🗊Презентация Economics of innovation. Lecture 3: Innovation, Demand and Consumption

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Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №1Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №2Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №3Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №4Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №5Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №6Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №7Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №8Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №9Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №10Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №11Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №12Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №13Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №14Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №15Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №16Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №17Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №18Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №19Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №20Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №21Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №22Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №23Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №24Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №25Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №26Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №27Economics of innovation. Lecture 3: Innovation, Demand and Consumption, слайд №28
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ECONOMICS OF INNOVATION
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ECONOMICS OF INNOVATION

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Consumers and innovation: demand and supply We will focus on: 1. The diffusion of innovations 2. The demand of innovation: consumers types
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Consumers and innovation: demand and supply We will focus on: 1. The diffusion of innovations 2. The demand of innovation: consumers types

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The diffusion of innovations Diffusion is the process by which innovations are adopted and used by consumers, or in the case of process innovations, by other organisations. Diffusion is the rate at which innovations are adopted Whether a product or a process, it takes a long time for an innovation to diffuse across users/consumers. The speed at which an innovation diffuses is critical to its (commercial) success.
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The diffusion of innovations Diffusion is the process by which innovations are adopted and used by consumers, or in the case of process innovations, by other organisations. Diffusion is the rate at which innovations are adopted Whether a product or a process, it takes a long time for an innovation to diffuse across users/consumers. The speed at which an innovation diffuses is critical to its (commercial) success.

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Diffusion of successful innovations follow a common path (S curve)
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Diffusion of successful innovations follow a common path (S curve)

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Diffusion of online social networks
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Diffusion of online social networks

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Diffusion of various innovations
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Diffusion of various innovations

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Drivers of the diffusion of innovations
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Drivers of the diffusion of innovations

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Drivers of the diffusion of innovations
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Drivers of the diffusion of innovations

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The demand for innovation Marketing e.g. Information acquisition approach (Bass 1969) Economics e.g. Consumer preferences (Deaton and Mullebower 1980)
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The demand for innovation Marketing e.g. Information acquisition approach (Bass 1969) Economics e.g. Consumer preferences (Deaton and Mullebower 1980)

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Types of Consumers Consumers are not a homogeneous group.
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Types of Consumers Consumers are not a homogeneous group.

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Six Types of Consumer Economic Consumer Veblen/Bourdieu Consumer Marshall Consumer Douglas Consumer Galbraith Consumer Routine Consumer
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Six Types of Consumer Economic Consumer Veblen/Bourdieu Consumer Marshall Consumer Douglas Consumer Galbraith Consumer Routine Consumer

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Economic Consumer Fixed, pre-determined wants, which the consumer knows in detail If all consumers were economic consumers there would be little market risk in innovation Consumer is a skilled optimiser but is asocial (consumes in private) Given same prices and income, (s)he will never vary consumption Interested in innovations that reduce price or increase a sought-after feature of a good Otherwise, not interested in innovation
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Economic Consumer Fixed, pre-determined wants, which the consumer knows in detail If all consumers were economic consumers there would be little market risk in innovation Consumer is a skilled optimiser but is asocial (consumes in private) Given same prices and income, (s)he will never vary consumption Interested in innovations that reduce price or increase a sought-after feature of a good Otherwise, not interested in innovation

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Veblen Consumer Veblen’s concept of “conspicuous consumption” Desires distinction through visible consumption of expensive items Bourdieu consumer is similar, but seeks distinction with more modest expenditure Veblen and Bourdieu consumers are interested in innovation to the extent that these give an opportunity to show distinction, e.g. Rolls Royce
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Veblen Consumer Veblen’s concept of “conspicuous consumption” Desires distinction through visible consumption of expensive items Bourdieu consumer is similar, but seeks distinction with more modest expenditure Veblen and Bourdieu consumers are interested in innovation to the extent that these give an opportunity to show distinction, e.g. Rolls Royce

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Veblen consumers upon the launch of iPhone 5
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Veblen consumers upon the launch of iPhone 5

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Nike making an appeal to Veblen consumers with their customized shoes CREATE YOUR OWN NIKE FREE iD However close to barefoot you like your run to feel—your reasons are exclusively your own. Run Free, your way.
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Nike making an appeal to Veblen consumers with their customized shoes CREATE YOUR OWN NIKE FREE iD However close to barefoot you like your run to feel—your reasons are exclusively your own. Run Free, your way.

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Marshall Consumer “In every stage of his progress he is destined to contrive and invent, to engage in new undertakings; and when these are accomplished, to enter with fresh energy upon others.” (McCulloch, 1864, quoted in Marshall, 1927) Marshall consumers are interested to explore what innovations can do for them, but they are not uncritical in their consumption of innovations (see Von Hippel, 2005)
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Marshall Consumer “In every stage of his progress he is destined to contrive and invent, to engage in new undertakings; and when these are accomplished, to enter with fresh energy upon others.” (McCulloch, 1864, quoted in Marshall, 1927) Marshall consumers are interested to explore what innovations can do for them, but they are not uncritical in their consumption of innovations (see Von Hippel, 2005)

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Marshall Consumers- the creative consumer
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Marshall Consumers- the creative consumer

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Douglas Consumer “the real moment of choosing is ... choice of comrades and their way of life” (Douglas, 1983) Douglas consumers may be cautious about consuming innovations that might seem to cast doubt on their peer group loyalty But they may find innovation and imaginative ways to confirm group loyalty And if the group leader(s) adopt(s) an innovation, then other Douglas consumers may follow rapidly
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Douglas Consumer “the real moment of choosing is ... choice of comrades and their way of life” (Douglas, 1983) Douglas consumers may be cautious about consuming innovations that might seem to cast doubt on their peer group loyalty But they may find innovation and imaginative ways to confirm group loyalty And if the group leader(s) adopt(s) an innovation, then other Douglas consumers may follow rapidly

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Galbraith Consumer “As a society becomes increasingly affluent, wants are increasingly created by the process by which they are satisfied …. producers may proceed actively to create wants through advertising and salesmanship. Wants thus come to depend on output.” (Galbraith, 1958) Mass market and advertising Galbraith consumers need encouragement from marketers to give innovations a try
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Galbraith Consumer “As a society becomes increasingly affluent, wants are increasingly created by the process by which they are satisfied …. producers may proceed actively to create wants through advertising and salesmanship. Wants thus come to depend on output.” (Galbraith, 1958) Mass market and advertising Galbraith consumers need encouragement from marketers to give innovations a try

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Routine Consumer Just sticks to familiar consumption items (“tried and tested”) Does not optimise Not influenced by advertising Does not seek distinction Does not seek novelty Not influenced by peer pressure Liable to be very suspicious of innovations
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Routine Consumer Just sticks to familiar consumption items (“tried and tested”) Does not optimise Not influenced by advertising Does not seek distinction Does not seek novelty Not influenced by peer pressure Liable to be very suspicious of innovations

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Other Types of Consumer ….
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Other Types of Consumer ….

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Ethical consumer Green consumer Consumption choices with reference to effects on sustainability Ruskin consumer Consumption choices with reference to effects on producing labour
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Ethical consumer Green consumer Consumption choices with reference to effects on sustainability Ruskin consumer Consumption choices with reference to effects on producing labour

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Ethical Consumption and Innovation Can you think of examples of companies innovating to appeal to the ethical consumers?
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Ethical Consumption and Innovation Can you think of examples of companies innovating to appeal to the ethical consumers?

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Learning consumer Recognition that something is an acquired taste and a taste worth acquiring Demand grows as consumer acquires the taste – learns how to appreciate the product/service
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Learning consumer Recognition that something is an acquired taste and a taste worth acquiring Demand grows as consumer acquires the taste – learns how to appreciate the product/service

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Innovation and Learning consumers Educating is an important consideration when it comes to promoting innovations at early stages to learning consumers
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Innovation and Learning consumers Educating is an important consideration when it comes to promoting innovations at early stages to learning consumers

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Dutiful consumer Consumption as a duty Duty to whom, or to what? Country (?) Science (?)
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Dutiful consumer Consumption as a duty Duty to whom, or to what? Country (?) Science (?)

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Different Types of Consumers and Product Life Cycle
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Different Types of Consumers and Product Life Cycle

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Lecture 3: Innovation, Demand and Consumption Summary Diffusion of innovations Customers types ?
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Lecture 3: Innovation, Demand and Consumption Summary Diffusion of innovations Customers types ?

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