Today’s economy is significantly determined by globalization, frequent changes, as well as, the increasing importance of knowledge application through the successful execution of innovation. These factors directly affect competitive advantage primarily within organizations that have developed the ability to improve the level of efficiency and effectiveness with the continual development of the innovation performance. In this new economy, organizations that can develop in a short period of time and profitably, applying it in all areas of business, reach competitive advantage over the competition. The growing importance of innovation in relation to achieving a competitive advantage has determined a brand-new concept and innovation classification. Nowadays, the term innovation means not only a significant improvement in process and product technology, but it refers more to the innovation process in the field of human resources, especially in marketing management.
A well-known author in the field of innovation management, Trott, (2008, p. 15) defines innovation as a set of activities related to the process of gathering ideas, technological development, marketing, production of new or improved products and production processes and equipment. Until recently, innovation included improvement in the production processes and new product development, while today it has changed to includes innovation in terms of organization and marketing innovation (OECD, 2005, pp. 9-25). In the modern economy organizations that understand the new rules of marketing develop relationships directly with consumers; the main objective of marketing innovation is to improve the identification process and satisfaction of customer needs (Scott, 2013). By implementing new marketing methods and activities, the organization establishes a closer relationship with customers whereas the customers become promoters of the organization achieving the goal that consumers are loyal to the organization and recommend it to their reference groups. Other objectives of marketing innovation are: new market penetration, improving the visibility and presence of the product in the market, as well as, attaining large sales frequency.
The basic marketing mix elements (the 4P- product, price, place, and promotion) are a combination of components through which organizations achieves their own marketing objectives and reach competitive advantage (Kotler, 2000). Marketing innovation is based on these four instruments that are inter-related and focus on meeting the consumer needs (Ferrell and Hartline, 2011, pp. 18-19). Marketing innovation involves the use of new marketing strategies, concepts and methods that have never been implemented prior. They are based on the following (Stošić, 2007, pp. 3-20):
- Changes in form or packaging
- New pricing strategies
- New distribution channel
- New promotion – social media
Marketing innovation in terms of product design includes substantial changes in terms of packaging form or product style without affecting function of the product (Stošić, 2007, pp. 3-20). Marketing innovation of the design would include a completely new design in order to achieve a special appearance in order to have a distinctive look/appearance of the product. Marketing innovation in terms of product packaging would include changes in the following elements (Trott, 2008, pp. 424-438): extensive improvement of the packaging protective function, materials, reliability and satisfaction, overhaul of package identification that includes additional information on the use, promotional/ sales actions, and improvement to the package shape and size.
Marketing innovation in pricing involves the use of a completely new pricing strategy that the organization applies for the first time in its products/services in a market (OECD, 2005, pp. 9-25). For example, innovation may be discounts in the store for consumers that have certain credit score, or preferential cards issued by organizations. Additionally, marketing innovation may be the introduction of a new interactive method of “online” pricing. “Online” service allows the consumer to choose products on the organization’s website and receive a price that is formed exclusively based on individually selected product characteristics (OECD, 2005, pp. 9-25).
Introduction of new distribution channels includes entirely new marketing methods and selling products/services to customers. An examples of marketing innovation is the introduction of licensing products, franchise, exclusive sales, and direct sales.
Marketing innovation is utilizing new marketing method to promote products or services of an organization. Examples of brand-new marketing promotion method would be the introduction of an entirely new kind of media - promoting products/services in a feature film, a TV show or on the Internet (social networks like Facebook, MySpace, Twitter) (OECD, 2005, pp. 9-25).
It is important to direct part of the “marketing” money to the gathering places of their consumers - such as the Internet and social media specially to achieve long-term brand positioning (Manić, et al., 2009, pp. 205-214). Consumers are more connected, and they are more active and more demanding. In our modern digital society, marketing innovations relate to the explosion of the Internet increasingly gain in importance. In recent years Internet marketing and social media have become a “new hybrid component of integrated marketing communications that allow organizations to establish strong relationships with their consumers (Mangold and Faulds, 2009, pp. 357-360).
In today’s digital era it is important to make maximum use of new communication technologies and the Internet - especially in marketing and sales. Companies preferred in the current economic conditions are the ones managing to link innovation and marketing successfully. Innovation can be an asset of the company, which is directly related to the feedback of marketing.
- Manić, M., Riznić, D., & Ostojić, S. (2009). Innovative marketing and sales strategies in the conditions of the global crisis. (pp. 205-214). Beograd: Megatrend University.
- Organisation for Economic Co-operation and Development, & Statistical Office of the European Communities. (2005). Oslo manual: Guidelines for collecting and interpreting innovation data (3rd ed.). Paris: OECD Pub.
- Scott, D.M. (2013). The new rules of marketing & PR: How to use social media, online video, mobile applications, blogs, news releases, and viral marketing to reach buyers directly (4th ed.). Hoboken, N.J: John Wiley & Sons.
- Stošić, B. (2007). Innovation management: Expert systems, models and methods. Beograd: Faculty of Organizational Sciences.
- Trott, P. (2008). Innovation management and new product development. Harlow, England: Financial Times/ Prentice Hall.
- Ferrell, O.C., & Hartline, M.D. (2011). Marketing strategy (5th ed.). Mason, OH: South-Western Cengage Learning.
- Kotler, P., & Keller, K. (2006). Marketing management (12th ed.). New Jersey: Prentice Hall.
- Mangold, W.G., & Faulds, D.J. (2009). Social media: Thee new hybrid element of the promotion mix. Business Horizons, 52(4), 357-360.
Author: Daria Boiko, Kaleigh Krieger