CONSUMER INNOVATIVENESS

Defining Customer Innovation

I often get asked what I mean when I use the phrase "Customer Innovation". Here's my explanation:

Customer innovation incorporates a number of emerging concepts and practices that help organisations address the challenge of growth in the age of the empowered and active customer (both business and consumer). It demands new approaches to innovation and strategy-making that emphasise rapid capability development, fast learning, ongoing experimentation and greater levels of collaboration in value-creation. Customer innovation impacts upon all the following activities, functions and disciplines: 

Marketing strategy and management
Brand strategy and management
Communications strategy
Customer experience design and delivery
Customer relationship management
Customer service design and quality management
Market-sensing and customer learning
Market and customer segmentation
Creativity and knowledge management including market research
Partner and customer collaboration
Organisational alignment and purpose (values, behaviour and beliefs)
Innovation strategy and management
Innovation valuation, measurement and prioritisation
Strategy-making

For me customer innovation is not only an important perspective on value-creation but a whole new strategy discipline that organisations must embrace if they are to pursue growth successfully in the future. Put another way, customer innovation impacts the fundamental means by which value is created and growth sustained.

One of the difficulties I encounter when explaining the concept is that the "Innovation" word is traditionally associated with products and technology. There is a section in The Only Sustainable Edge by Hagel and Seely Brown that eloquently defines Innovation from a much broader organisational and strategic perspective:

We underscore the importance of innovation but we use the term more broadly than do most executives. Executives usually think in terms of product innovation as in generating the next wave of products that will strengthen market position. But product-related change is only one part of the innovation challenge. Innovation must involve capabilities; while it can occur at the product and service level, it can also involve process innovation and even business model innovation, such as uniquely recombining resources, practices and processes to generate new revenue streams. For example, Wal-Mart reinvented the retail business model by deploying a big-box retail format using a sophisticated logistics network so that it could deliver goods to rural areas at lower prices.

Innovation can also vary in scope, ranging from reactive improvements to more fundamental breakthroughs... One of the biggest challenges executives face is to know when and how to leap in capability innovation and when to move rapidly along a more incremental path. Innovation, as we broadly construe it, will reshape the very nature of the firm and relationships across firms, leading to a very different business landscape.

Although Hagel and Seely Brown's book provides a great analysis of capability-building and new innovation mechanisms at the edge of organisations (through new dynamic forms of firm-firm collaboration) and specialisation, their discussion largely omits the customer-firm colloboration, open innovation perspective. But, from Hagel's most recent post and article in the Mckinsey Quarterly, this seems like it could be the subject of their next book! Here is a quote from the article:

Cocreation is a powerful engine for innovation: instead of limiting it to what companies can devise within their own borders, pull systems throw the process open to many diverse participants, whose input can take product and service offerings in unexpected directions that serve a much broader range of needs. Instant-messaging networks, for instance, were initially marketed to teens as a way to communicate more rapidly, but financial traders, among many other people, now use them to gain an edge in rapidly moving financial markets.

Example for consumer innovativenss

For example, based on this research, Tellis, who has experience launching new products via his past service as a sales development manager at Johnson & Johnson, recommended that businesses employ a “waterfall strategy” (i.e., a country-to-country tiered release) versus a “sprinkler strategy” (all at one time) for new products, making sure to vary their approach depending on the country and product category.

Governments can apply this research when introducing new products, such as fuel-efficient cars, and services to their citizens. “This study tells them whom to target first in which regions,” Tellis said.

Management consultant firm A. T. Kearney funded the study’s data collection, while Don Murray, executive chairman of Resources Global Professionals, provided the annual grant to the USC Marshall Center for Global Innovation, which paid for the data analysis.

Compulsive Consumption

O'Guinn & Faber (1989:148) defined compulsive consumption as “a response to an uncontrollable drive or desire to obtain, use or experience a feeling, substance or activity that leads an individual to repetitively engage in a behaviour that will ultimately cause harm to the individual and/or others.” Research has been carried out to provide a phenomenological description to determine whether compulsive buying is a part of compulsive consumption or not. The conclusion reached after analysing both qualitative and quantitative data stated that compulsive buying resembles many other compulsive consumption behaviours like compulsive gambling, kleptomania and eating disorders (O' Guinn & Faber, 1989:147). Hassay & Smith (1996) hold a similar view and refer to compulsive buying as a form of compulsive consumption as well. Besides personality traits, motivational factors also play a significant role in determining the similarities between compulsive buyers and normal consumers. According to O'Guinn & Faber (1989:150), if compulsive buying is similar to other compulsive behaviours it should be motivated by “alleviation of anxiety or tension through changes in arousal level or enhanced self-esteem, rather than the desire for material acquisition.” Hassay & Smith (1996) also agree with the above inference and concluded from their research that “compulsive buying is motivated by acquisition rather than accumulation.” 

Example Compulsive Consumption Consumer

Examples include uncontrollable shopping, gambling, drug addition, alcoholism and various food and eating disorders. It is distinctively different from impulsive buying which is a temporary phase and centers on a specific product at a particular moment. In contrast compulsive buying is enduring behaviour that centers on the process of buying, not the purchases themselves.

 



Consumer ethnocentrism
is derived from the more general psychological concept of ethnocentrism.

Basically, ethnocentric individuals tend to view their group as superior to others. As such, they view other groups from the perspective of their own, and reject those that are different and accept those that are similar (Netemeyer et al., 1991; Shimp & Sharma, 1987). This, in turn, derives from earlier sociological theories of in-groups and out-groups (Shimp & Sharma, 1987). Ethnocentrism, it is consistently found, is normal for an in-group to an out-group (Jones, 1997; Ryan & Bogart, 1997).
Consumer ethnocentrism specifically refers to ethnocentric views held by consumer in one country, the in-group, towards products from another country, the out-group (Shimp & Sharma, 1987). Consumers may believe that it is not appropriate, and possibly even immoral, to buy products from other countries.

Purchasing foreign products may be viewed as improper because it costs domestic jobs and hurts the economy. The purchase of foreign products may even be seen as simply unpatriotic (Klein, 2002; Netemeyer et al., 1991; Sharma, Shimp, & Shin, 1995; Shimp & Sharma, 1987).

Example for consumer ethnocentrism

For example, according to Burton (2002) and Quellet (2007), consumers are concerned with their cultural, national and ethnic identities increasingly in more interconnected world. Some consumer researches determined that people make their purchasing decisions on information cues. Information cues can be intrinsic (e.g., product design) and extrinsic (e.g.,brand name, price)(Olson, 1977; Jacoby ,1972). But extrinsic cues are likely to be used in the absence of intrinsic cues or when their assessment is not possible(Jacoby, Olson and Haddock, 1971 ; Olson, 1977; Jacoby, 1972 ; Jacoby, Szybillo and Busato-Schach, 1977 ; Gerstner, 1985).

Also, according to some researches, it was thought that there is a relationship between attitudes toward foreign retailers’ products and some demographics characteristics such as gender, education, income and age.

When doing this research, it was aimed at determining consumer attitudes towards foreign retailers’ products. The research starts with a literature review which includes international retailing in Turkey, attitudes towards purchasing foreign retailers’ products (general review), effects of age and education level on attitudes, influence of consumer ethnocentrism on attitudes towards foreign retailers’ products respectively. Secondly, methodology part that has explanations about how this research was conducted, was presented. Then, findings which derived from questionnaire results and its SPSS analyses, are presented. At the last stage of the research, discussion, limitations and future researches are discussed.

Narasumber

http://chrislawer.blogs.com/chris_lawer/2005/10/defining_custom.html

http://insciences.org/article.php?article_id=6602

http://www.businessteacher.org.uk/free-marketing-essays/compulsive-buying/

http://design-marketing-dictionary.blogspot.com/2009/11/compulsive-consumption-behaviour.html

http://en.wikipedia.org/wiki/Consumer_ethnocentrism