Marketing Innovation: Firm's Competitive Advantage Strategy

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Marketing Innovation:
Firm’s Competitive Advantage Strategy
A brief literature Review
Innovation is widely regarded as a vital source of competitive advantage in an increasingly changing environment. In today’s vibrant and ever changing competitive environment which is characterized by high degree of technological progress innovation capability is the most important determinant of firm performance. Although, technological innovations are important for developing new products and to maintain survival strength, yet they are not sufficient for turning any firm into dominant economic player in the market. According to a paper prepared from the Danish Centre for Studies in Research and Research Policy (2005), innovation has become more market driven and less R&D driven following the market orientation of the firms nowadays. Innovation policy has taken on a broader scope, increasing emphasis on “non-technical” forms of innovation, market driven innovation, knowledge transfer and firm’s capacity to capture and utilize knowledge. The broad premise of this literature suggests that the ability to innovate is a “key mechanism for organizational growth and renewal”. In times of environmental turbulences such as during an economic crisis, the need for innovation has been recognized as imperative to survive, be it a technological or marketing. The ability to innovate in marketing has recently gained in prominence as one such dynamic competence that distinguishes firms which outperform their competitors.Most studies examining market orientation have investigated a direct relationship with performance. However, a few others have inferred innovation as a moderating variable between market orientation and performance. This paper extends this debate by suggesting that the link between marketing innovation and firm’s performance is mediated by the ability of the firm to develop and sustain a competitive advantage. Competitive advantage, for the purpose of this study, is defined as “a value creating strategy not simultaneously being implemented by any current or potential competitors” This literature review studies the basic aspects of marketing innovation within the framework of marketing orientation. 1. Market Orientation and Marketing Innovation: Motivation Levitt (1960) in his pioneering paper “Growth and Profits through Planned Marketing Innovation” studied the exploration and development of new marketing procedures by companies. He criticized the absence of any dedicated marketing inventions and development departments in the big companies which leads to the missed and exhausted opportunities. Further, most of the marketing innovations were unintentional, spontaneous or fortuitous. The problem stemmed from the fact that product innovation had completely overshadowed the marketing innovation leading to the situation where “distribution” becomes the biggest problem for such companies. The main obstacles in giving increased importance to dedicated marketing innovation is the threat of its eventual overshadowing product innovation, lack of any backgrounds for carefully planned experimental and speculative activity in marketing innovation, difficulty in controlling the way product is sold in supermarkets or departmental stores. Additionally, the visible effect of marketing innovation has to be proved under highly unstable conditions of open market experiment, which is quite expensive, especially if the trial is honest and full-scale, even though limited to a few test areas. To overcome this sorry state of marketing innovation, he proposed various solutions such as, recognition by top-management that marketing innovation is an uncompromising aspect of sales and profits, setting up a marketing development task force, giving it a reasonably permissive environment and most importantly the dedicated personals who are energetic, bold, rational and nonconformist who have no corporate or strong personal ties to continue...
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