marketing - Industrial Engineering

INTRODUCING NEW MARKET OFFERINGS CHAPTER 20 569
Elixir acoustic gUitar strings were a result of a failed venture into bike cables. Even successful ventures may
need to move on. Glide shred-resistant dental floss was sold to Procter &Gamble because Gore-Tex knew that
retailers would want to deal with a company selling a whole family of health care productsY
Companies that fail to develop new products put themselves at risk. Their existing
products are vulnerable to changing customer needs and tastes, new technologies, shortened
product life cycles, and increased domestic and foreign competition. New technologies
are especially threatening. Kodak has worked hard to develop a new business model
and product-development processes that work well in a digital photography world. Its new
goal is to do for photos what Apple does for music by helping people to organize and manage
their personal libraries of images. Table 20.2 displays CEO Antonio M. Perez's philosophy
of innovation and transformation.
New-Product Success
Most established companies focus on incremental innovation. Incremental innovation can
allow companies to enter new markets by tweaking products for new customers, use variations
on a core product to stay one step ahead of the market, and create interim solutions for
industry-wide problems. Scott Paper and Southwest Airlines have made some notable incremental
innovations.
SCOTT PAPER COMPANY
When Scott Paper couldn't compete with Fort Howard Paper Co. on price for the lucrative institutional toilet tissue
market, it borrowed a solution from European companies: a dispenser that held bigger rolls of paper. Scott
made the larger rolls of paper and provided institutional customers with free dispensers. It later did the same
thing with paper towels. Scott not only won over customers in a new market, but it also was less vulnerable to
competitors, such as Fort Howard, which could lower prices but weren't offering the larger rolls or tailor-made
• dispensers.
I SOUTHWEST AIRLINES
An airline known for bucking tradition, Southwest used incremental innovation to offset the impact of an important
competitor innovation: frequent flier miles. Begun by American Airlines more than 20 years ago to boost customer
loyalty, frequent flier rewards programs were soon rolled out by all the major airlines. Southwest, however,
decided to tie its rewards to the number of flights taken rather than miles flown. The airline offers mainly shorthaul
flights for business travelers who often fly the same route over and over. The program was a big hit with
• this target market. 18
Newer companies create disruptive technologies that are cheaper and more likely to alter the
competitive space. Established companies can be slow to react or invest in these disruptive
technologies because they threaten their investment. Then they suddenly find themselves
1. See the future through the eyes of your customer.
2. Intellectual property and brand power are key assets.
3. Use digital technology to create tools for customers.
4. Build a championship team, not a group of champions.
5. Innovation is a state of mind.
6. Speed is critical, so push your organization.
7. Partner up if you're not the best in something.
SOl/ree. SIP.'I€ Hamill and Williani r.. SynlOllrls. "Mistel\es Made on tlle I~oad t 111110VaUon," RUS(lIessWeek IN tn.~ide
Innovatiun [Nov€1ll11er 20 G): 27-31.
I
I TABLE 20.2 I
Kodak CEO Antonio Perez's Seven
Notions of Innovation