Chapter 6

Question 1

Offering

Answer 1

Purposely broad term that captures both tangible products and intangible services provided by firms.

Question 2

Innovation

Answer 2

The creation of substantial new value for customers and the firm by creatively changing one or more dimensions of the business, this enables firms to identify and develop valuable new offerings that establish and ensure their sustainable competitive advantage.

Question 3

Innovation radar

Answer 3

1. Change what the firm offers
2. Changing who the customer is
3. Changing how to sell to customers
4. Changing where to sell to customers

Question 4

Offering equity

Answer 4

Refers to the core value that the performance of the product or service offers the customer, absent any brand or relationship equity effects.

Question 5

Developing innovative offerings (stage-gate model)

Answer 5

1. Concept and definition
2. Design and development
3. Validation and production
4. Final audit

Question 6

Red ocean market

Answer 6

Very competitive and populated by fighting over the same
customers. They launch new products or service extensions that represent incremental innovations.

Question 7

Blue ocean market

Answer 7

Less competitive, refine the market space which creates a
significant risk of failure. Introduce unexpected feature and fundamentally change the entire value proposition.

Question 8

Sustaining technologies

Answer 8

Well understood and typically exploited by market leaders, and produce continuous, incremental improvements over
time.

Question 9

Disruptive technologies

Answer 9

Present highly different price and performance characteristics or value propositions, and improves very quickly

Question 10

People-based factors influencing innovation diffusion: Adoption lifecycle (consumers)

Answer 10

1. Innovators
2. Early adopters
3. Early majority
4. Late majority
5. Laggards

Question 11

Product-based factors influencing innovation diffusion

Answer 11

1. Relative advantage: Is is better than the existing offering?
2. Compatability: Is it consistent with the existing offering’s values and uses?
3. Complexity: Is it too difficult to understand?
4. Trialability: Can the consumer try it for free?
5. Observability: Are the offering’s benefits visible without a company needing to communicate them?

Question 12

How to build offering equity

Answer 12

1. Develop an offering or offering portfolio that provides customers with the largest relative advantage among all competitors in the market.
2. STP offering in a way that accounts for both people- and product-based diffusion factors
3. Manage the customer migrations from innovators and early adopters to early majority stages