ABSTRACT
Firms employ different growth strategies, such as acquisitions and continuous process improvement, as well as product innovation to generate exceptional shareholders’ value. Among all, innovation is less risky and highly sustainable, even guaranteeing a profitable margin, firm and product differentiation, and market leadership status. However, inventing a new product in itself does not complete the innovation process until there is a commercial success and wide use of such a product.
The case company, Vitafoam Nigeria Plc, has evolved new product innovations for a huge target market of infants and children in its environment but has not been able to successfully commercialize them and to take the first mover advantage. Hence, the reasons for the failure were investigated while developing a comprehensive strategy through which it may recoup on its investments in the innovation process that generated its Early Days products, capturing the lion’s share of the market.
The key drivers for ensuring the successful diffusion of Vitafoam’s Early Days products, such as communication through mass media and word of mouth, economic condition, and the marketing mix variables, were isolated and applied to the resulting product, price, place, and promotion strategies recommended for the Company.
Keywords: innovation, diffusion of innovation, marketing strategy, promotion
TABLE OF CONTENTS
Thesis Abstract
Tables and figures
1 INTRODUCTION
1.1 Background of study
1.1.1 Value of an innovation
1.1.2 Innovator’s ability to appropriate value from an innovation
1.1.3 Vitafoam Nigeria PLC
1.2 The Problem
1.3 The main research question and objectives
1.4 Research relevance, contribution and limitation
2 LITERATURE REVIEW
2.1 Innovation
2.1 Factors influencing on the birth of innovations
2.1.1 Space for creative thinking
2.1.2 The need for strategic planning
2.1.3 Crisis as opportunity
2.1.4 The connection between the organization and key elements in its external environment
2.2 Criteria for profitable innovation
2.2.1 Successfully predicting a market need
2.2.2 Successfully envisaging a product whose performance and capability will meet the consumer’s need
2.2.3 Develop the product to the appropriate time scale and produce it
2.2.4 Launch the product
2.3 Adoption of innovation
2.3.1 Relative advantage
2.3.2 Compatibility
2.3.3 Complexity
2.3.4 Trialability
2.3.5 Observability
2.4 The diffusion process and the key elements in the process
2.4.1 Actual Innovation
2.4.2 Communication channels
2.4.3 Time
2.4.4 The social system
2.5 The adopter categories
2.5.1 Innovators
2.5.2 Early adopters
2.5.3 Early majority
2.5.4 Late Majority
2.5.5 Laggards
2.1 Marketing environment
2.1.1 Porter’s Five Forces
2.1.2 SWOT Analysis
2.2 Marketing strategy
2.2.1 Segmentation and targeting
2.2.2 Product
2.2.3 Price
2.2.4 Place
2.2.5 Promotion
2.3 Diffusion of innovation and the marketing mix variables
3 METHODOLOGY
3.1 Sample and sample selection
3.2 Data collection procedure
3.3 Data analysis
4 FINDINGS AND DISCUSSIONS
4.1 Findings and discussions from secondary data
4.1.1 Porter’s Five Forces analysis of Vitafoam Early Day’s products
4.1.2 SWOT Analysis of Vitafoam and its Early Days products
4.1.3 The stage of the Early Days products on the adoption curve
4.2 Findings and discussions from primary data
4.2.1 Segmentation and targeting strategy
4.2.2 Product Strategy
4.2.3 Pricing strategy
4.2.4 Distribution strategy
4.2.5 Promotion strategy
5 RECOMMENDATIONS
6 CONCLUSION
BIBLIOGRAPHY
APPENDICES
1 INTRODUCTION
1.1 Background of study
Marketing strategy is defined as an array of principles in business that may be employed by a firm to profitably service its customers (Kotler 2003). In similar vein, Armstrong & Kotler (2003) stated that marketing strategy is evolved to guide a firm towards the effective use of its available resources in servicing the identified needs of its target market(s), profitably, and ahead of its competitor(s).
However, there is a close link between marketing strategy and product innovation. Why, according to Cravens et al. (2000), marketing strategy is made up of four different dimensions, and these are “branding strategy, low-cost strategy, channel strategy, and innovation strategy”, thereby linking marketing strategy with product innovation.
Firms do employ different growth strategies to generate exceptional shareholders’ value. These strategies include acquisitions and continuous process improvement, as well as product innovation. Unlike innovation, mergers, acquisition, and continuous process improvement could be risky, expensive and extremely difficult to sustain, although they may be successful. Therefore, firms must look towards the less risky and the highly sustainable growth option found in innovation to generate their much desired year-on-year organic growth. Innovation may even guarantee profitable margin, firm and product differentiation, and market leadership status.
Innovation comes from the Latin word “innovare”. Innovare simply means to bring something new into existence. However, innovation extends beyond that and it is largely agreed that to invent is just the first step in the innovation process. The process is not complete until there is a commercial success and wide use of the invention. Therefore, innovation can be defined as the “process of turning opportunity into new ideas and of putting these into widely used practice”. (Tidd et al. 2005, 66.)
Drucker (1985, 32) according to McAdam & McConvery (2004) stated that “innovation is the specific tool of entrepreneurs”. This means that the entrepreneurs, in order to be successful, must learn to utilize or exploit change as a foundation for generating new businesses or services. In innovation, the interaction between the duo of “technology push” and “market/ consumer demand pull” must be employed and maximized (Tidd et al. 2005) further emphasizing that innovation process started with an invention is not complete until the invention is successfully commercialized.
The criteria for profitable innovation may be basically broken into two main categories, namely: those that ensure the value of an innovation; and those concerned with the innovator’s ability to appropriate value from an innovation.
1.1.1 Value of an innovation
Successfully predicting a market need is a pre-requisite for successful innovation. Researching the needs of the consumer has always been a reserve of marketing as it focuses on creating value that satisfies the isolated needs of the consumer. However, the marketing mix, as variables and tools in marketing, according to Tidd et al. (2005, 239), also makes room for innovation. For example, a product-based innovation generally results in totally new or improved old products and services. This is significant as product innovation may place the firm in a good stead for premium pricing of its product.
Therefore, for profitable innovation there must be an adequate understanding of the needs of the consumer and this is achievable by getting the consumer involved in the innovation process from the earliest stages of the innovation process. Following this approach is a sure way of ensuring “better adoption and higher quality innovation” (Tidd et al. 2005, 96) from the onset.
Successfully envisaging a product whose performance and capability will meet the need of the consumer is closely related to the point above. The emphasis here is on producing products and rendering services that adequately meet the needs and....
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