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Jumat, 16 November 2012

CONSUMER INNOVATIVENESS


Defining Customer Innovation
            Customer innovation incorporates a number of emerging concepts and practices that help organisations address the challenge of growth in the age of the empowered and active customer (both business and consumer). It demands new approaches to innovation and strategy-making that emphasise rapid capability development, fast learning, ongoing experimentation and greater levels of collaboration in value-creation. Customer innovation impacts upon all the following activities, functions and disciplines:

·         Marketing strategy and management
·         Brand strategy and management
·         Communications strategy
·         Customer experience design and delivery
·         Customer relationship management
·         Customer service design and quality management
·         Market-sensing and customer learning
·         Market and customer segmentation
·         Creativity and knowledge management including market research
·         Partner and customer collaboration
·         Organisational alignment and purpose (values, behaviour and beliefs)
·         Innovation strategy and management
·         Innovation valuation, measurement and prioritisation
·         Strategy-making

            For me customer innovation is not only an important perspective on value-creation but a whole new strategy discipline that organisations must embrace if they are to pursue growth successfully in the future. Put another way, customer innovation impacts the fundamental means by which value is created and growth sustained.

            One of the difficulties I encounter when explaining the concept is that the "Innovation" word is traditionally associated with products and technology. There is a section in The Only Sustainable Edge by Hagel and Seely Brown that eloquently defines Innovation from a much broader organisational and strategic perspective:

We underscore the importance of innovation but we use the term more broadly than do most executives. Executives usually think in terms of product innovation as in generating the next wave of products that will strengthen market position. But product-related change is only one part of the innovation challenge. Innovation must involve capabilities; while it can occur at the product and service level, it can also involve process innovation and even business model innovation, such as uniquely recombining resources, practices and processes to generate new revenue streams. For example, Wal-Mart reinvented the retail business model by deploying a big-box retail format using a sophisticated logistics network so that it could deliver goods to rural areas at lower prices.

Innovation can also vary in scope, ranging from reactive improvements to more fundamental breakthroughs... One of the biggest challenges executives face is to know when and how to leap in capability innovation and when to move rapidly along a more incremental path. Innovation, as we broadly construe it, will reshape the very nature of the firm and relationships across firms, leading to a very different business landscape.


            Although Hagel and Seely Brown's book provides a great analysis of capability-building and new innovation mechanisms at the edge of organisations (through new dynamic forms of firm-firm collaboration) and specialisation, their discussion largely omits the customer-firm colloboration, open innovation perspective. But, from Hagel's most recent post and article in the Mckinsey Quarterly, this seems like it could be the subject of their next book! Here is a quote from the article:

Cocreation is a powerful engine for innovation: instead of limiting it to what companies can devise within their own borders, pull systems throw the process open to many diverse participants, whose input can take product and service offerings in unexpected directions that serve a much broader range of needs. Instant-messaging networks, for instance, were initially marketed to teens as a way to communicate more rapidly, but financial traders, among many other people, now use them to gain an edge in rapidly moving financial markets.


Compulsive Consumption
            For most people a large part of consumer behavior is simply a part of their everyday routine. Only unusual special or major purchases stand out as being particularly significant to the typical consumer. Many consumption activities receive little thought and require little involvement. Even fanatical consumption by enthusiasts, collectors and cognoscenti is typically limited to a small number of consumption objects or areas. To some individuals, however, consumption itself can become particularly central and deeply involving. It can have major, often severe, implications for many aspects of their lives. In these cases, consumption becomes dysfunctional, and is often typified by a compulsive quality.
            This paper attempts to call attention to this dysfunctional form of buyer behavior, discuss some of the major concepts and issues involved, and report some very preliminary research findings on the topic. Unfortunately, there is virtually no published research on the problem of compulsive consumption. Therefore, to accomplish the goals of this paper we have to rely in large measure on anecdotal accounts, as well as observation and participation in self-help group discussions with credit abusers, and the results of a small pilot survey.
Example Compulsive Consumption Consumer
            The subjects for the pilot study were 23 people attending meetings of a San Francisco based self-help support group. The respondents had been members of the group for differing lengths of time ranging from three weeks to over a year. The majority were women (19 women and 4 men), and most were in their thirties and forties (78.2%). Approximately half of the respondents were married (47.8%), 30.4% were single and the remaining 21.7% were divorced or separated. Annual household income varied greatly among the respondents ranging from one person who earned under $10,000 a year to three respondents who reported household incomes of over $100,000 a year. The majority of the respondents had yearly household incomes of between $20.000 and $50,000.


Consumer ethnocentrism
            Consumer ethnocentrism is a psychological concept that refers to individuals who believe that their country's products are superior to those of other countries. This concept also describes consumers in one country thinking that purchasing products in other countries is immoral or inappropriate because doing so is unpatriotic. It is a common belief amongst groups showing signs of consumer ethnocentrism that purchasing foreign-made products means not supporting the economy and the job market of the home country.
            Businesses often study consumer ethnocentrism to develop strategic marketing plans for entering new foreign markets. By understanding the attitudes and beliefs of the foreign consumers, a business can better position itself to come across in a more positive light. For example, a business entering a market showing consumer ethnocentrism may want to include in its advertisements that purchasing from them means supporting their country because the business has local offices employing their neighbors.
            Characteristics of countries with consumer ethnocentrism include skepticism of foreign goods, strong patriotism and high availability of domestic brands. If consumers believe that foreign goods are generally inferior to their own home goods, then they will be less likely to support foreign brands. These consumers also are aware of economic conditions and want to support local jobs and businesses by not buying items that will take their money outside of the country. If there are no local brands to satisfy a need, then consumers will purchase foreign goods until their needs are fulfilled locally.

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