ABSTRACT
https://s3-euw1-ap-pe-df-pch-content-public-p.s3.eu-west-1.amazonaws.com/9780080501277/46f3fe21-8f6e-484c-9030-9772da6c3280/content/fig4_1_B.tif" xmlns:xlink="https://www.w3.org/1999/xlink"/> In recent years the pressures for firms to innovate have grown tremendously. As markets develop over time the combination of sophisticated demand and intense rivalry forces companies to strive harder and harder just to keep pace with competitive dynamics. They do this in a broad range of ways, consistently seeking product and process breakthroughs to build or maintain a competitive advantage. In this chapter we examine the broad range of marketing issues which are bringing innovation to the top of the boardroom agenda for many firms. In a competitive marketplace the importance of innovation cannot be overstated in an environment where ‘the survival of the fittest’ is the watchword for corporate success. The following quote from Peter Drucker (1974), the doyen of management gurus, illustrates the central role of innovation in the contemporary business environment:
Because its purpose is to create a customer, a business has two – and only two – functions: marketing and innovation. Marketing and innovation produce results; all the rest are ‘costs’.
An important point to make at the outset of this chapter relates to the distinction that should be made between invention and innovation. Invention is the creation of an idea and is typically based on technology breakthroughs. Innovation is the commercialization of ideas and embraces creativity in all elements of the marketing mix: everything provides scope for differentiation if an appropriate market-driven outlook is adopted. While invention is often more interesting for research scientists in R&D departments the strong evidence is that innovation strategies tend to be more profitable! Having noted this, i t must be emphasized that a strong creative process and organizational responsiveness are essential to secure innovation success. As we will see, the trick is to innovate for first mover advantage, a process which combines speed to market and an ability to build entry barriers as the market develops and becomes more attractive to follower companies.