39499673
| Question | Answer |
| What is Innovation? | Innovation is the practical implementation of ideas that result in the introduction of new goods or services or improvement in offering goods or services |
| Why is Innovation important? | Companies with a great idea need to continue to improve, adapt and change, and respond to new technologies, customer demand and competition. This is why innovation is so important. |
| Market advantages | Anything that places a firm in a better position than its competitors. Firms need to continually seek new ways to enhance its existing advantage and create new ones. |
| Market opportunities | As society’s needs and wants change, so too do the types of goods and services people want to purchase. This give businesses a chance to expand their brand. |
| Product differentiation: Advantages | •Firms can charge a higher price than their competitors, on the grounds that customers are receiving a better item. •Create a demand for its distinct product. •Customers develop brand loyalty |
| ~Innovation~ Examples | Mercedes-Benz: Made the decision to prioritize digital product development in its manufacturing efforts. The incremental innovation resulted in a significantly shorter innovation cycle and a rise in the company’s overall efficiency rate. |
| Global markets | Recognising what is offered in overseas markets shows a level of innovation. What is available overseas that is not available in Australia? Would Australian consumers like it? Looking overseas at other markets can reveal innovation and ideas that have not yet reached Australia. This is evident in a successful franchise. Franchises often start overseas and spread to the Australian market because someone saw a business opportunity. Oporto, Krispy Kreme, The Coffee Club and Subway are good examples. This can also happen in reverse. Innovation in Australia can be taken overseas to build successful businesses |
| Research & Development R&D | Research and development (R&D) is work directed towards the innovation, introduction and improvement of products and processes to assist innovation and business concept development. The government often supports ideas in areas of research and development because R&D can identify and establish new products and innovative technologies. Furthermore, R&D can add value to an existing product, by providing environmentally friendly options for a cleaning product, for example, or changing packaging to use biodegradable materials. |
| Competitive advantage | A competitive advantage is the unique ability of a firm to utilise its resources effectively, managing to improve customer value and position itself ahead of the competition. It means it has an advantage over its competitors. Businesses can create a competitive advantage in many ways, including creating a; •Cost advantage, •Differentiating •Establishing an identifiable brand. |
| Lower cost product | •Many businesses choose to reduce their costs in order to attract customers through lower prices. This can be done in many ways. •Large organizations such as Bunnings are able to charge customers low prices due to a concept known as economies of scale. •Because they can buy stock in very large quantities and therefore pay suppliers the lowest possible price, they are able to pass these savings onto their customers. |
| Cost Leadership | •The ability to provide a product at a lower price than its competitors. This can be achieved by : •Negotiating with suppliers to keep input costs down. •Investing in a new machinery •Restructure workers’ wages and salaries. |
| Example of cost leadership | McDonalds-McDonalds has been extremely successful with this strategy by offering basic fast food meals at low prices. They are able to keep prices low through a division of labor that allows it to hire and train inexperienced employees rather than trained cooks. |
| Differentiation | •All businesses aim to establish themselves as offering a product that is different from their competition. •The most important factor in differentiation is the features of the product itself; however, elements such as packaging, delivery and service can be effective differences between businesses. •Many customers will become extremely loyal to a business on the strength of these factors, and can become brand ambassadors promoting the product to others. |
| Example of Differentiation | Consider the restaurant industry. Despite the fact that all businesses in this industry are fundamentally providing the same basic product (i.e. food), there are innumerable varieties of restaurant existing within the market. |
| Brand Recognition | •Many companies use logos and slogans to give them a competitive advantage over their competition and to make their brand more recognizable. •A logo is a symbol, name or trademark of a company. Logos are used by companies because they represent a concise image of the company. •Advantages of a logo are that it has potential to reach a large audience, is easier to remember, can be a faster and simpler way to communicate, can grab a person’s attention and can bypass language differences. |
| Brand Recognition Competitive advantage | •To gain a competitive advantage, in addition to a logo, a business may also use a slogan. •A slogan is a simple and catchy phrase accompanying a logo or brand that encapsulates a product’s appeal and makes it more desirable than that of its competitor. |
| Marketing | •Marketing can be defined as any activity designed to plan, price, promote and distribute goods and services. •Customers need to be made aware of a product’s existence, regardless of how ‘record breaking’, ‘new and improved’ or ‘revolutionary’ it may be. |
| Target Market | •Before a business can start advertising its brand and/or products, it must identify its target market. •A target market is the group of customers to which the business intends to sell its products. •Target market selection is important, enabling the business to direct its marketing strategies to that group of customers, rather than the whole market. •This allows the business to better satisfy the wants and needs of the targeted group and make marketing more relevant to the customers’ needs. |
| Market Segmentation | Businesses not only have a target market but also divide the total market into market segments. This allows a business to direct its marketing towards meeting the needs of a particular part of the total market. As part of recognizing and knowing its target market, a business will also divide the consumer market according to four key traits or commonalities: Demographic: age, gender, occupation, education, religion, family size, ethnicity Geographic: urban, suburban, rural, climate Psychographic: lifestyle, socioeconomic group, motives, personality, consumer trends Behavioral: regular user, first-time user, brand loyalty, benefits sought. |
Want to create your own Flashcards for free with GoConqr? Learn more.