Chapter 3

1. Explain how crowdsourcing is used to generate product ideas.

The term crowd sourcing can be defined as a technique which will help in online funding
process by generating ideas through crowd of people. It is used to describe the internet base
activities. It is only possible with presence of crowd where ideas are put for creating online
content to promote any kind of products using stickers or images. It is a kind of marketing
campaign which helps companies to utilize resource in an effective manner. The important
feature of crowd sourcing is that it is an open kind of software which allows in building of
online business model (Gronroos, C, 2004). It is a kind of marketing technique which help
companies to promote their marketing campaign through word of mouth publicity. Texting &
driving is dangerous for crowd so in such situation different kinds of efforts can be used by
targeting customers who are under age group of 16 to 34 by reinforcing them that driving
and texting can also be dangerous when they are texting.

2. Discuss the merits and limitations of lead users as a source of innovations.

LEAD users are people who deal intensively with a problem in an application area for which
there is no suitable solution on the market. These users feel a need much earlier than the
masses or the average customer. The LEAD user is differentiated from the customer of the
main market by a perceived need, for which the market has no or only an inadequate offer at
the moment. The needs of LEAD users are potential needs of the rest of the market and
therefore offer potential to increase the desire to not accept the new idea or change by the
customer even under the pressure to do so.

3. How does diffusion differ from adoption?

Adoption is the acceptance of a new idea or change by the consumer. - Diffusion is the
degree or level of adoption of new ideas or change by the consumers. Resistance is the
desire to not accept the new idea or change by the customer even under the pressure to do
so.

4. How does frugal innovation differ from targeting low income segments?
Identifying target customer segments to focus your marketing resources. ... Creating target
customer segments (referred to as segmentation) is the process of dividing the market for
your products according to similarities between the market's subgroups.

5. What role should marketing play in the early stages of product innovation?
He suggested, is because science provides us with information that was previously
unknown. Yet, technology comes from employing and manipulating science into
concepts, processes and devices. These, in turn, can be used to make our life or work
more efficient, convenient and power full , s om e o f t he ad di t i on a l f ac t or s t hat
a f f e ct t he ad op t i on of hi gh ly i nn ov at iv e products. Answer First, Salkowitz argues
that within the fastest growing economies such as the BRICI countries(Brazil, Russia, India,
China and Indonesia), the young represent a much higher proportion of the population than
is typical in old world western counties in Europe and the USA. It is this new generation,
he suggests, that will deliver the new fast-growing entrepreneurial firms of the future.
Second, independent evidence from firms such as the Boston Consulting Group
confirm that the information and communication technology (ICT) revolution is continuing to
cause huge changes in the way people live and consume services.

6. List some of the additional factors that affect the adoption of highly innovative products.
Research findings have shown that the first three factors, the relative advantage,
compatibility and complexity consistently influence the level of innovation adoption. Those
technologies that score best on those criteria are likely to reach the highest saturation level
among potential adopters.

Relative advantage
An innovation will be adopted more widely when it is considered superior to the alternative
solution that it replaces. The relative advantage might be measured in economic terms (the
new technology is cheaper than the old, or as expensive but more powerful) but it could also
be a convenience factor (receiving email is faster than writing letters and going to the post)
or a status aspect (“I need this product in order to look cool”). Relative advantage is
important because a new product is rarely without alternative, whether it is using digital
cameras rather than analogue ones, or watching video on demand rather than renting DVDs
from a DVD shop. However, relative advantage is not enough to guarantee fast diffusion
speed, and the market abounds of superior technologies that never made it to success, from
the Dvorak keyboard to the Betamax or Video 2000 video recorder.

Compatibility - measures whether the innovation is consistent with the set of norms, values
and other cultural aspects or religious beliefs that predominate in the population. This also
includes naming issues: a product wearing the wrong name or the wrong colours in a society
that associate special meanings to these attributes has a low level of compatibility.

Complexity - is the level to which an innovation is seen as being complex to use in practice,
maybe because its user interface is not intuitive, or it requires too many successive steps to
be applied, like swallowing pills every hour ten times a day. This is an area where well-
thought-out solutions bundling hardware and software like the iPod and the iTunes
application can have a real competitive advantage: each component is easy to use on its
own and the components have been optimally designed to interact with each other.

Triability - is the degree to which an innovation may be experimented with on a limited basis.
It lowers barriers to entry for customers, especially the late majority. Triability can help
convince those who are risk averse and would delay their usage of the technology because
they are not sure whether it will satisfy their requirements or be superior to the previous
practice. For instance, many telecom service providers provide new services for free in an
initial launch phase, for example unlimited mobile TV access, to encourage their subscribers
to use the service.

Observability - Finally, innovations that have a lower degree of observability will spread more
slowly than others, because observable innovations advertise for themselves. These could
be innovations used in the home only rather than outside, or innovations that have been
allocated more limited shelf space that other products.
According to Rogers, “the five attributes of innovation have been found to explain about half
of the variance in innovations’ rate of adoption”. The other half is influenced by:

 the intensity of the promotion efforts, in particular with aggressive marketing

campaigns
 the right timing and combination of mass-media and interpersonal channels
 whether the adoption decision is taken individually, collectively by consensus, or
authoritatively by the state or a company’s management, as collective decisions are
slower to diffuse, and authoritative ones faster.
Additional learning from diffusion research are provided in the book “Business Planning for
Managers and Entrepreneurs”, including:

 the impact of mass-media versus interpersonal communication

 network externality effect for interactive innovation
 benchmarks for the time to critical mass and characteristic duration
 cross-country comparison: similarities and differences

7. Explain how market vision can help the innovation process.

Market vision is the ability to look into the future and picture products and services that will
be successful. It can be done by assessing ones own technological capability and present or
future market needs and envisioning a market offering that people will want to buy. So, the
focus of innovation should not only be on the need to examine the market but also the way
the new product offering will be used or consumed.

About the consuming, the consumption pattern is important. This is the degree of change
required in the thinking and behaviour of the consumer in using the product. Some products
can require the altering of thinking and habits of consumers and this may affect the
willingness to embrace a new product. The way a new product requires users to interact with
it can be familiar or novel. So, in considering highly innovative products it is crucial to take
into account the customer’s view and experience of the product.

Otherwise the innovation results in a product that is at odds with the market’s perception of
the product. New products are more than simply bundles of technology. Innovative new
products must deliver benefits and be used by people who can enjoy them and the
advantages that they can bring about.There are three key variables firms must consider with
the development of new intensive products: the technology capability, the product capability
and the pattern of consumption.

8. How does the pattern of consumption influence the likely success or failure of a new
product?

Bringing a successful product to market is a team effort. While designers are responsible
for usability, utility and the rest of the user experience there are many factors which
contribute to the success or failure of new product development and many of these are
outside of the designer’s direct control.
The figure above shows the main factors which contribute to new product development
success as promoted by Gonzales and Palacios in 2002:

 Knowledge Management
 Market Orientation
 New Product Development Process
 New Product Development Speed
 New Product Development Strategies
 New Product Development Teams
 Technology
 Top Management Support
Let’s take a look at each of those factors and see how much responsibility a designer can
take for them and how much lays elsewhere.