The Interplay of Customer and Product Innovation Dynamics: An Exploratory Study

Journal of Product Innovation Management, Forthcoming

UIC College of Business Administration Research Paper No. 11-01

40 Pages Posted: 26 Dec 2010 Last revised: 20 Jul 2011

See all articles by Jonathan Bohlmann

Jonathan Bohlmann

affiliation not provided to SSRN

Jelena Spanjol

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management)

William J. Qualls

University of Illinois at Urbana-Champaign - Department of Business Administration

Jose Antonio Rosa

University of Wyoming College of Business

Date Written: December 24, 2010

Abstract

The challenges of successfully developing radical or really new products have received considerable attention from a variety of marketing, strategic, and organizational perspectives. Previous research has stressed the importance of a market-driven customer orientation, the resolution of market and technological uncertainty, and organizational processes such as cross-functional teams and organizational learning. However, several fundamental issues have not been addressed. From a customer’s perspective, a more innovative product tends to have uncertain benefits and requires customers to learn new behaviors. Customer preferences can therefore change as product experience and learning increase. From a firm’s perspective, it is unclear how to be customer oriented under such dynamic preferences, and product strategies using evolving technologies will tend to interact with how customers learn about an innovation. This research focuses on identifying unresolved issues about these customer and product innovation dynamics.

A conceptual framework and series of propositions are presented that relate both changing technology and customer learning to a firm’s strategic decisions in developing and launching really new products. The framework is based on in-depth interviews with high-tech product managers across several sectors, focusing on the business-to-business context. The propositions resulting from the framework highlight the need to consider relevant customer dynamics as integral to a firm’s product innovation process. Successful innovation strategies and future research challenges are discussed, and applications to better understanding customer needs and theories of disruptive innovation are examined. Several key insights for innovation success hinge on a broad, downstream orientation to customer needs and product innovation dynamics. To be effective innovators, firms must know their customers’ customers and competitors as well as or better than their immediate customers do. Market research must extend downstream for a comprehensive understanding of customer needs dynamics. In the context of disruptive innovation, new dimensions of customer needs may become more valuable based on perceived downstream customer trends. Firms may also innovate on secondary needs because mainstream customers do not always give firms the design freedom to radically innovate on primary features. Understanding customer commitments and how they develop under evolving needs can help firms focus resources on innovative efforts more likely to be accepted by customers.

Keywords: Innovation, Customer Dynamics, Product Dynamics, Radical Innovation, New Product Development, Qualitative Interviews

JEL Classification: L6, M00, M1, M3, O3

Suggested Citation

Bohlmann, Jonathan and Spanjol, Jelena and Qualls, William J. and Rosa, Jose Antonio, The Interplay of Customer and Product Innovation Dynamics: An Exploratory Study (December 24, 2010). Journal of Product Innovation Management, Forthcoming; UIC College of Business Administration Research Paper No. 11-01. Available at SSRN: https://ssrn.com/abstract=1730742

Jonathan Bohlmann

affiliation not provided to SSRN ( email )

Jelena Spanjol (Contact Author)

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management) ( email )

Kaulbachstr. 45
Munich, DE 80539
Germany

William J. Qualls

University of Illinois at Urbana-Champaign - Department of Business Administration ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

Jose Antonio Rosa

University of Wyoming College of Business ( email )

1000 E. University Avenue
Dept. 3275
Laramie, WY 82071
United States
307-766-6159 (Phone)
307-766-3488 (Fax)

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