Marketing innovation

Marketing innovation
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Marketing innovation is a deployment of new marketing method that is associated with significant changes in the project, product construction or in packaging, distribution, promotion or pricing strategy. The purpose of marketing innovations is to satisfy consumers' need better, to open new trade areas or new positioning of product on the market in order to boost sales.

The element that differentiates marketing innovations from other changes in the area of company's marketing instrumentation is the fact that they consist in an implementation of marketing method which has not been applied hitherto in a particular firm. This method has to be a part of a new conception or marketing strategy, which is a major departure from marketing methods employed heretofore. New marketing method might be elaborated by an organization on its own or adopted from other entities. It can be also deployed for both new and existing products on the market.

Types of marketing innovations

Classification of marketing innovations according to Oslo Handbook:

  • Changes in a project or product design - they consist in a modification of form and appearance of products, that does not lead to a change of their functional and practical features. This group ranks also packets changes of products such as foodstuff, beverages and cleaning materials, where packaging is the main determinant of product's appearance. An example of marketing innovation in terms of project or construction of a product is a substantial change of furniture series project that is to impart a new look and greater luster. To this type of innovation also rates introduction of bigger changes in form, turnout and taste of food or beverages, for instance, implementation of new flavors of consumer articles to win a new segment of clients. An example of market innovation in a range of packaging is a utilization of entirely new body lotion bottle that is to impart it distinction and visual appeal from the new segment's point of view.
  • Changes in product placement - they consist mainly in the introduction of new sales channels. Sales channels here mean methods applied in order to sell products and services to clients, but not logistic methods (transport, storage, transshipment of products) because the latter are linked to enhancing effectiveness. Examples of marketing innovation in terms of products distribution are an implementation of franchising system for the first time, direct sales or exclusive retail sales and introduction of product licensing. Innovations in products distribution also include new conceptions of products exposition employment. An instance can be an implementation of furniture sales store, where an arrangement is thematically changed. This allows the clients to see products in entirely furnished exhibitive interiors.
  • Changes in product promotion - they consist in using new conceptions of promoting products and services of a company. As an example, marketing innovation is the first deployment of significantly different media or techniques, such as product placement in films or televisual auditions or utilization of famous person's image in the role of product's user (celebrity endorsement). Another example is branding - creation and implementation of entirely new brand symbol for positioning company's new product in the new market or imparting new image for a product. Launching of personalized information system can be also considered as marketing innovation. For example, an information sourced from client's loyalty cards in order to adjust the presentation of products to particular clients' needs.

Price formation innovations consist in using new pricing strategies for products and services sales on the market. An exemplification can be the first application of a new price revision method for product or service, depending on demand (when demand is low, price is low as well) or introduction of new method that allows clients to choose desirable features of a product on a website and then to check the price of chosen features combination. New methods of price formation that aim only at price diversification for individual consumer segments are not considered as innovations.

Marketing innovations might concern any marketing method (project, project construction, packaging, distribution, pricing strategy, promotion) provide that it is the first application of this innovation by a company. It is important to remember that marketing innovations are not common (standard, periodic) improvements, routine alterations of goods at the request of clients and regular seasonal changes. If changes are to become marketing innovations, they have to be significant and have regular character. Under conditions of market economy, strong competition, fast-changing consumers' needs, the necessity of engaging individual clients in the process of creating innovations that are means of conveying values, marketing innovations are of great importance not only for an organization but also for its customers.

Advantages of inculcating marketing innovations

Marketing innovations enhance capabilities of a company to development of new products or solutions for purchasers, to shape customized offer which satisfies complex needs of a customer, abilities to reposition brands and extend them on new areas of business. Marketing innovations also contribute to adjustments of customer relationship character, changes in distribution techniques, what results in enhancement of value for a buyer, increase of their satisfaction and, as a result, they conduce to improvement in economic performance of an enterprise.

Competitive Advantage

One of the most important aspects to consider when dealing with any type of innovation is the potential competitive advantage that can be gained. When it comes to marketing innovation one of the major decisions a firm faces when wanting to improve their competitive advantage is whether to enter new international markets with the information and technology that they have in order to facilitate new innovations. It has often been said that the competitiveness of a firm is the result of how well they can compete in a market using innovative marketing ideas. New innovative marketing ideas in international markets joins together theories of marketing, distribution and sales. Unlike other forms of innovation these marketing innovations are often unplanned or accidental and have originated in the external environments of other industries where they were successful. This shows that the success of an innovative marking idea really is affected by the success it has in other markets. In conclusion, a successfully implemented innovation of marketing strategy in an international market can clearly lead to a greater competitive advantage, which can also perhaps be used in their local market. (Gupta, S., Malhotra, N. K., Czinkota, M., & Foroudi, P. 2016)

The concept of marketing innovation and competitiveness described in the section above can be supported by the example of Reseller firms.

  • Reseller firms often find it difficult to compete in a rapidly growing market because of their weak financial capability and the lack of resources they have in order to expand their business. As part of their attempt to stay relevant in the business, they focus on trying to sell brands that already have a leadership position in their market. (Gupta, S., Malhotra, N. K., Czinkota, M., & Foroudi, P. 2016).
  • This leaves the reseller firm with the task of marketing these brands to their benefit and showing the major brands that they are capable of effectively marketing for them. This of course makes them more attractive to the brands in question, giving them a higher chance to work together. Being able to attract a larger customer base increases competitiveness because the brands will often choose them first. (Gupta, S., Malhotra, N. K., Czinkota, M., & Foroudi, P. 2016).


Author: Elin Andren Eriksson and Thirza Martens