1. Introductory concepts of product and innovation management
Topic 1

2. Marketing mix
Product
Price
Promotion
Place (Distribution)

3. Product management
The process of designing, building, operating, maintaining, and trimming a product

4. Product management and marketing
“Too many products are developed to satisfy the desires, urges, and hunches of people within the company, rather than to meet the specific needs of the market external to the company. Products grow out of the desire to tinker, or because an engineer sees a purely technical challenge.” (Ehrenfried 1956)

5. Conventional concept of product management
Scrutinize product portfolio from time to time
Eliminate unprofitable products
Every product must stand on its own bottom line
Fighting with competitors on a product-by-product basis

6. New concept of product management
Innovating and innovating, so as to increase the chance for a big win
Increase the number of other products that can benefit from a hit’s popularity
Examples: Apple iPod, India’s Star TV network, Dan Brown

7. Innovation
“An iterative process initiated by the perception of a new market and/or new service opportunity for a technology-based invention which leads to development, production, and marketing striving for the commercial success of the invention” (OECD 1991)

8. Importance of innovation
Most important ingredient for the long-term success for a firm (McKinsey & Company)
Most important ingredient for the competitiveness of an economy (Lisbon Declaration among EU member states)
‘the competition posed by new products was far more important than marginal changes in … existing products’ (Schumpeter 1934, 1939, 1942)
‘not to innovate is to die’ (Freeman 1982)

9. Market leaders in 2007 … and now?
Products
Companies
Innovation areas
Mobile phones
Nokia
Design and new features
Internet-related industries
eBay; Google
New services
Pharmaceuticals
Pfizer; GlaxoSmithKline
Impotence; ulcer treatment drug
Motor cars
Toyota; BMW
Car design and associated product developments
Computers and software development
Intel; IBM; Microsoft; SAP
Computer chip technology; computer hardware improvements; software development

10. Two major types of innovation
Radical innovation
Incremental innovation

11. Different application areas of innovation
Product innovation
Process innovation
Organisational innovation
Management innovation
Production innovation
Commercial innovation
Marketing innovation
Service innovation

12. Technological versus marketing discontinuities
Technological discontinuities – a paradigm shift in the state of science or technology embedded in a product, resources and/or production process for a firm
Marketing discontinuities – new marketplace to evolve and/or new marketing skills to be required for a firm

13. Involvement of different departments in product innovation process

14. Conflicting set of management demands for product innovation purposes
Quality
Value
Time
Cost

15. Hi-tech product Industry-based approach
Proportion of R&D employment in the industry (adopted by US Bureau of Labour Statistics)
Ratio of R&D expenditures to value added of the industry (adopted by OECD)

16. Hi-tech industries Crude petroleum and natural gas operations
Cigarettes
Industrial inorganic chemicals
Plastics materials and synthetics
Drugs
Soap, cleaners, and toilet goods
Paints and allied products
Industrial organic chemicals
Agricultural chemicals
Miscellaneous chemical products
Petroleum refining
Miscellaneous petroleum and coals products
Nonferrous rolling and drawing
Special industry machinery
Computer and office equipment
Electrical industrial apparatus
Communications equipment
Electronic components and accessories
Motor vehicles and equipment
Aircraft and parts
Guided missiles, space vehicles, parts
Search and navigation equipment
Measuring and controlling devices
Medical instruments and supplies
Photographic equipment and supplies
Computer and data-processing services
Engineering and architectural services
Research and testing services
Management and public relations
Services, not elsewhere classified
Miscellaneous textile goods
Pulp mills
Miscellaneous converted paper products
Ordnance and accessories, n.e.c.
Engines and turbines
General industrial machinery
Industrial machines, n.e.c.
Household audio and video equipment
Miscellaneous electrical equipment and supplies
Miscellaneous transportation equipment

17. Problems of industry-based approach to define hi-tech product
Think about the cigarettes industry
Think about the textile industry
Think about the computer industry

18. Using ‘common underlying characteristics’ approach’ to define hi-tech product
Market uncertainty
Technological uncertainty
Competitive volatility
A product is defined as of hi-tech nature if it has all these three ‘common underlying characteristics’’.

19. Is this module an art or a science?
Yes, art
Yes, science

20. Some career prospects Generally
Strengthen management/marketing-related career prospect by having specialised knowledge of the most fundamental part of the marketing mix as well as innovation.
Specifically
Product manager
New Product manager
Marketing manager
Marketing researcher
General manager
Product management consultant
Functional representative on a new product management team

21. Contributions of innovation
For companies
For industries
For countries
For economic development
For the advancement of human societies

22. The top 10 most innovative companies in the world
Rank 1 2 3 4 5 6 7 8 9 10

23. The top 10 most valuable companies in the world
Rank 1 2 3 4 5 6 7 8 9 10

24. Massive western economic development fuelled by a series of technological innovations
What
Who
When
Steam engine
James Watt
Iron boat
Isambard Kingdom Brunel
Locomotive
George Stephenson
1829
Electromagnetic induction dynamo
Michael Faraday
Electric light bulb
Thomas Edison and Joseph Swan