Key Points

Summary

In this day and age, innovation is critical to success, as new products are launched all the time, with failure ever present as well. Understanding innovation in marketing is crucial.

Much marketing thinking focuses on selling products rather than looking at the customer’s needs. Traditional marketing often is very involved with the market as it is today, rather than how it could be. Furthermore, there is often a drive to categorize and segment a market. Segmentation has been one of the strongest strategies in marketing as it is traditionally practiced. If you enter a new category, you attempt to create a product that is distinct from those already there, by carving out a niche. In this way, you own that part of the market, but on the other hand, this process, taken too far, leaves everyone with a very small piece of the overly fragmented market. By viewing the market as something fixed to be divided up is a useful model in some ways, but can at times be limiting in terms of innovation and opening up entirely new markets.

“Modulation” innovations in marketing refer to changing the amount of some characteristic of a product - more or less fat/sugar/salt, for instance. Changing a product’s size is another common way of increasing the sales of a product by allowing people to consume it in amounts closer to the amount they desire in any given moment. Packaging is another important way of creating a distinction - a very similar product might be sold in fancy packaging for more money. Design changes are another way of creating a new niche or sustaining domand, even if the changes are mostly superficial. The development of “complements” to a product may help the sales of a mature product, by pairing it with some other product that increases its appeal. Finally, reducing the effort required to purchase and consume the product may increase the pool of buyers by snagging buyers who were indecisive. None of these innovations creates truly new categories or markets, though, they are all ways of subdividing the existing market.

Links

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