The challenge of organizations on a daily basis has a goal and that is "innovation and creativity in the products or services it provides". Bibliography about this is often written, but the competitive advantages that the company has when implementing this idea are not coldly analyzed. in the market.
The management of innovations varies according to the degree of development and the market that the organizations are in when they plan to implement a new product or service.
There are 3 levels of innovation management that are directly related to a new product on the market.
The first to analyze is called:
New company with new product: This definition belongs to new ventures by a certain person or organization and had the ability to create a new idea regarding a launch of a new product or service.
An example is the famous aphrodisiac food restaurant that exists in Buenos Aires, called "Te Mataré Ramírez" which innovated in terms of absolute creativity in the gastronomic field, its innovations respond to aphrodisiac dishes with sensual and exotic names with great variety of food and a convincing and exotic soft environment that makes a great match with the dishes it has.
There is a great variety of restaurants but very few differ in terms of the quality of their dishes or the original ideas they present through their dishes.
This case study does not have direct competencies in the innovations of its dishes, since there are numerous restaurants that cook aphrodisiac dishes but not with the same original names that "I will kill you Ramírez". This shows that when innovation is high, for a short, medium or long term, the company obtained the advantage that there were no competitors and at the same time imposed entry barriers for a new competitor who wants to innovate to continue competing or to copy its product.
Direct competitiveness does not exist at the time of product innovations, otherwise they would not be innovations, if of course each organization with its new product in the market will have substitutes or secondary competitors but not with the same product since this innovation is allowing you to maintain a temporary barrier until your competitor or another player copies your product and makes certain modifications or makes a new innovation that allows you to compete with your product in terms of its attributes.
Company in the market with new product: This new classification differs from the previous one in that said organization has direct and substitute competitors, but remember that each strategic unit has its own competitors, customers, suppliers, so let's give an example to that can be better understood.
The Nestlé company has clear competitors in terms of the production of its chocolates, and different products from its various segments, but what if we suppose that said company launches an innovative product on the market as it did during the winter of 2006, creating a chocolate that no company towards.
Said in this way in order to better understand the management of innovation in this product, Nestlé will continue to have its same competitors, but with the exception that in this recent innovation it will have no competitor and will have a not only competitive advantage but also enjoy to position themselves in their consumers in a unique and unrepeatable way over other players.
The innovations allow companies to create a new positioning of their products and own the minds of consumers since the positioning achieved in each client who buys the product will be kept because it is original and new.
Barriers to entry into the innovations market:
The entry barriers of each competitor may be low or high depending on the type of industry in question, the following variables may determine the complexity of each competitor's income and put together a matrix that allows us to study the income of said competitor.
Suppose we rate the variables of innovation management with a value that can range from 1 to 5 points.
Technology
Product
Advertising
Location
Creativity
Investment
Demand
The named variables will have an impact that will allow or deny access to these markets, suppose then that a clothing company decides to promote a new style of garment that does not exist in the current market.
Said company Z possesses enough technology to be able to manufacture said clothing models with an economy of scale that allows it to reduce costs, for which reason said score is 5 points.
The product is excellent, the most innovative in the last 5 years in terms of sportswear and an excellent quality that allows it a magnificent positioning.
Advertising is not a variable to be taken into account by this company and I decided to invest in certain magazines and carry out few promotions to make their product known, which is why company Z rates itself a 3.
The location refers to what type and how many points of view it has since it will be a predominant factor in terms of the proximity of the segments it has decided to face.
The company Z affirms that it has excellent points of sale centered in important shopping centers but that it cannot supply all the points it wants, so it qualifies with a 4.
Creativity, at this point the company Z is completely innovative in the invention of its new product, so it achieves the highest score with a 5.
The investment is not very high compared to the usual investments in businesses, but it is an important investment that not any player can usually do, so the rating is considered to be 3 points.
Demand is one of the strengths of this new clothing fashion, it was a boom in sales of its new product, for its style, for its innovation and what it represents in the people who buy said product, its attributes are quite differentiating and very profitable for the company that manufactures it.
Let's see then how the following matrix of product, market and customer innovation is carried out to determine the positioning of the innovation:
This matrix allows analyzing the importance of each variable to determine whether or not to enter the market and be a new competitor and fight for a share in the market where it operates.
By determining the score of each variable and placing it in the corresponding quadrant, the positioning of the desired innovation will be determined.
The competitive advantage will then be possessed by the company that manages to innovate something in the market since achieving this, it will not have competitors directly in a given time and thus achieve a position in its clients.
Last words:
Innovations have always been and will be the continuous effort of organizations to achieve it, of course, it is only a few to achieve it and in this way seize a new market segment and thus obtain an outstanding competitive advantage.
The most important thing to highlight in this article is not the innovation itself, but the advantage that innovation achieves by not having competitors in a certain or undetermined time and at the same time the imposition of barriers to the entry of this new market.
Innovations have often been the product of important advances in science and in the ancient world as contemporary, so it is not least to analyze its vital importance of the impact it has in the business world where the world and the environment is increasingly complex, chaotic, competitive and extremely aggressive in the fight for innovations to seize new market shares and highlight a new position.
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