global innovation management electronic marketing components: customers and the business model

Global Innovation Management

Electronic Marketing

Components: Customers and the

Business Model


Blue-Ocean Strategy

create uncontested market space by reconstructing market boundaries


Blue-Ocean Strategy– Value Innovation

» simultaneous pursuit of differentiation and low cost

– Strategy canvas, – Four actions framework

» reconstructing market boundaries, » focusing on the big picture, » reaching beyond existing demand » getting the strategic sequence right

– Eliminate-reduce-raise-create grid» visualizing strategy, noncustomers » launch idea » target costing » overcoming adoption hurdles.


Innovating to Differentiate and Create a Market Niche

• An ‘Innovation’ is:– Invention + Commercialization

• Freeman, The Economics of Industrial Innovation– A new way of doing things that is

commercialized• Porter

• The new knowledge in an innovation can be either– Technological, or– Market related


Fundamental Equations

• Innovation = Invention + Commercialization

• Capabilities = Assets + Competences

• In the present economy– Demand is driven by innovation– Supply is constrained by capabilities


Understanding Innovation

• Innovation occurs on;– Technology– Market channels and packaging of technology– Architectural rearrangement of existing

components– Integration of new component technologies

• Theories and frameworks precede and motivate commercialization of technology

• Business models and figures of merit precede innovation


Innovation = Change

• Change management is an essential part of innovation management– Change destroys old competitive advantages,

• And introduces new ones• Success requires:

– Ability to collect and use information about the competitive environment

– The nature of information that can be scanned from the environment


What the Consumer Sees

• Overall desirability of features is measured by a figure of merit– A quantity used to characterize the

performance of an item relative to other products

– often used as a marketing tool to convince consumers to choose a particular brand

• Unfortunately, each feature carries with it both desirable and undesirable characteristics


Toolsets

Quiz & Organize with a Mind MapAsk Questions: Customer Experience is dynamic

• Who?• … is with customers while hey use the product

– How much influence do they have• If we could arrange it, who would we want the customer to be with …

• What?– … Do our customers experience when the use the product– … needs provoked our offering

• What else? … might customers have on their minds • When? … do our customers use this ..• Where? … are our customers when they use this• How? … do customers learn to use the product .


Toolsets

Overview of Feature Set

Prioritize and choose the major features of Beats’ innovation

Review the main innovation features with a feature-attribute map for the entire innovation

Basic Discriminator Energizer

Positive Nonnegotiable Differentiator Exciter

Negative Tolerable Dissatisfier Enrager

Neutral So What? Parallel


Toolsets

Consumption Chain Analysis

• Determine the main steps in consumption

• You should only list the 3 or 4 most important steps

• These will determine whether the potential customer proceeds to the next step (good)

– Or leaves the consumption process (not good)

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Toolsets

Feature-Attribute Map the 3-4 Key Steps in the Consumption and Manage those 3-4 Steps

• Identify Discriminators and Energizers

• Describe how you will manage each of these features of the consumption process





C o n tin u e

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Recipes, Not more Cooking

• Big advances in our standard of living have always come from ‘better recipes, not just more cooking’

• Economist Paul Romer

• Innovation is not necessarily about ‘new’ technology, design or marketing.

• It is about new combinations and configurations of features,

• limited only by the constraints imposed by existing technology.


Three Challenges

FramingVenture CapitalCommunication


The Framing Challenge

• What Is the Real Business Problem?– Accurately define your customers and what

motives them• Properly framing a problem in terms of

• the reality of the situation and • the objectives of the organization

– is an important step in the decision-making process.

– Mental frames act to channel our thinking and are important tools to help navigate complex decisions


The Venture Capital Challenge

• What is your business worth, and why?• Your new venture competes in two markets:

• Product• Financial

• How will you tie this to your business model – tying narrative to numbers

• What are the activities, operations and products? • What are the significant environmental influences?

– major competitive forces outside management control• How does value flow through your business model? • What is the Net Present Value of future activities


The Communication Challenge

• Provide a ‘lead in’ which will ‘hook’ your listener (the elevator pitch)

• Provide a brief ‘sales pitch’ presenting the major components of your innovation and business

• Consider what parts you most want to emphasize about the business model

• Describe your business in one paragraph (equivalent to the 25 second pitch)– Numbers– Behavioral model and capabilities required– Strategy model– Investment Risk– A summary financial analysis to show risk and ROI for the

project• Answer your investors question:

– Why should I give you My money?"


Activity #1:

Identify your Customer

• Commercialization is about creating a customer• ‘Quiz’ to identify your customer:

• Who?– … is with customers while hey use the product & How

much influence do they have– If we could arrange it, who would we want the customer

to be with …• What?

– … Do our customers experience when the use the product– … needs provoked our offering

• What else? … might customers have on their minds • When? … do our customers use this ..• Where? … are our customers when they use this• How? … do customers learn to use the product ..


Toolsets

Organize Answers with a Mind Map


Activity #2:

Select a Product or Service

• Select a Product or Service that you are interested in marketing via Internet business models – This is mainly about determining your Core Capabilities

• Capabilities =Assets + Competences

• Money is important– Innovation Utility Commercial value

• Talk about your opportunity register (OR) – Your repository of alternative ideas that can be pulled up at any

time If a particular idea isn’t working


Identify the 3 most important features

• Specify the particular customer choices you are offering in your product or service (no more than three) as– Identify the discriminators and energizers

• What differentiates your product from competitors’ in the customer’s minds?

• List the three features that are important to the target customer, and rank them from most to least important.






Activity #3:

Make a Profitable e-Marketing Business

• Define how you will measure the usefulness or attractiveness of each of these features to the target customer.

• This performance metric should be a numerical measure• Draw a value map describing your companies proposed business

model, and – provide some indication of the costs and revenues that will

flow into and out of the business. • Define your product’s top competitor in each of these 3 features

Are these companies profitable? How big (approximately) is their business? Why is your product better?

• Think: Low-cost or Differentiated Products?


Activity #4:

Define your Marketing Channels

• Consumption Chain Analysis– Works from the premise that

• opportunities for differentiating your product from others

– lurk at every step and decision that your customers take

– From the time they first become aware of their need for your product or service

– To the time thy finally dispose of the remnants of the used up product

• Product differentiation is the secret to high revenue


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Activity #5:

Describe the Business Model and Entrance Strategy

• Start with a compelling story– Part of selling your strategy / investment– Tying Narrative to Financial Numbers

• Strategy becomes less philosophy• More performance and outcome

– What activities, operations and products are within the ‘scope’ of the valuation analysis? (Bubbles: depends on audience)

– What are the significant environmental influences? (Boxes: major competitive forces outside management control)

– How does value flow through the relevant scope of the analysis? (Arrows: value metric)

R & D

C u s to m erR elat io n s h ipM an ag em en t

L ab o r C u s to m er s

F act o ry

W o r k

Production


Market Entrance Strategy

• What are the major competitive forces molding managerial strategy which add to, or take away from ‘Value’?

• What ‘levers’ (strategy drivers) can management pull to influence value added?

• What is the functional relationship between value and the strategy drivers? (Define the ‘Strategy Model’)

• What are the major technologies relevant to managerial strategy which add to, or take away from ‘Value’?


Business Model and Strategy Need to do Two Things

• (1) Must produces revenue by satisfying customer demand – i.e., that meets the ‘Framing’ challenge; and

• (2) Must controls costs and generates a high return on investment, – where expected revenues significantly exceed

expected costs, – and thus can be argued to meet the ‘Venture

Capital’ challenge.


Activity #6: Internet Marketing

• Keywords, keywords, keywords– Which will you buy?– What are the trends?– How much will it cost?– How much traffic?– How much revenue

• Will that traffic generate?


Conversions

• Conversion = Money Generating Web Action• Point users to the right landing page.

• When users click on your ad, they should arrive at a landing page clearly displaying the information or product offered

• Keep the user experience in mind.• Place important information and images on the top left, where the

eye naturally goes first.• Help people get what they want in three clicks or fewer.• Create a simple process for users to complete transactions


Meet the Challenges• Framing

– What Is the Real Business Problem?– the reality of the situation and – the objectives of the organization

• Venture Capital– Your new venture competes in two markets: (1) Product; (2)

Financial– What are its activities, environmental influences, operations and

products? – How does value flow through your business model? What is the NPV

of future activities• Communication

– Provide a ‘lead in’ which will ‘hook’ your listener (the elevator pitch)– Provide a brief ‘sales pitch’ presenting the major components of

your innovation and business– Consider what parts you most want to emphasize about the

business model– Answer your investors question:

• Why should I give you My money?"


The Long Tail

• In a typical graph of demand – rank ordered over all products (say MP3 files)– Inventory storage limits you to best sellers

• Whereas the majority of the market will be ‘niche’– i.e., in the long tail– Internet technologies give you access to the long tail

Market without limits

Limits of Shelf Space


When do you have an Innovation?

• You start by asking what you do better than anyone else in:– Technology– Market channels and packaging of technology– Architectural arrangement of components– Integration of new component technologies


Where to find New Business


The Nature of Innovations

• New ideas arise in either:– technology behind the invention, or – marketing, logistics, networking and design strategy

• To succeed requires a holistic perspective on management of the innovation process:– Innovations will not come about by R&D staff inventing

whatever they want – then throwing it over the fence for Production to make,

and Marketing to sell• All the resources in the firm need to be considered at all

phases of the innovation’s life-cycle if it is to be a success


Establish Your Identity• Make it memorable

• "Amazon.com" is more unique and less limiting than "booksonline.com."

• Describe your business• Avoid confusion by simply and logically describing

your business• "Flowers.com" obviously leads one to believe they

can buy flowers on the site. • If you are setting up an online presence for an

established business, keep the name of your site the same as the name of your business


Build a User-Friendly Site

• Plan Your Site• identify clear marketing goals • such as generating leads, • building a database of potential customers' names

and e-mail addresses, • putting a product catalog online to save the time and

expense of printing and mailing– Quantify your objectives - such as increasing

sales by 15% - so you know whether or not your site is successful.


Build a User Friendly Site

• Figure out what your potential customers need to know before buying your products and services

• An overview of your company, its products and services, and their applications

• Complete product or service descriptions, including features, key benefits, pricing, product specifications, and other information, for each product or service

• Testimonials, or success stories so customers can see how similar individuals or organizations have worked with you

• FAQ section that anticipates and answers customers' common issues


User-friendly sites

Plan the structure of your siteMake it easy for customers to learn what they need to

know, make a purchase decision, and then buy quickly.

Create a site map that outlines every page on your site starting with the home page and mapping how customers get from one page to the next

Use tools that quantitatively measure site activity - where customers are clicking, how often, and whether they end up purchasing - then compare the results with your goals.


Site-Building Tools

• Site building is not extremely difficult– But the number and breadth of tools is

confusing• The following is a brief survey

• Often your choice will be dictated by:– Company standards– Templates– Platform (e.g., iPhone)– Personal experience (e.g. Dreamweaver)


E-Commerce Site Design

• Carefully research your own favorite e-commerce sites

• Creatively adapt the most compelling marketing and design techniques to enhance your site's effectiveness.

• Your home page is your business’ online front door

• make a good first impression on visitors

• Make sure it clearly presents • Your company name, logo, and tagline prominently …

showcase your brand identity.

• Contact information• Don't make it difficult for visitors to find your phone

number, e-mail address, mailing address, and fax number


Site Design

• Provide a link to – an "About the Company" page for customers to

quickly learn who you are and what your business offers.

– A menu listing the basic subsections of your site• Keep this menu in the same place on every page

throughout your site to make it easy to navigate. – A "What's New" section for news,

announcements, and product promotions. – Your privacy statement


Site Building

• Make it easy for customers to navigate your site. As you build your site

• minimize the number of clicks it takes the customer to go from your home page to actually being able to make a purchase

– Four to six clicks is a useful rule of thumb

• Make sure links make sense, so customers know what to click to find what they're looking for.

• Quantify your goals for sales, clicks, or inquiries

• so you can objectively measure the success of your e-commerce Web site


Site Building

• Keep things simple– Stick to the same basic color palette and fonts your

company uses in other communications, like your logo, brochures, and signage

– Ensure that images and graphics serve to enhance, not distract from, your marketing goals. Make sure the text is easy to

• Keep download times short– Test pages to make sure they're not too heavy with

graphics that will slow load – Most Web pages take anywhere from three to eleven

seconds to load• i.e., waaayyy too long


Web Hosting: what to look for

• Shared hosting or dedicated server• Hard-disk storage space

– Smaller sites may need only 300-500 MB (megabytes) of Web site storage space, while busier e-commerce sites may need at least 9 GB (gigabytes) of space - or their own dedicated Web server

• Availability– If you run an e-commerce business, your site must be accessible to customers 24 hours a day. ISPs and

Web hosts maximize the availability of the sites they host using techniques like load balancing and clustering. Can your ISP promise near 100% availability?

• E-mail accounts– E-mail accounts that match your domain name are often available from your ISP.Are they included with

your monthly access and hosting fee?

• SSL Encryption– The security of the credit card numbers and other personal information customers send you should be

a top concern. Does your ISP or Web host protect your site with an SSL server ID? See Step Four below to learn more about Web site security.

• Support– A big part of the value of turning to an ISP or Web host is that you don't have to worry about keeping

the Web server running. Does your host offer 24x7 customer service?


The Innovation Workout

Reversing Assumptions

• Forcing yourself to “think outside the box”• This exercise is about reexamining what you

think are the – underlying requirements, – objectives and – constraints

– of a problem

• Example: the 9-dot problem– What do you assume are the underlying

requirements, objectives and constraints?


The Innovation Workout

Reversing Assumptions


Case study

{iPod + iTunes}

1. Describe Apple’s iPod business model. • Where does Apple make money? What are its

costs?

2. Many once innovative companies suffer from the ‘Not Invented Here Syndrome’ (NIHS).

• How do you think Apple has managed to avoid the NIHS problem?


Case study

{iPod + iTunes}

3. How did Apple use adaptive execution to develop the (iPod + iTunes) business?

• What firm capabilities does Apple possess that made it a successful competitor in the MP3 player market?

4. What was innovative about the iPod versus other MP3 players?

• How did this help its commercialization?

5. What role does the industrial design of the iPod play in its success?


Case study

{iPod + iTunes}

6. What role does software play in the success of the iPod business?

6. Describe how Apple reused and repurposed software designed for another function in order to make the iPod a success.

7. What role does the WWW play in the success of the iPod business?

8. Challenge one of the fundamental assumptions of iPod’s business model by reversing it.

• Define an ‘anti-iPod’ product and business model that satisfies your reversed assumptions


Case study

{iPod + iTunes}

9. What are the commercially important attributes that make iPod’s business model successful and sustainable?

10.Split just one of the attributes in question 8 into three sub-attributes.

• How could you alter each of these sub-attributes to create a new product?

11.Describe customer activity at each step of iPod purchase and usage.

• Do you see any opportunities for new businesses?

global innovation management electronic marketing components: customers and the business model

Documents

innovation slide

innovation management

innovation supply

main innovation features

environment slide

change change management

market related slide

parallel slide