SELF TEST #18: Developing Priorities for Product and Service Innovations

Test #1:

What might we use as an indication that an innovation will remain unique?

Answer:

There are two simple approaches. In the first approach we categorize each benefit producing Positive volatility into its Customer Buying Hierarchy category (Function, Reliability, Convenience, Price) and evaluate those categories with the highest Positive volatility. We then assume that the category with the highest Positive volatility is the most difficult for competitors to copy.

Second, we can review the average time that innovations in each of the Customer Buying Hierarchy categories remain unique, that is, from the time of the innovation's introduction until more than half the competitors in the industry had the innovation as part of their value propositions. The Customer Buying Hierarchy categories with the highest average time of uniqueness are the most difficult for competitors to copy.

Test #2:

Rank order the speed of copy for each category of the Customer Buying Hierarchy in a fast growing, in a Hostile, and in a Stable market.

Answer:

In a fast growing industry, Function and Price create substantial amounts of Positive volatility. However, Reliability and Convenience benefits are also important.

In a Hostile marketplace, Function and Price innovations move little Positive volatility because competitors copy them too quickly. Reliability is usually the most important producer of Positive volatility, followed, at some distance, by Convenience.

In a mature, Stable market, Reliability and Convenience remain the most important producers of Positive volatility. However, both Function and Price are able to produce Positive volatility as well, though not as much as either Reliability or Convenience.

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