How Consumers Consume - Case Study Example

Digital business Service Innovation: Focus on Apple applications By: Executive Summary Digital business service possesses a very complex innovation ecosystem. However, many companies which manufacture information technology products take advantage of knowledge obtained from understanding the ecosystem. Apple, Google, IBM, Nokia, Samsung among many other companies comprises the stakeholders of this ecosystem. In the digital business innovation ecosystem, innovation never stops. Instead, the release of a new product results in a series of better and improved products. This helps to ensure customer loyalty through ensuring customer satisfaction. This paper mainly focuses on Apple Inc. The Apple Inc. company took the market by a storm and seems to be enjoying a cutting edge of the competitive market in digital service and product market. Introduction Reliance on goods in order to understand the economy seems to be getting harder as the industrial economy ceases. Researchers noted that service provisions implemented the distribution mechanisms obtained from goods. They also noted that service creates a basis for the proliferation of economic transactions. This paper defines economic service broadly as “the utilization of unique knowledge and skills in the business practices, processes and outputs in order to create value for the customers (Eaton 2011, pg59). Emergence of service dominant logic The dominance of information technology highly contributes towards the emergence of the service-dominant rationality. As Vargo and Lusch (2004, pg51) discuss, primacy of service and its recognition as the fundamental factors for economic can be attributed to two reasons. These primary reasons include; the ability to separate information and service from tangible goods and the increasing specialization in business. These two reasons dwell on the creation of information technology which speeds up specialization in creation of knowledge which consequently led to the reduction of harmonization and communication costs. In addition, the digitization of informational products and the integration of software capabilities into goods created the term digital innovation. This innovation contributes to the slackening of solid goods with service since its inception. Digital networks characterize the best dynamic and exhilarating field of inventions in our modern economy. Companies like Google, Apple, Nokia-Microsoft and HP/Palm are all chasing numerous procedures of innovation approaches in imperative to the worth of their products. These companies frequently undertake these operations by fetching external developers as well as maximizing the technology’s reproductive potential. Similarly, these firms need to balance their performances by associating with in-built enigma of control as well as generatively in contemporary digital ecosystems (Eaton 2011, pg16). Apple Inc. Strategy The California-based Company chose to venture into the music industry away from its core business of personal computers and marked a huge success. The introduction of the iPod, iPad, iTunes Music Store and others, Apple sought to support the digital music revolution. For this function, the company moved quick to provide exquisite and portable music and music players to support online purchase and uploading of music. In the latter days, this company gained fame and popularity for its high quality and attractive products in many countries (Blumberg, Renery & Bunggaard 2006, pg15). The discovery of digital products and a dramatic change to dominance of logic in service provision rotate the basic strategies of innovation. Due to this, organizations lack the power to exercise extreme control over the experience in service as depicted through the modeling of their goods. Digital innovation, the service-dominant does not cease once the product makes a debut in the market. Instead, innovation keeps going on long after the product enters the market. For instance, the multifunctional Apple iPhone works as a mobile phone, mobile navigation system, a personal mobile game device, e-book reader among other functionalities. Paradoxically, Apple made a few applications for itself. Additions to the basic operations of the device were outsourced from developers who operate individually to create applications otherwise known as the apps (Eaton 2011, pg27). After the introduction of the iPhone, more application services became available in the market for consumer purchase. Through the creation of the devices, as well as the operating systems by Apple, the Apple store and the iTunes, consequently deliver the digital services and apps. The platform created by Apple provides core functionality between the application and the interface through which the apps in question relate with the devices’ hardware. These innovative aspects exhibited by the iPhone are manifested as intangible apps services as well as the hardware of the physical device. These aspects can be attributed to the association between the app developers, Apple Company and other partakers. This comprehension of this platform and its players need an analysis of the complex interactions between the numerous and equally significant participants (Eaton 2011, pg56). Product differentiation As pointed out previously, such an ecosystem necessitates a common platform on which the participants may build individual modules. This platform also enables the realization of extended potential in service provision. This platform also incorporates the social actors. These actors contribute towards building a regulatory policy and standards which bind all the different actors. For this aspect of the discussion, control would be a necessity towards understanding how the concerned actors interact (Fanning 2014, pg45). The Apple Inc. brand serves as a net for its product differentiation in the market. Recommendations of high-quality products serve to boost sales for the Apple brand products all over in the world. The products of the Apple brand include computers, phones and digital music revolution products and services. The phones mainly include the iPhone, iPhone 3Gs, iPhone 4 and iPhone 4s. The computers include the IMac, e Mac, Mac Pro, iBook, the MacBook and the Mac Books Pro and Air. In addition, the digital products include the iPod, the IPods (Nano, Classic and Touch) and the Apple TV. The company further develops software products and accessories for its products which are incompatible with products from other brands. In addition, the company boasts of its glassy logo away from its previous multicolored one integrated with its sleek and smooth white products (Fanning 2014, pg48). Consumers as co-creators The consumers of the digital products and services co-create value as they customize and adopt technology. The upcoming ecosystems in digital business employ uniqueness and are designed specifically to support and allow innovations even after production. These ecosystems also intend to connect the generativity by employing digital platforms. In this aspect, generativity refers to the overall capability of the technology to solicit unprovoked impact caused by varied, large and uncoordinated receivers. Therefore, this term refers to the capability of a self-reliant system in creation, generation or production of new structures, content and behaviors. The system does all that devoid of assistance or contribution from the initial developers or. A company that seeks to solicit revenue from its innovation of service needs to understand the operation of generativity within the digital ecosystem. For success to be realized, this activity would require of exercising utmost control since lack of control leads to misunderstanding and chaos and consequently zero economic value (Eaton 2011, pg38). Primarily, good product experience refers to the personal interaction of the distribution and utilization of the product that result in a positive attitude towards the same. The society indulges in products and services that provide mutual experience with their peers. As Holt noted in his article, A typology of consumption practices, consumers utilize a product for its experience, or they consume the experience of a product altogether. In this way, experience could be utilized as a means to acquire the product or to acquire the same experience in question (Holt 1995, pg13). For instance, the iPod advertisements do not merely sell a product, but a lifestyle and experience attributed to the iPod user. Apple Inc. uses the need to blend in and belong to a community quite well in this commercial environment. Also, they create an iPod community that stimulates those, not in the community to join in and share the experience. In the end, as an individual yearns for the experience, they are motivated to buy the product and later share in the experience with others who own the product (Fanning 2014, pg130). Competition The paradox between generativity and control easily occur within the digital business innovation environment. In order to curb these occurrences, the owner of the particular platform could execute four strategies. First, one could request for additions. Secondly, the protagonist owner needs to indirectly manipulate the antagonist. Thirdly, the owner of the platform may need to consider implementing change as well as routing in a different location. Finally, the owner could bypass the antagonist (Eaton 2011, pg5). Correspondingly the antagonist can also retaliate with four actions. First, they may allow for a propagative action. Secondly, they may hinder any attempts to evolve the ecosystem. Thirdly, they may refine complex propagative actions into simple and narrower sets of classes of consenting and blocking. Fourthly, the antagonist could ignore the request of the protagonist all together. These counteractive sets of four actions comprise the fundamental accomplishments for the in-depth construction of digital business service innovation ecosystem (Eaton2011, pg5). Evolution of innovations Therefore the ironic association between generativity and control can be analyzed in two ways. First, control, which diminishes generativity by trying to enable control boundaries for upcoming innovation, can also develop extensive generativity. Correspondingly, generativity, which contributes towards unexpected and evolving innovations, can necessitate increased control. For example, the simple billing services delivered by Google and Apple for Android and iPhone developers. Rights of validation and safety of payment can be retracted form the developers without necessarily inhibiting further innovations on their individual services (Eaton 2011, pg5). The service-dominant rationality depicts that buyers always get generative. They create value for themselves at the point of use by creating awareness for the operant services from the products they have purchased. They therefore become co-creators. On the contrary, through generativity, the manufacturer of the products sustains unwavering control over the processes of assembling and delivery of the product. The exceptions for these scenario could the re inventions and product hacks (Eaton2011, pg8). Complexity of innovation in digital business service A digital ecosystem exclusively provides the prospect for generativity on a lower platform of product design because of the intrinsic features of digital objects. Consequently, the center of generativity and control tend to alternate both spatially and periodically. This paradox may be inevitable for the company during temporary design phase. Spatially, the enigma moves into the solid arena of consumption partially. Eventually, the possibilities of innovation of service tend to become more complex and diverse. This mainly occurs to a few participants of the ecosystem such as those in the digital mobile service business (Eaton 2011, pg8). The incrusted modular design of digital invention indicates unsolidified artifact confines. It also implies unfastened pairing of components despite the standard protocols which enable heterogeneous participants to make individual contributions. Service innovation allows these stakeholders to employ rich fluid procedures of co-development and disseminated inventions. These procedures rely on exceptional features of digital technology. For instance, immateriality, homogenization and reprogram-ability, of data over assorted processes. They also rely on self-preferentiality of digital technologies which contributes to unfastened pairing between objects that generate information and their corresponding packaging, processing and transmission (Blumberg, Renery & Bunggaard 2006, pg25). As it occurs, architecture discussed above tends to hold great potential for generativity. That means it holds the capability to create inventions beyond the original ideas conceived. This could take the form of innovation in direct service by creating uncountable applications or other innovations. It could also take the form of generative capacity within the innovation platform. For example, this could be manifested through incorporation of modified capabilities in the platform thereby rendering the resources to be flexible for advanced service innovation (Eaton, 2011, pg31). Challenges. The core challenge in innovation of a service within the digital business manifests in the dominant need to establish generativity and control. Innovations form the basis for paradoxes within the organization. More particularly, it involves engaging the digital ecosystem in maintaining modification and stability. Nurturing digital ecosystems demands the enigmatic process of controlling and regulating generativity. This process does not merely present itself as a success or failure. On the contrary, innovation in digital business demands that the participants of this process need to take big risks in business continuously. The actors need also to modify their regulations of control in order to ensure success in a very complex ecosystem (Eaton 2011, pg24). The primary paradox of change and solidity characterize the development of the digital business environment. Change refers to the basic need for a supervised and stable basis to recruit fresh actors, processes and develop new products. This flexibility enables the uncontrolled growth of the digital ecosystem. Paradoxically, both firmness and change tend to be fundamentally contradictory, interdependent and complementary. For instance, the ambidexterity within an organization depicts the paradox faced by organizations. This paradox mainly involves the need to engage in the assessment of fresh opportunities, as well as the exploitation of simultaneous competences. Generativity gestures change which however also relies on methodically unwavering grounds on which amendments can be redefined (Blumberg, Renery & Bunggaard 2006, pg10). Conclusion In as much as innovation and creativity in IT and electronic products served as the backbone of the existence of the company, product differentiation served to be the cumulative mission for the company. Apple does not sell its products; instead, its loyal customers extensively do that for the company through the experiences of the products. As noted above, Apple Inc. focuses on marketing the experiences associated with their products more than selling a product (Fanning 2014, pg45). References Blumberg. E, Renery. A, Bunggaard. T (2006) Strategic report for Apple Computer Inc. Out of the bocx consulting. Pandora Publishers 3-25 Fanning, S. M. (2014 ). Marketing principles and practices - e - text [Electronic handout]. Available from S. M. Fanning, School of Business, Edith Cowan University, Joondalup Drive, Joondalup, 6027, Western Australia. Holt, D.B (1995). How Consumers Consume: A typology of consumption practices. Journal of Consumer Research, 22 (1) 1-16 Eaton, B., Calderwood, S. E., Soresen, C., & Yoo, Y. (2011, April). Dynamic factors of control and generativity in digital ecosystem service innovation. London school of economics. Retrieved October 22, 2014, from http://www.lse.ac.uk/management/documents/isig-wp/ISIG-WP-183.PDF Read More