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Types of Innovation
Process Innovation
Innovation to enhance the capability of production processes or supply chain operations (e.g., increase reliability or reduce cost).
Product Innovation
Introduction of new functions, enhanced performance, or add features to existing products Innovation of this type is generally incremental. Underlying technology can be new to the firm, but is unlikely to be new to the world.
Marketing Innovation
Includes use of new channels of distribution and new advertising approaches for selling current or new products. Firms can expand revenues by selling current products in new markets or by expanding existing product lines into new segments of existing markets
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Influences on Innovation
Firm innovation behavior
varies by industry sector. Some industry sectors are capital intensive, making them cautious about innovations that require large capital investments
Type of innovation that firms pursue also depends on whether their industry is:
emerging (radical innovation is more likely) or is mature (incremental innovation is more likely)
Influences on Innovation
The type of customers that firms serve also influences the type of innovation they undertake. Firms that sell consumer products generally serve a larger number of customers directly or through distributors than firms that sell products or services directly to other businesses They also must devote more time and attention to market research and advertising and generally have more difficulty getting timely and accurate feedback from their customers
Different types of innovation are important at different points in a products life cycle
Perishability:
Services are usually created as they are used, while products can be made ahead of time and held in inventory or distribution supply chain
Products Vs Services
Imitatability and opportunities for bundling
Services can be combined into customized packages compared with product features Differentiates services from products making them more difficult to imitate by competitors increases competitive advantage.
supplier
Often there is a simultaneous production and consumption of a service. Customers may participate in production because the service preparation and the service delivery are identical
Products Vs Services
Products and services can be viewed as layers because many products have services embedded in them and vice versa A single layer can be a physical product that is exchanged for payment. The relationship between buyer and seller starts and ends with the sale Multiple layers would be services that consist of dialogues between service providers and clients, e.g., consultation or travel information
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Focus Energies
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Market test/launch
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Importance of Customers
Customer needs are the most important driver of NSD An important reason for failure among firms focusing on developing new services is an inadequate assessment of customer needs and problems
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Organising Needs
Understanding customer needs is only part of the problem Once the raw ideas are generated, it is important to categorize and assemble them based on their similarities. These needs must be organised and prioritized
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Prioritising Needs
Firm decides how important these needs are to the firms (current or potential) customers. This understanding will help the firm to select the needs that it will target If the customer base is small, interviews and focus groups will be best Otherwise, a quantitative approach (e.g., survey) is more appropriate.
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Sometimes a product is the answer, sometimes a service, and sometimes a product/service combination
Firms need an effective process to generate ideas and transform them into new services which replace or create activities up and down the value chain
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An Open Culture
The quality of idea generation and screening can be enhanced by inclusivity Innovation requires support by management, employee involvement, and open communication among different functional areas (e.g., production, process design, IT, service delivery and marketing)
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SME may be weak in technical or marketing capability because of the number and quality of their professional personnel
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SME often have an inadequate knowledge of competitors and their products. Have little time to scan their environment regularly to monitor their competitors
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The downside of less specialization is difficulty in keeping up with the latest knowledge in a given specialty
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Conclusions
NPD Vs NSD NPD and NSD essential to avoid strategic drift NSD is a neglected area of tourism research Importance of Customer Needs in NSD Importance of Firm Culture in NSD Special problems for Tourism SME
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