Defining Marketing Innovation

Before we start our marketing innovation journey, we need to look at some of the ways marketing innovation is defined. Understanding the proper definition of marketing innovation is key if you want to maintain or achieve competitive advantage and/or maximize shareholder value.  The wrong definition could lead you to miss legitimate opportunities to “change the game” or lead you to waste money on new technologies that don’t prove themselves, or do neither and let the competitors pass you.

The first is what we will call the “Opportunities View.” What or where is the opportunity to create breakthrough, innovative products and services? Looking at the success of Apple when it comes to developing new products and services, e.g. iPhone, iTunes, iPad, companies want to do the same thing in their industry. This view sees marketing responsible for creating new opportunities with new products and services in existing markets or perhaps even identifying new markets. From this perspective, marketing works with R&D throughout the innovation process, through marketing research. Marketing helps understand unmet needs, market segments, trends, technology adoptions, etc. with the focus on developing innovative products and services.

Innovating the Marketing Mix

The second view understands marketing innovation as it applies to the traditional marketing mix, product, price, packaging, promotion and place or distribution. Marketing innovation emerged as marketers figured out how to use the Internet to have a significant impact on all of these variables. For example, the Internet has enabled significantchanges to a companies’ ability to distribute products as physical points of distribution were no longer needed. The Internet made changes to channel strategy possible as companies both disintermediated and reintermediated the value chain.  Pricing could be dynamic with auctions helping both consumers and companies sell to the highest bidder or buy at the lowest cost.  The Internet brought a new level of transparency, which also had a major impact on pricing.  Physical products now contain an increasing amount of digital content, online, or as part of the product e.g. cars with GPS and digital entertainment systems as part of their value proposition.  In terms of promotion, new digital marketing technologies emerged such as SEO, PPC, affiliate marketing, new media, etc. Marketers have been very successful in leveraging the Internet to drive marketing innovation.

A Culture of Innovation

Some see innovation as more of a culture or attitude where everyone is encouraged to be creative or innovative as no one knows from where the next breakthrough idea will come. Innovation goals and objectives may be a part of the company’s innovation culture. For example, setting the goal that a certain percentage of revenues will come from new products.Or providing employees time to work on projects outside of their area. Another example would be providing recognition and reward systems to encourage innovation and reinforce these objectives. In this perspective marketing innovation occurs as a natural part of the culture and it is seen as better ways to do what we are doing.

An Innovative Campaign

Marketing innovation can also be seen as part of the marketing or advertising campaign. Usually the creativity or innovation for such campaigns are recognized through awards, feedback in the press and sometimes with sales results. Marketing, advertising and PR agencies are hired for their ability to be creative or innovative when it comes to developing and executing an integrated marketing campaign. Some of the best ads and campaigns go viral, which is the dream of most marketers.

Our View

These definitions make sense, if we have an innovative culture, we will have innovative marketing, we have innovative marketing because we hire an agency that helps us innovate aspects of the marketing has the resources to focus full-time onthe latest advances in marketing and the ability to incorporate those advances into our campaigns, or to improve our marketing innovation, we are reengineering our marketing and product development processes so they are more integrated thus improving our ability to create breakthrough products.

While logical and internally consistent, these are woefully inadequate definitions of marketing innovation given the current context and will limit a company’s ability to create strategic, competitive advantage using marketing. Marketing is a discipline consisting of both art and science and technology is having an unprecedented impact on the field. As a result, companies need a strategy for how they will evolve their marketing capabilities over time, how they will interact with and perhaps drive technological changes. For our purposes we define marketing innovation strategy as

The plan that helps companies incorporate advances in marketing science, technology and engineering into their marketing strategy, research, communications, operations and analytics, to improve both efficiency and effectiveness,as a way to obtain competitive advantage and/or create shareholder value.

While identifying potential opportunities in the market is critical for growth, making sure your marketing strategy incorporates the changes occurring in the field marketing is also critical for success and why it is important to have the right definition of marketing innovation.