Innovations in Business Marketing - Research Paper Example

Business Marketing Innovation in business Contents Introduction 2 The Concept of Service Innovation 3 Importance of Service Innovation in Supermarkets 4 Main Areas of Innovation that the Supermarket should consider 5 Target Market 6 Theories and Frameworks for Service Innovation 6 Incremental Innovation 6 Modular Innovation 7 Radical Innovation 7 Service Innovation – Den Hertogs model 7 Organizational Capabilities that are likely to Deliver Superior Innovation 8 Distribution Channel 8 Customer Relationship 9 Core Competencies 9 The Innovation Processes the Supermarket should Implement 10 Strategize 10 Evaluate 11 Execute 12 Practical example of service innovation in Supermarkets-TESCO 12 Conclusion 13 References 14 Introduction Innovation does play a very important role in business growth and development. From a critical point of view, innovation creates several positive changes for a business, which include efficiency, productivity, effectiveness, and quality. This process can also be interlinked to business goals and objectives and for assessing market competitiveness. The key component for any business is the fulfilment of business goals (Zott &Amit, 2004).However, a change in the choice of consumer trends does propel businesses to implement certain strategies, which grant their customers to purchase their desired products, and service with relative ease and that is where the need for implementation of innovation is evident. The level of service plays a very crucial aspect in this regard and implementation of innovative service ideas can be a real boost in this regard. The Concept of Service Innovation Service Innovation can be defined as a service or product, which is based on a technology or systematic method of business (Tidd & Hull, 2003).Concept of service innovation comprises of two very important concepts, which are as follows: Innovation in Services or Service Products: They can be defined as a creative or a significantly improved product or service. It is also compared at times with technological innovation because service products may comprise of various technological elements. This concept also related to service design and with service development. Innovation in Service Processes: This focuses on the enhanced and improved manner of designing products or services. Service Innovation in this regard could be technological or technical because implementation of this process depends on professional expertise and technical skills. Importance of Service Innovation in Supermarkets The business procedures of a supermarket are very different when compared to a specific retail outlet. A supermarkets needs to have a variety of products under a single roof on a consistent basis. Implementation of an innovative service model within a supermarket is highly essential when establishing market economies specifically where there is involvement of consumer choice, transaction cost and transparency involved among consumers as well as producers. Due to the high intensity of business competition, there needs to be an implementation of an innovative and creative model of service quality. Successful service model require creativity, which implements the need for bringing important inventions and discoveries to consumer market, and bring the opportunity for satisfying the desired customer needs (Scott, 2002). Simultaneously innovative business concepts can portray a source of innovation and creativity. From the perspectives of a supermarket, a huge number of alternates are possible. Some may be directly applicable to consumer needs and business environments while others may not have any link. Some of the important questions, which a business has to focus on when analysing the importance of innovation, are as follows: How will product/service be useful to the consumer? Are the necessary products already available for the consumer along with the appropriate convenience and price which is essential for business development What customers want and how in what manner will the firm be able to satisfy those needs? What will the customer ‘pay’ for getting the desired product/service? How big is the supermarket? Will the product be offered to a mass market? What would the implementation cost the business in provide for the product/service? How will the volume and other factors change in this context Main Areas of Innovation that the Supermarket should consider The importance of service in business can be evaluated through a variety of reasons and some of them are as follows: Service Quality By focusing on service quality, a supermarket can fulfil the demands of the customers and can integrate as well as protect core competencies of the business. Creativity and Innovation in services will result in an increase in customer satisfaction as well as loyalty. Service is not limited to transferring traditional values and customs to business but it is about improving the quality of service or product and satisfying customer needs. Integrated with these factors is the quality and performance of the staff, which includes decisions of the workforce and business procedures for those staff. Efficiency and Effectiveness Efficient and effective services can certainly differentiate a retail business from its rivals and can help to establish strong relationships with customers. Though it may be relatively easy for supermarkets to provide low cost and high quality service but very difficult to establish an everlasting relationship with their customers. Capacity The size and capacity of the service facility is highly important within the context of a supermarket and delivery process is integrated with it. If the capacity of the store is inadequate, customers will not opt for the particular product or service and this argues for an excess in capacity. If there is excess capacity, the operational costs will be too high and it would be difficult for setting an optimum price for the customers to pay. A supermarket has to build a capacity, which needs to be planned, and it must not be limited to the service delivery, but for other services which are affiliated with a variation in capacity. Target Market One of the main proponents to be considered before initializing service innovation is selecting the target market. When a company selects a target market, it has to simultaneously consider the market segmentation (Grant and Schlesinger, 1995). By implementing this procedure, a company can effectively allocate its resources to its target market effectively and attracted by its customers. Profitability High quality services result in a high level of profits and thus result in improvement in profitability as well as cash flow. Due to intense competition and business rivalry, it is very difficult for supermarkets to maintain a high level of profitability and it is possible on economies of scale. Several product categories become saturated due to competition is market. This also influences the demand of the particular product or service and it results in the demand of the product and service and lowers profitability. Theories and Frameworks for Service Innovation Innovation is very important for creating revolution in business and for the sustainability for companies (Chakravorti, 2004). Some very important frameworks and business concepts have been established for business innovation and creativity. Some of them are: Incremental Innovation It redefines and elaborates an established and interlinked design for business creativity. Improvement in this mode may occur in various components and the underlying concepts that are related to them will remain the same. It reinvigorates the competitive advantage of an established company and builds on its core competency. This mode of innovation has been easy to implement and has been quite common. Modular Innovation Although this mode of innovation does alter core service components but will not change the overall business design. A huge amendment is needed when implementing such innovative concept because it redefines the original business design and the knowledge for this business has to be acquired from the replaced component that is an intangible business asset. Radical Innovation As the name suggests, it is able to establish a relatively new and dominant design that is a set of core concepts that are embedded with components that are integrated to form a new business model. Although it may produce highly beneficial results for companies if implemented but it also creates a plethora of challenges for companies, which are already established, and it may even hamper their existing capabilities. Service Innovation – Den Hertogs model The service innovation model, which was introduced by Den Hertog (2000), identifies few very important concepts or dimensions of service innovation that give a different route to the innovation theory from various perspectives. They are elaborated as follows: The Service Concept: It directly refers to a specific service concept, which has been launched in a specific market, is a new service in wide effect, and adds to a new value in proposition. Various concepts of service innovations do involve fairly important intangible traits of service and others are comprised of other ways of organizing and evaluating solutions for business problems. From the perspective of the retail grocery sector, much cannot be focused on the format due to the unconventional organization of shops in various ways. Client Interface: It refers to creativity and innovation from the perspective of the user interface and between the provider of the service provider and the consumer. In this method, clients are directly involved in product or service offer and comprise of the changes in the way in which the business can play its part and can play a crucial part in various creative and innovative idea for other services. Service Delivery: It also relates to the link between service provider as well as the client because delivery of the service or the product does involve an interaction at the interface. However, there are some very important business arrangements, which are related to the manner in which workers of a particular business are able to perform their job. Though a huge focus is emphasized upon electronic delivery of products or services, but it also includes other complimentary aspects which may include transport and also packaging innovations. Technological Options: Such options may resemble some familiar and very common process innovation options within the service sector. It is a fact that access to the latest technology is very important to consumers because it allows them to better efficiency and effectiveness and contributes to the development and growth of the business. Organizational Capabilities that are likely to Deliver Superior Innovation According to Dyer and Singh (1998), service innovation is comprised of some very important concepts and they are directly interlinked to each other. Some of them are as follows: Distribution Channel According to Pitt, (1999), identifying a relevant distribution channel helps a company to reach the maximum customers within the minimum timeframe, for example website or social media. The most common distribution network in the retail and the superstore industry are information and communication technology and the internet, which has a great potential for complementing a business and improving its competency to a higher level. Business decisions which are related to ownership and distribution of services of products, specifically in the form of supply chain, have to be swiftly considered in the context of service innovation. Customer Relationship A business can achieve high profits by attracting new customers, enhancement of profitability and improving the relationship with existing customer relationships. It is very important to hold a good personal relationship with the customers with the help of tools such as personalization, trust and brand. This mechanism focuses on getting customers to feel appreciated for instance having a polite and helpful conversation with a representative with a company. This concept focuses on how the customers feel about the product or service that is provided to them. The core concept of customer relationship is getting to know about the customers in order to know what they need. Core Competencies A business must possess sufficient capabilities to create a value for itself. Such value creation depends on the internal resources of the company. There has been a trend that such resources are often outsourced to partners that may leave the company to concentrate on its core competencies. Such competencies may be tangible assets that include plant and machinery, cash etc and may include intangible assets, which include royalty, patents and copyrights and can also comprise of intangible assets such as knowledge and skills. Technology For a supermarket, the smart adoption of technology will help it to improve its business operations and will positively affect its ability to deliver new services and also to compete in new markets. It also focuses on how the services can be provide to the consumer. Retailers and supermarkets are often in a dilemma on how effectively technology can be implemented in the business operations. Can it be through the self-service mode? Could it be through the help of the internet? Owners and managers of a supermarket have to recognize the fact that the choice of technology can have an effect on the customer base and market segmentation and due to this reason needs to provide various types of service to customers who want to use a specific mode of technology. Facilities and Discounts According to Stephen and Stuart (2001), facilitating the customer is one of the most important concepts which businesses are always encouraged to follow. It also focuses on delivering food directly to the consumers. Although several supermarket chains offer grocery deliveries on a consistent basis but there are very few supermarket stores who deliver the product on the very same day or very same hour and don’t charge any fee for the delivery. By implementing such innovative concepts, a supermarket can capture huge market capitalization. The Innovation Processes the Supermarket should Implement Achieving service innovation needs implementation of an authentic and highly rigorous plan that cannot only help a business to prosper but also to make it internally strong so that it can sustain adverse business scenarios. The innovation process is as follows: Strategize Having a vision can be defined as a very important step in innovation management. As a supermarkets focus on selling tangible products, implementation of practical goals is essential for achieving goals of the business strategy. It is a fact that businesses that are able to implement an effective strategy are able to plan and achieve innovation goals within the business strategy (Wernerfelt, 2006). The implementation of service innovation is based on an idea that successful service innovative plans starts from the lowest level, taking growth targets and business goals from the business planning process to drive acquisition, IT, and product strategies. Evaluate According to Scott (2002), when a company is able to gather sufficient innovative ideas, it than has to decide which ideas are the contenders for subsequent investment and which are not, as only selected ideas should be evaluated to apply them later on. Now, the question arises that which ideas exactly should be the contenders for evaluation? One of the methods or procedures which can be followed here, are the methods or procedures which can assist a supermarket to decide exactly as to which and what number of the contender ideas should be selected for evaluation. Following are such social methods or procedures, which can be successfully implemented in the evaluation process: Offer an exploration method to individuals so that they can recognize such ideas which relate and may resolve their concern or issue Trace down those ideas which are getting the most recognition amongst the people Constitute a rating system which would aid people to rate the ideas or invite the people to provide the companies with their feedbacks and signify them that their feedbacks are valued by the companies Special consideration should be given to those people’s feedbacks and responses who have comparatively greater knowledge or who may have a comparatively better social standing. Execute After evaluating the specific ideas, a supermarket must execute such ideas, to know that whether such ideas can be practically applied in real circumstances or not. Often it happens that not only small retailers but also even massive supermarkets struggle to get the planned task done in time and within the budgeted cost, while sustaining the required level of quality in their ideas. This means that supermarkets have to make sure that execution of the ideas must be done successfully to make sure that their assets are utilized effectively, so that it can bring in furthermore innovations in the market (Zeithaml, 2000). Following are the ways through which supermarkets can successfully execute innovative service ideas: To pursue the most regular product or service enhancement, a course of action needs to be made which can replicate successful outcomes. Cultivate distinctive planned task models for various kinds of planned tasks to amend the intensity of control accordingly and appropriately as based on planned task risk. Correlate the planned tasks with those of the uniform planned tasks deliverables Supply an uncomplicated relationship between the planned tasks and the related facts and deliverables Practical example of service innovation in Supermarkets-TESCO During August 2010, The British supermarket giant “Tesco” introduced the first ever drive-through store. The core aim of the service was aimed to facilitate the customers who did not wanted to carry out the shopping activity in a cumbersome process and who did not wanted the products to be delivered to them through the internet. For a meager fee of £2, consumers were able to drive through a specific shopping area in any of the Tesco store at a stipulated time period and could pick up their desired product in the comfort of their car (Wood, 2011). Eventually, this turned out to be quite fruitful for the company, as not only it produced very much prominent and flourishingly resourceful thoughts and advertising tactics but these procedures gave confidence to a custom of independence and responsibility within the company. This depicted the importance of service quality and customer service within the company and this was only possible due to the implementation of successful innovative ideas and consistent planning. Conclusion It is evident from the study that service innovation does play a very important role in the development of any business and within the context of a supermarket, it may be more important. The importance of service innovation is evident from the fact it helps to evaluate the capacity and need of the customer service and also elaborates the way through which business enterprises are able to respond to and value their customers. Successful service innovation model propels consumers to pay for services and products and these payments are then converted into profit and revenue generation for the business with the help of proper design of business elements. A supermarket’s ability in designing and introducing a new and innovative level of service will prove to be a competitive advantage, specifically in today’s competitive business market and it could prove to be a catalyst for growth and high profitability. Though the service delivery process is highly important from the customer’s point of view but it is important to note that innovation is not limited to a specific group or department. It will apply to the entire business system and service innovation will play major role in this regard. References Amabile, T. 1996. “Assessing the work environment for creativity” Academy of Management Journal, Vol.39. 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Zott, C., and Amit, R. 2004. “Business strategy and business model: Extending the strategy-structure-performance paradigm.” Strategic Management Journal, Vol. 9, No. 2. Read More