free good would always be chosen if offered.

free > cheap

expensive > cheap

-Buying decisions are heavily influenced by mental anchors

-Mental anchors are part of marketing, not part of the product

-Three main areas: Pricing, Scarcity and time of reward

Pricing- Everything is relative:

-Multi Unit Pricing = Bundling increases the perceived value! Multiple unit promotion leads to multiple unit sales

-Initial price setting = Mental anchors are mainly created through the initial price

-Relativity = Mental anchors follow an unlinear pattern - relative to the perceived value of a product

Scarcity - Rare is more valuable than common:

-Limited Quantity = opportunity to satisfy a certain need is limited to a certain product (Hotelrooms)

-Limited Time = opportunity to satisfy a certain need is limited to a certain time (Mc Donalds)

-Illusion of Demand = Creation of an illusion of demand addresses herd behaviour of humans (Apple queue)

Rewarding - Now is better than in the future:

-Losaversity = Customer values a product more, when it can be lost compared to rather that can be gained

-Rewarding time = now is always better than future! Delayed gratification calls for a high self control (Marshmellow Experiment)

In 2-person-situations:

Personal selling - face to face communication

“Matching” is very important (character, demography, cognitive aspects, personality).

The beste sales guy is the best matching one.

In bigger groups:

You can only have indirect contact

Mainly mass market with indirect and non-transparent relationships

Organization= A social unit of people that is structured and managed to meet a need or to pursure collective goals.

There are different opinions, people have different preferences and there is no average which can than be fullfilled.

In bigger groups you have:

-group dynamics and role structures

-creation of power situations by coalition building

-indirect and non-transparent relationships

-negative impact of differences in status

Virtual agglomeration of everyone involved in the buying process of an organization they accept, decide and give input.

Its not an organization but rather temporarily formalized.

It is important and difficult to identify all members of the BC and their individual roles and interests.

Roles can be: Buyer, User, Gatekeeper, Initiator, Influencer, Decider.

The four dimensions of analyzing a BC:

-know-how/ information gaining (how do they get it, how do they react to it)

-individual decision making (emotional or rational, risk perception and reaction)

-individual role/ power (which role is taken? possibility to influence)

-group conflicts (process of final decision? which weighing of criteria?)

Under certainty= buying process not necessary, risk is limited. Uncertainty of outcom.

Under risk= good is needed under any circumstances, uncertain risk might appear after purchase. Uncertainty of consequences.

In the perfect market theory, demand and supply meet in the average. All Offerers have the same costs and product price.

A competitive advantage can be achieved by low cost producing. it helps to realize an economic rent, which is the difference between the normal “return” and the above average return, realized by using the advantage.

Two opportunities: Cheaper or Better (von Mises)

Cheaper - Market average performance at lower price

Better - You provide a better than market average performance (Differentation by delivering a non-price buyer value)

Competitive advantages materialize as provider or customer advantage

Customer advantage= Effectiveness/ Market shar - directly impacts competition by generating customer preferences, differentiated competitive position

Provider advantage= Efficiency/ Profitability - indirectly impacts competition by generating economic rent, cost-based competitive position

The theories how to achieve a competitive advantage changed over time, depeneding on market evolution and social environment

Market based view (positioning school) - firm performance depends on chasing an “attractive” market

SPC (Structure - Conduct - Performance)

Structure: Company performance depends on industry structure (fragemented vs. consolidated)

Conduct: Competitive conduct depends on industrie strucutre (competitive vs. collusive)

Performance: Performance depends on allocation of capital in the market (profitability high vs low)

The SPC paradigm is less important because of the collusive regulation nowadays. (Antitrustlegalisation)

The Concept investigates how likely it is to get a new customer.

The higher the intensity of rivalry the lower will be the performance of the industrie.

Potential Entrants: Threat of new entrants?

Customers: Bargain power of customers?

Substitutes: Threat of substitute products/ services?

Suppliers: Bargaining power of suppliers?

Industrie competitors: Intensity of rivalry?

According to the concept, every decision is limited by decisions made in the past.

Consequence: Arising opportunites cannot easily be used due to opposing structures, processes, mindsets based on the past! Often they may also be underestimated.

Barriers of mobility:

Market aspects, Value creation framework, structural elements of the firm

Result from investment decisions in the past

Max materialize in structural aspects like size, cost or deifferentiation advantages

Can be overcome - cost of prohibitive investments

Strategic groups:

Marekt dynamics may require a change of the strategic group to stay competitive, can open new market potentials

Structures, processes and also image must allow the changes to be accepted by the market

Professional Group/ branded mass market group/ private label group

Budget group/ mass market/ premium

Porter added a company`s relative position in ain industry as source of competitive advantage

Two main aspects:

Attractiveness of the industry (industry structure analyses, analysis of strategic groups)

Relative position in that industry (porter´s generic strategies)

Two competing positioning poles in these aspects:

Differentiator - specially trageting a niche market - artificially high prices based on unique position

Cost Leader - economics of scale and experience curve effects - size-based cost advantages

Apple is both. Their product is very different and unique from others and they have the cost leader, because they have less different models and at the same time high salesnumbers, so they benefit from scale effects.

BUT Porter does not work for the digital age! Software has endless scales.

A strategically important resource is a heterogenous, advantageous and sustainable resource.

It has to fulfill vier main conditions:

Valuable, Rare, In-Imitable, Non-Substitutable

If the conditions are fulfilled this leads to a sustainable competitive advantage.

1. Resource-based advantage - Advantage because the company has access to a unique, non-substitutable resource

2. Core competence - Companies who stay with their competence will have a bonus in brand, name and technical advantage

3. Dynamic capabilities - The firms ability to integrate, build and reconfigure internal and external competences to address rapidly changing environments

   oder

   -Companies who are able to adopt new technologies will gain advantages to others

Two-sided coin:

Driver of societal change & driver of competitiveness

Societal: see below

Competitiveness: long-term survival of companies, increase in profit/ growth/ productivity/ efficiency

Development and progress in technologies, processes, organization and business model!

Leon: -Innovation has repeatedly revolutionized industries with enormous impact on companies and society -Does not lead to job losses, rather to labour immigration (evtl zur nächsten Karte passender)

Innovation is a driver of societal change and development:

It raises the standard of living and reduces environmental impact

Major facotr of economig growth

Helps us to live longer and more healthy

Allows us to enjoy more leisure time

• Innovation brings a higher standard of living and stronger economy!

• Not necessarily leads to job loss but rather to labor migration! (Arbeitsmigration)

(Madi) The people can do things they couldnt do before or they can do it in an more affordable way. Positively driving economic growth

Innovation is seen as an endogenous phenomenon of economies, driven by creative destruction of entrepreneurs

Leon: -Entrepreneur: driving innovation and technological change of a nation by chreative destruction-Creative destruction: old ways of doing things are endogenously destroyed and replaced by new ways-Schumpeterian rent: temporary monopoly based on innovation ("the entrepreneurs´ motivaion")

when the schumpeterian rent is too low, and the Creative destruction happens. Means old ways of doing things are endogenously destroyed and replaced by new ways.

-The schumpeterian rent, a temporary monopoly based on innovation is the entrepreneurs motivation

-New goods or a new quality of a good - no-keyboard smartphone

-Process innovation (new method of production) - 3d-printing in production

-Conquest of new source of raw material - fracking for oil exploration

-Opening a new market - mobile phones in Africa

-New organization of an industry - direct sales/ customization by dell

Disruptive innovation often originates in low-end or new-market footholds.

Often initially lower in performance but offers other benefits. (simpler, more convenient and less expensive)

Does not catch on mainstream customers until quality catches up to their standards.

Disruptive innovation lead to two types of market behavoirs either:

a) new competition/ entrant - small in trouble first - reduces price a lot

b) substitution - big in trouble first - reduces demanded amount a lot

-Diffusion of an innovation means that you try to make an innovation known to the public

-For diffusion of innovation you need to cross Moore´s chasm

-Driving forces: endogenous and exogenous forces

-product characteristic: compability, complexibilty,case of perception, divisibility, communicaveness, relative product advantage

His concepts says, that endogenous and exogenous aspects lead to adoption by the customers.

According to bass innovation adaption is far more driven by endogenous forces than by exogenous ones.

Endogenous= likelihood that somebody will start using a product because of influcence from those wo already use it

Exogenous= likelihood that somebody will start using a product because of mass media or other external factors

-Innovators= brave people, pull the change, important communicators (2,5%)

-Early adopters - respectable people, opinion leaders, try out ideas (13,5%)

-Early majority - thoughtful people, careful but accept change more quickly than the average (34%)

-Late majority - sceptic people, only adopt change when majority uses it already (34%)

-Laggards traditional people, only accept change if it becomes mainstream/tradition (16%)

Moore`s chasm:

-Disconnection between the groups = chasm

-Biggest chasm between early adopters and the early majority

-For winning larger market, an innovation needs to “coress the chasm” between early adopters and early majority.

-Trageted marketing and product development for majority is necessary.

“Whole product” is an extention of the core product. It contains all aspects of the product-life-cycle the product includes. Including Additional services, Consulting services, Support services, 3rd Party plugins, Training, Custom Parts, Product Extensions, etc.

Only when bundled into a “whole product”, technology and features will appeal ot the mainstream.

It is the prerequisite/ condition for crossing the chasm. Drives the perceived value and acceptance by the market majority.

Crossing Moore´s Chams

1. Identify the target market

2. Create a real “whole product” (who is using it and how?) - Customer centric product development

3. Position the product to address early majority

4. Price the product relative to competition

5. Distribute the product through right channels

Example: Ipod - features of seemingly “extended” product mophed into defining the product core. “Outer rings become inner rings” (Itunes, Speicher, MP3,…. core aspects of the product)

• Apple was lat but created a “killer” and turend “free riders” into paying customers!

-Standardization is driven by market maturity and impacts the vendor´s competitive landscape. (Growth phase - shake out phase - imitation phase)

-Dominant design is de-facto standardization, fueling growth as well as cost competition and market consolidation

-Different solution “designs” compete and at some point, a dominant design will emerge as the winner in that evolutionary competition (Ipod-all after that looked pretty much the same)

-Market entry before dominant design is key to high growth

-From technology side, a pioneering strategy is successful in most of the cases

-From the commercialization sida, a fast or late follower strategy is most rewarding

1. Best success rate: R&D pioneers and market follower, because beeing first in the market it can be unpredictable how the market will react to your product.

Lead time effects — Temporary monopoly, technology performance, cognitive anchor

Network effects — Customer preferences, switching cost, establish value network

Preemption on resources — physical location, natural and human resources, intellectual property rights

S-Curve describes the innovation cycle over time and accumulated R&D efforts and technology performance.

Network effects are the result in value for its members and exponential growth when effect kicks in. You have to get the “critical mass” then the product improves (Facebook).

Cost-degression is a higher standardization allows to perform a task more often - degression of manufacturing costs.

Non-Linear-effects example: Fax Technologie vs. Telex. (As soon as a lot of people had fax it exploded)

Free ride on pioneer´s invest - lower r&D costs, learning from pioneer, cheap access to market

Dissolving uncertainty - known needs about demand/buyer, regulatory uncertainty resolved, capacity allocation easier

Reaction to change - account to recent development (needs, tech.), Production seeting for growth, no technology lock-in

Lead markets= regional or national markets or market segments which have frist adopted an innovative design which subsequently becomes adopted by most other countries.

For sensing opportunities and threads early - identify the lead markets of the respective industry.

Determinants of lead markets:

-Price/ cost advantages (market size, factor costs)

-Market structure advantages (high competition intensity)

-Demand advantages (Income, Infrastrucutre, global trend)

-Export advantages (Export orientation/ similarity with other marktes)

-Transfer advantages (International attention, multi-national firms, customer mobility)

1. The lag market is the following market with slower processes.

   
   

2. Telefax: Japan is the lead market and europe is the lag market.

   Mobile telephony: Scandinavia is the lead market (high income, high need of communication, lag of infrastructur, low population)

(Madi) Its the way of thinking about a product and also the way of using it. It s not about the Design More of Features and the usage.

(Leon)

Dominant logic relates to the main means a company uses to make a profit. In essence, it is an interpretation of how a company has succeeded. It describes the cultural norms and beliefs that the company espouses.

→ dominant logic is a common way of thinking about strategy across different businesses

Open innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation and expand marktes for external use of innovation.

Open innovation allows companys to use internal as well as external ideas and internal and external paths to market.

1. The principle of Open innovation is to propose to open the innovation process to exploit divers internal and external sources of knowledge. / The principle behind it shows that is is necessary to work together to create smart innovation

Closed innovation = control and efficiency

Open innovation = creativity and effectiveness

Traditional closed innovation is managed as closed process based on the principle “efficiency” that limits diversity of sources of knowledge.

Open innovation turns the traditional R&D sequence around to lead user involvement.

(Madi)

Lead users are individuals or groups who experience needs that are ahead of the general population and have a strong motivation to solve thes needs.

1. Crowdsourcing is a marketing strategy which is trying to use the swarm intelligence and collect money and solution ideas.

——

The Lead user approach is to involve early user throughout design and development via open innovation. “We dont know what the customer wants until we interact with them.”

1. Crowdsourcing is using community ideas and rewarding them to participate with their ideas and work. Important is to obtain information or input into a task or project by enlisting the service to a large number of people and for the same time do a marketresearch.

The Iterative desing thinking process:

Empathize-Define-Ideate-Prototype-Test

1. In complex environments with high uncertainty, a traditional linear development process is not very promising, user-centred non-linear process is more promising.

(Madi)

Traditional thinking is for low unvertainty, based on the assumption to already understand the customer/user, while design thinking is for higher uncertainty and checks and interacts with the customer/user and adds safety.

Takeing a closer look at the customer´s job can help to understand their real pains and gains.

It avoids self-centeredness of companys and promotes user-centeredness.

1. It can be achieved by design thinking methods. The company has an observational role, customer use the product and talk out loud about their experiences.

A persona is a fictional character aggregated from market research with multiple attributes and individual history.

The Persona acts as a proxy as users are not always available and helps to unterstand the customers needs and preferences. Also helps to extrapolate trends and future scenarios of use.

the six core funtions are derived from iteratively adjusting internal complexity to external relations/needs:

1. Value proposition (Creating value for the customer)

2. Market segmentation (Mechanism for generating sales)

3. Value chain (Value creation and distribution, complementary assets

4. Costs and profit (Distribution of value between company, customers and suppliers)

5. Value network (suppliers, customers, complementar suppliers, competitors,…)

6. Competitive strategy (alignment to generate and secure resource-based advantages

A brand needs reasons to benefit and reasons to buy.

It lead to a certain brand identity which has internal and external effects: personality, culture, self-image, physique, relationship, reflection

A brand expresses a complex mix of different attributes which Form a communicative aggregation of the performance and offering of a company.

It consists out of organizational identity and product identity:

Organizational identity - Values, Norms, Behaviors =Reasons to benefit

Product identity - Achievments, Performance, Uniqueness = Reasons to buy

(Madi)

The traget is to serve various brand benefits from a customer and a vendor perspective.

Potential brand benefits from consumer perspective: Orientation, Trust, Relief, Prestige, Identification, Quality

Potential brand benefits from vendor perspective: Value creation, Platfroms, Price premium, Preference building, Differentiating, Customer retention

1. The brand strategy is based on company strategy and works as the basis for funtional strategies.

-Essential core of the brand (Talents and styles which characterize the brand?)

-Brand response (Who is attracted because of which reasons?)

-Brand positioning (Unique communicated position of the brand?)

-Development of the brand (Where should it be developed to and whcih means/ programms?)

-Brand implementation (Establish rules to use the brand in day-to-day communication and business)

Brand strategy must serve brand benefits from customer and vendor perspective!

They form the identity of a brand and should not be changed. Apple is same since 80s.

Firms in dynamic environments are challenged to develop organizational capabilities to handle brand development.

Build strength through self similarity.

Example: Core capabilietes Apple (80-today: user friendly, high knowledge sales force, low-cost manufacturing, professional image)

Brand strength is defined as grow potential, brand performance, sustainability, reliability, market strucutre aspects

Brand (financial) value:

Pricing for acquisition, pricing for licensing, evaluation of damage compensation.

/Total sum of how much extra people will pay or how often they choose the expectation memories and relationships of one brand over alternatives.

Branded house:

core brand with descriptive sub-brands (Fedex Express/ Ground/ Freight…)

-core brand is important and versetile

-key value which is important to all sub-brands

-Maximizes synergies as participation in one product market, creates associations and visibility that can help another

-only small role of the sub brands

House of brands:

Portfolio of various, independent brands (Procter & Gamble). Different brands use same procesess.

-Aim economies of scales

-Target niche markets

-Minimizes channel conflict and avoids incompatible brand association

Brand inventory:

Firm/ product performance aggregated to values which build the essence of the brand

Brand exventory:

finding expression of the brand values build the style of the brand which is communicated to the markets

1. Packaging is part of the expression with the three aspects form, material, colour

It is very important, that brands stay self similar. Step by step developing, so that each of the new versions has the old core.

1. Identity problems, confused messageing, internal adoption, overcom past perceptions, fighting rebranding resistance

2. Good Examples: Porsche 911, Instagramm, Apple

   Bad Examples: GAP, BP, Ebay Kleinanzeigen

   
   

Disruptive is normal, markets are more complex and dynamic.

1. therefore the marktes are more volatile, variable, timeless, chaotic, random and uncertain. Disruptive behaviour is set as base and necessary. The speed of adoption is accelerating..

A speed of adoption is accelerating, there is almost no time left for catching up.

You need to be the pioneer and already there, when the market is not yet there.

1. In digital markets the winner takes it all. There is a Battle of monopolization of the customer interface and control over customer data. Because better data leads to better understanding, leads to better performance ad decreases the customers will to switch

The companies must switch from product to process innovation and for the next innovation cycle return to product innovation. In the transition-phase you have to be efficient and effective at the same time.

The managements neet to be agile. Means knowing without understanding. Adapting instead of planing and orchestrating networks without structure.

An ambidextrous organization units efficiency and innovation. (Exploitation and Exploration)

1. They manifest efficent hierarchy and entrepreneurial teams.

Entrepreneurial teams should explore areas of higher uncertainty in the technology or at the market side in order to generate flexible options.

1. (Madi) highly diverse with strong characters and they dont come along with each other, so they discuss a lot. That increases the performance of the team.

1. (Embedded entrepreneurial teams aim to leverage corporate assets into agil innovation, they combine aspects of corporate and start-up organization into a hybrid form.)

Framing the challange, define gravity, clearing obstacles, subtle control.

1. Strategic, structural and decision autonomy are critical factors for the performance of entrepreneurial teams.

A corporate entrepreneur brings together entrepreneurial aspects and management aspects in one person.

1. Analytical risk-taking, reproducible problem solving, intrinsic motivation, entrepreneurial leader, need for autonomy, stakeholder management, transparent decision making, innovative initiator

Marketing needs to take into focus not only customers but also ecosystem stakeholders.

Product- and positioning-based adavantages decrease.

Brands that relate to flexible capabilities outperform competence-based brands.