APPLYING DIFFUSION OF INNOVATIONS THEORY
Applying Diffusion of Innovations Theory
Introduction: Diffusion theory of innovation
Diffusion of Innovations is to explain how innovations are taken up in a population. An innovation is an idea, people or organizational behaviour, or objective that is perceived as new by its audience.
Tidd et al (2000) states, “the innovation is a business process of revolving opportunity into new ideas and of putting these into widely used practice. In term of the nature, there are five major types of innovations: novelty, competence shifting, complexity, robust design and continuous improvement. While in term of the extent of change, innovations can be divided into incremental, radical and
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From this another question arises:
Is this market profitable enough to be carried forward and marketed? Only time can answer that question.
What I feel about Kodak’s move was that they are trying to make a space for themselves in an already crowded market. Kodak is trying to carve out a niche for them by offering inks for low prices. But, they have forgotten the abilities of the competitors. They have probably underestimated them. HP and Canon are big names in the printing industry and because of their continued rollout of good quality products; customers trust them more than they trust Kodak. It is also observed that Kodak had forgotten that if HP lowers their price to almost the same level like Kodak, Kodak won’t stand a chance. The only way that Kodak can hope to make some profit is by hoping that their competitors won’t reduce the price of the inks as it is the only source of revenue in the printing industry. But I am pretty sure that marketing research people of Kodak has made a blunder by opting for this. The major fact is that they have forgotten cartridge refilling industry which is cheap too and people have started to use that as they are comparatively cheaper to the original printing inks. I sincerely feel that Kodak has taken the wrong path to get out of their troubles.
Conclusion
In general, Kodak has done well in the innovation implementation. This paper mainly discusses the innovation system within the group also influence the innovation
Innovations form the main sources of competitive advantages and are always of significance for the growth of a company. Companies or organizations put their greater efforts in improving their performance by finding new ideas and knowledge on the best way of beating their competitors and therefore give satisfaction to their customers. There are various factors involved in the innovation design system which can be either internal or external.
Alongside the entrepreneur spirit, Innovation is the process of taking new ideas and implementing them into the market. Key word being “new”, an innovation can be sometimes viewed as the application to better solutions that meet new demand-requirements, inarticulated needs or existing market needs. Innovative ideas range from: goods, services, products, processes, services, technologies or ideas that create value for which customers will pay for. For an idea to be an innovation, it must be replicable at an economical cost and must satisfy a specific need. This means is that one must be ready and willing put their new idea to the test. On the other hand, there is recognition that “innovation is also critical to cultural, environmental, social, and artistic progress as well” (Bullinger, 2006). With this stated, high-tech innovation is ultimately the reason why we can be thankful for the many new conveniences of the 21st century. Although we might see the forefront of innovation being very prominent in today’s world, innovation is truly nothing new. From the start of modern man times, innovative ideas have paved the way for civilization to advance and develop into what we are today and at the same time, we have barely begin to chip away at the tip of the iceberg of our true human potential. Some scholars believe that innovation is a
Innovation: An initiative, practice, or objective that is modern by individual or other elements of acceptance (Rogers, 2003).
It was Kodak’s’ strategy to sell the cameras at low prices, and it used to earn revenue from the films; this strategy is called the razor-blade strategy. This model for photography became flop when Sony introduced a camera with floppy disk inside, in which there wasn’t any use of films. As a result of Sony’s introduction of the Mavica in 1981, Kodak took it as a threat and started investing in the digital photography. For this purpose, it has conducted a huge research on the digital photography. As exposed by Fisher in 1997, Kodak’s respond wasn’t appropriate for the digital world: “One of the mistakes we [Kodak] have made is that we [Kodak]’ve tried to do it all. We [Kodak] do not have to pursue all aspects of the digital opportunity and service side.”
The problem in this case is Kodak's steadily eroding market share and shareholder value in the film rolls market. This is especially undesirable given the fact that the market has been growing at a tepid 2% annual rate and the steadily increasing threat from competition. Kodak needs to come up with a strategy for corrective action so as to arrest this decline, regain market share and increase share holder value. Kodak's strategy is to reposition itself by targeting a new segment of price sensitive customers and re-segmenting the super premium customers’ space by including a wider segment of special occasion customers.
The word ‘innovation’ is derived from Latin word ‘innovare’, which means “to change something to new”. In other words, we may say that ‘innovation’ means changing the regular way of doing things and involves doing the regular things in a novel way.
Kodak currently has no position within the ink market. The ink business is a $45 billion a year sector that could regenerate Kodak’s position in the printing sector. The market for ink is dominated by HP, followed by Epson, Canon, and Lexmark. Entering a complete new market may be beneficial in its current position. According to Kodak, the greatest obstacle to printing at home is the cost of ink and supplies. Kodak can develop a cost efficient solution that will be more appealing to consumers. With the launch of this product, Kodak must focus on several sectors of business: marketing, pricing, distribution, and production. Onesource (2011).
Diffusion of Innovation (DOI) Theory focuses on studying how innovations, which maybe practices or ideas perceived as a new thing, are spread. DIO theory is based on the idea that a few individuals within a social system initially adopt an innovation such as a new service or product, and then over time more people adopt this innovation until all the social system's members adopt it. This research presents some topics related to DOI: characteristics of DOI, innovators and types of adopters, the relationships between DOI theory with other variables such as application of DOI in IT, competitiveness, and the innovation life cycle.
Another contributing factor is the decision to stop manufacturing digital cameras and expand the company. According to the SWOT Analysis, the company has formed partnerships with Samsung to sell their printer and with LifePics to develop photo merchandising services (2012). Perhaps most impactful partnership Eastman Kodak has formed in recent years is with NovaCopy in 2012. This joint venture will “enable businesses to upload documents to Microsoft Office365, a cloud-based collaboration and productivity platform” (Eastman Kodak SWOT Analysis, 2012).
Innovation is normally used to denote the process that takes place when a product or a process is developed, from idea to market; the concept of invention only denotes the process that takes place when new ideas or solutions are generated. Baumol (2002) argues “is it possible to have lots of inventions and still lack innovations. Nevertheless, inventions are a necessary precondition for innovation”.
Considerable research has established the importance of spreading innovative ideas to bring about change. While Damanpour, Walker, and Avellaneda (2009) write that “the study of innovation hardly needs justification as scholars, policy makers, business executives, and public administrators maintain that innovation is a primary source of economic growth, industrial change, competitive advantage, and public service” (p. 650), it is misleading to suggest that there is a consensus in scholarly research on the use of the diffusion of innovations framework. In essence, diffusion is the process where adopters (individuals or organizations) make choices on whether to embrace an innovation by examining the uncertain benefits and risks of this new
While Kodak has historically been a well-established brand name in the marketplace, it struggled to find a niche when the industry morphed from a film-based market to a digital-based market. Kodak has struggled to successfully evolve its film-based business structure to the new structure of digital-based technology, which has allowed for competitors to enter the market, decreasing Kodak’s market share. Competitors (such as Canon Inc., Fuji Photo Film Co., Hewlett Packard Co., Nikon, and Sony Corp.) have posed major threats to Kodak’s livelihood. Kodak faces a 5% drop in film sales (2001-2003) and a 3% reduction in overall revenues over the same time period. In addition, revenues and net income are expected to be fairly flat (or decrease) in future estimates. Kodak faces much pressure to revitalize their business through digital imaging, a radical innovation, or risk being eaten alive in an industry they thought they controlled.
Once innovation occurs, innovations may be spread from the innovator to other individuals and groups. In 1962, Everett Rogers proposed that the life cycle of innovations can be described using the “s-curve” or diffusion curve. The s-curve maps growth of revenue or productivity against time. In the early stage of a particular innovation, growth is relatively slow as the new product establishes itself. At some point consumer demand increases and product sales expand more rapidly. New incremental innovations or changes to the product allow growth to continue. Towards the end of its life cycle growth slows and may even begin to decline. In the later stages, no
Innovation is the process by which ideas are created, selected and implemented to bring about profitable change to organisations. Innovations come as a result of an identified need for organisations to change their current processes, activities or operations. Andriopoulos and Dawson (2009) explain that organisational change is ‘new ways of organizing and working’. They explain that change occur in two dimensions – movement of state and scope of change.
Models for diffusion of innovations among potential adopters have been recently used to study the life cycle of new products and to forecast first-purchase sales. Those models are useful for managers as decision aids to create and perform strategies to maintain the profitability of new products across their life cycle. Bass (1969) pioneered this area of research with a model for diffusions of new products under peer pressure via word-of-mouth. This model distinguished two parameters: innovation and imitation. Later, Chatterjee and Eliashberg (1990) provided a microeconomic version of Bass’s model that included interactions among potential adopters and the formation of beliefs.