Innovation Strategies in Management

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Questions and Answers

What is a key reason for companies to adapt their products to local markets?

To standardize their global marketing strategy

To avoid market competition

To increase production costs

To align with local consumer preferences (correct)

Adaptation to local markets can only be voluntary, depending on consumer preferences.

False

What are the two types of adaptation to the market described?

Voluntary and compulsory

In the Japanese market, Ikea adapted their furniture to better fit local consumer __________.

preferences Signup and view all the answers

Match the following companies/products with their adaptation examples:

PepsiCo = Localized flavors Ikea = Adapted furniture for local market Coca-Cola = Brand name change McDonald's = Menu variations based on local tastes Signup and view all the answers

What is one advantage for companies that engage in imitation?

No investment in R&D and innovation Signup and view all the answers

Counterfeit products are always easily recognized by customers.

False Signup and view all the answers

What typically triggers the beginning of imitation in international markets?

When demand for an innovative product grows and market processes become understood. Signup and view all the answers

A ____ copy refers to products that adhere to legal boundaries while replicating features of an original product.

legal Signup and view all the answers

Match the level of imitation with its description:

Counterfeit = Products that customers may not realize are false Legal copies = Replicates certain features within legal boundaries Creative adaptations = Changes existing products to meet new market needs Superior adaptations = Improvements that allow newcomers to take market share Signup and view all the answers

What is one reason imitators can reduce risk?

They only enter when market demand exists Signup and view all the answers

Imitation is always a negative strategy for innovation.

False Signup and view all the answers

Name one way imitators take advantage of innovators.

By utilizing the human capital and expertise of employees educated by innovators. Signup and view all the answers

What is a primary risk associated with a simultaneous product launch?

If something goes wrong, the whole market knows Signup and view all the answers

Gradual introduction of a product can serve as a test in each market segment.

True Signup and view all the answers

What is one of the primary drivers for internationalization mentioned?

Saturation of local markets Signup and view all the answers

Adopting a __________ strategy involves creating hype before the final product launch.

pre-advertising Signup and view all the answers

Match the following terms with their corresponding characteristics:

Standardisation = Lower costs due to economies of scale Adaptation = More costly due to production capabilities Disinvestment = Press to exit failing markets Globalisation = Selling in multiple countries Signup and view all the answers

Which situation likely prompts a company to consider disinvestment?

Economic crisis Signup and view all the answers

Product adaptation is usually more cost-effective than product standardisation.

False Signup and view all the answers

What advantage does product standardisation offer?

Lower costs due to economies of scale Signup and view all the answers

When faced with social movements against products, companies often have to adapt their __________ strategies.

marketing Signup and view all the answers

Which of these is a disadvantage of product standardisation?

Consumer needs may be ignored Signup and view all the answers

Implementing standardisation is always the best approach for every type of product.

False Signup and view all the answers

Name one strategy that can help reduce costs during international expansion.

Economies of scale Signup and view all the answers

One common reason for a company to leave a local market is when it is heading towards __________.

failure Signup and view all the answers

In what scenario is a gradual market entry most suitable?

When risk of imitation is low Signup and view all the answers

Study Notes

Innovation and New Strategies

Innovation is a general management term, specifically applied to products.
Innovation involves creating or improving products.
Innovation, in a social and economic context, develops novel solutions to problems and addresses societal needs.

Types of Innovation

Product Innovation:
- New Products: entirely new offerings.
- Improved Products: enhancements to existing products. Includes:
  - Technological specifications
  - Component/material improvements
  - Software enhancements
  - User-friendly design
  - Incremental Improvements: small, continuous improvements to maintain competitive advantage. Typically short development cycles.
  - Disruptive Innovations: aim to provide customers with a better experience. Aims to create new ways to meet current or developing needs, and not just tweak existing products.
Process Innovation:
- Improving existing production processes or developing new ones.
- Significant changes in design and delivery.
- Example: IKEA's innovative manufacturing process.
Marketing Innovation:
- New marketing methods.
- Changes in product design, packaging, positioning, promotion, or pricing.
- Example: Starbucks using AI for customer service.

Examples of Core Initiatives for Products

Modulation:
- Varying fundamental product characteristics to better represent target markets:
  - Customization options (cars)
  - Expanding product sizes or volumes (beverages)
Packaging: Modifying packaging to target different markets or perceived product value.
Design: Modifying external characteristics of a product to target new styles with different positions to attract new audiences.
Developments of compliments Adding complimentary products or services with existing products or services.

New Product Development

A structured approach is necessary for developing a product.
Steps could include: Development and filtering, Testing the concept, Product development and testing, Product launch and follow-up, Post-launch analysis.
Sources of ideas include internal (marketing, sales, R&D) and external (customers, competitors, suppliers).

Criteria for Filtering New Product Ideas

Analyzed by experts through a qualitative assessment.
Evaluated on factors such as environmental impact, strategic fit, market potential, novelty, and competitive analysis.

Concept Development and Testing

Developing a detailed description of the product's features, usage, benefits, packaging, pricing, and distribution.
Testing concepts with potential customers.

Launching the Product

Choosing a target market for launch.
Developing an appropriate marketing plan.
Utilizing appropriate distribution channels.

Drivers for Internationalization

Local market saturation and market failures.
Economic downturns.
Increased demand in other countries.

Standardisation vs Adaptation

Considerations for the production of goods and services and market needs.
Adaptation is more costly, while standardization is more cost and time efficient.
Different markets have different standards, needs, and wants.

Adaptation Strategies

Adapt products to local preferences and legal requirements (e.g., language, cultural considerations).