This sample will let you know about:
- What is Innovation Theory
- Discuss Evaluation of the theory
- What are Business Model Canvas
Innovation in a business involves creating new products or improving the existing features of an existing product, service and process in order to solve an existing problem, enhance the efficiency of the business and reach out to new segments of customers which leads to an increase in sales (Agger and Sørensen, 2018). Implementing innovation is a crucial as well as important task for any business. It is beneficial for organisations as it helps in increasing their overall profitability as well as share in the market. Diffusion of Innovation theory was developed by E.M. Rogers in the year 1962 and is regarded as one of the oldest theories. It explains the progress of an idea through various stages of adoption by different consumers. There are various factors that affect the diffusion of an innovation or a new product within a society like education level, level of disposable income, pressure from peers, level of development of the society etc.
Consumers in a market do not immediately accept and engage with an innovation immediately after its launch, rather they take some time to do so (Diffusion of Innovation Theory, 2019). When an organisation decides to launch a new product or an innovation in the market, it is important for it to understand the characteristics and needs of the customers to avoid the situation of them taking a long time to adopt the change.
Diffusion of Innovation is one of the oldest models that helps organisations in understanding the process through which a buyer adopts as well as engages himself with an innovation in the market (Ali and et. al., 2016). Therefore, marketers use this theory when they launch a new product in the market or an existing product in a new market. The adopters or the consumers are broadly classified into five categories based on the the tine they take to adopt a product. The different adopter categories are explained below-
- Innovators – Innovators are people who want to be the first ones to try any innovation the market as they are highly interested and support new ideas. These people are always open to taking risks and usually have a strong financial back which is why setback of the innovation or a new product does not affect them much. Marketers don't need to implement or make use of any special strategies to attract them.
- Early Adopters – People in this category have a high opinion about a new product or innovation. Early adopters enjoy various leadership roles and are aware of their need to adopt change and are thus comfortable with adopting new ideas (Darabont and et. al., 2017). These people speed up the process of diffusion for the marketers and their opinions about a certain product is respected by friends and family. Marketers do not need any kind of strong information in order to attract this category of adopters.
- Early Majority – People in the category of early majority are not opinion leaders but they still adopt the innovation before other categories of people. But in order to do so, they first want see a valid proof that the innovation works and is useful. Marketers can opt for strategies like success stories and an evidence of the effectiveness of the new product or innovation.;
- Late Majority – Adopters in the category of late majority are the ones who are highly doubtful about the change and only adopt it after many people have tried it. In order to attract this segment of adopters, marketers of different organisations can present information about how many people have successfully adopted the innovation.
- Laggards – Laggards are very conservative and resist any kind of change like adopting a new product or an innovation which makes them the hardest group for the marketers to convince and attract.
The processes of diffusion of innovation theory consist of various stages that are explained below -
- Knowledge – In this stage, the consumers are first exposed to the innovation or the new product that the company has decided to launch in the market (Diffusion of innovation, 2020). They lack any kind of information regarding the same and may only be familiar with the name and basic features of the product.
- Persuasion – In this stage, the consumers become interested in the product and thus searches for information relating to the same in order to increase their knowledge about how the product works and what are the benefits of buying it from different sources like friends, family, colleagues etc.;
- Decision – The consumers compare the advantages as well as disadvantages of using the product, whether it will satisfy their needs or not and thus decide if they should buy the product or not. In this stage, it is difficult for organisations to completely understand the mind of the customers.
- Implementation – In this stage, organisations still need to make efforts in order to encourage the customers try out the product and determine its usefulness (Goffin and Mitchell, 2016). The main challenge for the organisation in this stage is to provide the right information to consumers.
- Continuation – If they think that using the product if beneficial and useful to them, they continue using the product else discontinue the same. This is the shortest stage in the whole process in which customers confirm that the product is performing well in the market. They can do this by interacting with friends, family or read reviews that are posted online by other people. Want to Get Help With Management Dissertation Topics. Talk to Our Experts
Evaluation of the theory
- Diffusion of Innovation theory is important for businesses as they can use it as a tool to attract and influence different categories of customers to buy their products and services.
- The theory explains the rate at which consumers will adopt a new product that is launched in the market which in turn helps organisations in understanding the different trends as well as the likelihood of their product in either being a success or a failure among consumers.
- By using this theory, marketers can predict what type of customers will buy their products and thus they can formulate effective strategies accordingly to attract potential segments of customers (Grunwald, 2018).
- The theory can be applied across various industries like retail, marketing etc. and also helps organisations in identifying various factors that can affect the introduction or launching process of the product in the market.
- If an organisation implements the Diffusion of Innovation theory effectively, it can be successful in the market and attract a large number of customers to buy its products.
The Diffusion of Innovation theory has several limitations that are explained below -
- Number of consumers – In a market, there are few innovators and early adopters through whom the company can push its products among other categories of customers in the market (Lindfors and Hilmola, 2016). Therefore, organisations should pay more focus on developing strategies that help them in increasing their overall customer base.
- Differences in culture – Culture varies from location to location which is why it is important for marketers of different organisations to take the same into account. If they fail to do so, the number of consumers who buy their products will also go down.
- Lack in Communication – If the attempts by organisations to communicate information about their new products and services in the market are not effective, people will not be able to gather information about the same and may remain uninformed of the same. Thus, information about any new launch or innovation should be clearly communicated to the consumers by using various online and offline channels. Take Free Examples of Assignmentss Now!
Application of the Innovation theory
Background of the company
BrewDog is a bar and brewery chain that was founded by Martin Dickie and James Watt in the year 2007. The company is headquartered in Ellon, Scotland and aims to make people passionate about great craft beer like the founders. The main products of the company are bottled as well as canned beers that are manufactured in different styles like lager etc. BrewDog began its business as a small brewery in Scotland, ten years after which it opened its first US brewery in Ohio (Lütjen and et. al., 2019). The respective company launched a hotel at its brewery in Columbus, named DogHouse. The founders of the company, starred in their own series on television, named “BrewDog” and also started running its own airline from the year 2018.
A business model explains the reason behind how does an organisation create and deliver value to its customers. The different business models that are used by BrewDog are as follows -
- Marketplace Business Model – In this business model, the company lists all its products and distributes its products to different supermarkets which sell them to the customers. This helps BrewDog in increasing its overall sales in the market.
- E-commerce Business Model – BrewDog also follows an e-commerce business model or an internet based model, in which it sells its products online through its website and not just through offline retail stores and supermarkets. Finding online assignment help uk ? Talk to Our Experts.
Business Model Canvas
A business model canvas is a start up template that is used to develop as well as document existing business models of an organisation (Miglietta and Morrone, 2018). It is presented in the form of a visual chart that comprises of elements like infrastructure, finances and customers of the company. The business canvas model for the respective company is also explained below-
Mashing, Lautering, Conditioning, Boiling, Fermenting and Packaging
High quality craft beers and other spirits like Vodka, Whiskey etc.
Dedicated sales in retail stores, online webstore and supermarkets, Loyalty Cards for the customers
Physical machinery and Information Technology Infrastructure
Offline retailers, supermarkets and online webstore
Distribution, Research and Development
Customer Payments, Ad Revenues
Historical Development and Application of the theory
Martin Dickie and James Watt got bored of industrially brewed ales and lager in the year 2007 (Miller, 2016). This is when they decided to fix the situation which gave birth to BrewDog. Both the founders who were 24 at that time and leased a building and started their operation. After receiving few bank loans, they spent all their money on stainless steel and started making craft beers. They brewed small batches of the same that were sold in the market. In the year 2008, the founders approached many banks for loans so that they could buy a proper bottling machine. The company become Scotland's largest independent brewery in the same year. By 2009, the company had gained popularity and had become UK's fastest growing beer brand. The company opened its first bar for craft beer in the year 2010 and received a massive response from customers. Also, it made the world's most expensive beer and also managed to find space for more tanks in its brewery.
The year 2011 saw the company opening bars in locations such as Glasgow and Edinburgh with a flagship store in London. One of the most important event in this year was that the company launched Equity for Punks II in order to grow its business further. BrewDog shifted its headquarter brewery from Fraserburgh to Ellon, Scotland. Also, multiple new bars opened all across the United Kingdom apart from the Dead Pony Club (OUR BEER JOURNEY SO FAR. 2020).
The company raised a total of £4.25M through equity in the year 2013 and continued making other people passionate about craft beer through 2014. 2015 was a major year as the company launched the largest scheme of crowdfunding besides opening 17 new bars. BrewDog set two world records in the year 2016 as well as gave away detailed recipes of each and every beer that was ever listed in their product portfolio. The year 2017 marked the completion of a decade of BrewDog when the company decided to change they way it does business. It also decided to build a new brewery in Brisbane, Australia in the same year. The world's first craft beer hotel, “The Doghouse” was opened by the company in the year 2018 apart from the blueprint of the company.
In order to attract innovators, the company produced small batches of craft beers which the founders packed themselves and sold in the market in order to market themselves. The major goals was also to increase the overall sales of the craft beer produced by them (Nolan, 2018). No major efforts were taken by the company to attract early adopters in locations such as Sweden and Japan and only concrete reasons were provided for why the consumers should purchase its products. Comparisons and reviews that were posted by other people on different sites pushed the late majority to try out innovation that the company had brought in the market. All of this helped BrewDog in attracting customers from different segments and encourage them to purchase the craft beers and thus become a premium brand in the industry.
BrewDog plans to grow its overall bar division business in the coming years as well as the first crowdfunded craft beer hotel, “The DogHouse” in the coming years. It has also decided to provide access of the craft beer to a more diverse audience in order to increase its overall profitability as well as share in the market (Swink and et. al., 2017). It has also decided to revive some of its old recipes from the past that are voted as favourites by its customers.
BrewDog can plan on producing low calorie beers for customers who are health conscious. This will help it in attracting more customers and thus increase its share in the market. In order to expand business and build a brand image overseas, BrewDog should increase its presence in different events that happen around the world.
If the company decides to introduce a new batch of low calorie beers in the market, it should have an understanding of whether consumers are ready to accept the innovation or not. Important efforts should be made to attract people in the late majority as well as laggards, who are the toughest groups to be pushed for purchasing the products and services (Weimer and Marin, 2016). There is no need to put in a lot of efforts to attract innovators as these people are always ready to try something new and also support the idea of innovation.
The above report concludes that organisations should constantly upgrade and innovate their products and services as this helps in gaining a competitive advantages against competitor. In order to reach out to increased segments of customers and fulfil the demands of existing ones, various strategies should be adopted that are developed after carefully reviewing and understanding their requirements. Diffusion of Innovation theory which is among the most valuable theories of history, has grouped consumers in the market in to five different categories depending on the time they take to adopt an innovation or a new product in the market. Therefore, to be successful, marketers of different organisations should analyse the needs as well as requirements of the customers effectively and then introduce a new product which will be beneficial for them.
Read More - Business Communications