sign in sign up
<<
Home , Entrepreneurship

Articles as a Source for and Product Development

Milanka Slavova* 1. Background onsumerism is a term that has a Summary: Cvariety of meanings. The article Consumerism is a term that has explores them by the research method of undergone variety of changes in its literature review and summary of the major meanings. There are a lot of overlapping interpretations of the term "consumerism" and contradictions in its usage and through the years and its impact on interaction with innovation. The aim of the innovation. article is to explore consumerism as a Swagler (1994) traces down the first source of innovation by doing a literature usage of the word in 1944 describing the review. The diversity of meanings as cooperative movement in the USA in the well as the common features and the 1930s. The term started to be used more differences in their manifestation in the often after the introduction of the Consumer various parts of the world is the basis for Bill of Rights by President John F. Kennedy exploring consumerism as a reason for in 1962. The Bill stated that consumers’ innovation and product development from rights should be safe, informed, to choose, three major aspects: (i) consumerism as a and should be heard. The following driver of ; (ii) consumerism American administrations added the rights as protection of consumer rights; and (iii) of consumers to a remedy, to consumer consumerism as ’ empowerment. and service. Consumerism was The diverse concepts of consumerism understood mainly as consumer rights' determine a variety of effects on innovation protection. The focus of the research was and new product development in the primarily on the needs to protect consumer . They can be summarized as a , the quality of the products, constant search for co-created sustainable and sales promotion decency, and shared . the activities of consumer movements and Key words: Consumerism, Crowdsourcing, the impact of government and companies Frugal Innovation, New Product Development, on consumer safety (Magnuson, 1972; Social Innovation Kotler, 1972; Cravens and Hills, 1973; Jones and Gardner, 1976; Mayer, 1989; Swagler, JEL Classification: M 110 1994). Though the research concentrated

* Associate professor, Ph.D., Department of International Economic Relations and , University of National and World , e-mail: [email protected]

5 Consumerism as a Source for Innovation Articles and Product Development on the triangle consumers – government from their co-creation to launch. The new - business, there were also researchers technologies and provide the like Day and Aaker (1970) that pointed opportunities for the customers’ immersion out that the term gradually came to cover in the innovation process. the concerns about the changes in the The study of consumerism as a economic and physical environment, and source of innovation and new product that it will become "a reflection of many development requires also a definition of social problems that are certain to persist". the latter terms. Their usage through the The impact of consumerism on society years has been more consistent. Most in general and on business strategies of the innovation definitions are based continues to be an important part of the on Schumpeter’s notion of innovation as modern research on consumerism. "". Today one of the Consumerism is associated also with most popular descriptions of innovation the excessive possession of goods though is given by OECD in the Oslo Manual. society believed in general that the higher "An innovation is the implementation of: rate of consumption is better for the economy a new or significantly improved product as a whole and for the individual. Gabriel (good or service), or process, a new and Yannis (2008) argue that consumerism marketing method, or a new organizational is a preoccupation with consumption method in business practices, workplace standards and that choice was built on mass organization or external relations." (Oslo production. Sociological and psychological Manual, 2002, p. 47) research explored consumerism as a way Innovations are classified on the basis of to achieve happiness. The more you have, the criteria of novelty for the and the happier you are. The consumers’ needs the market, impact on consumer behavior, and wants for new products and services consumers’ exposure to the product, etc. have a positive impact on the economic (Trott (2011), Tidd and Bessant (2013), growth and stimulate new areas of business. Schiffman, Kanuk and Wisenblit (2010). However, it is accompanied with a lot of At the company level the ultimate goal of negative consequences like the exhaustion innovation is to improve performance by of natural resources and growing . increasing demand or reducing the cost. New features of consumerism develop At a macroeconomic level Innovation is the with the growing power of the customers in engine of economic growth and "industrial contemporary economy. Sharing becomes technology innovation has led to substantial a major cultural shift in modern society. economic benefits for the innovation New technologies enable consumers company and the innovative country" (Trott, to gain more control over the company 2011). New technologies embedded in new business by participating in and sharing processes, products, new organizational information (Schiffman, Kanuk and approaches of business practice and new Wisenblit, 2010). The consumers become marketing methods create opportunities for marketers (Mathieu, 2013). They are not increasing consumption. just eager to buy the new products and Environmental changes, the depletion of services but to experience the process natural resources, the aging population, the

6 Economic Alternatives, Issue 2, 2014 Articles needs for new skills and social inclusion as we are if we weren’t intrinsically attracted well as the needs for emerging markets to new things". More consumption is a and the rising world "middle class" and measure of individual and national success. population "at the bottom of pyramid" The investment in R&D and the application enhance the practice and coin new terms like of research results lead to breakthrough "green", "sustainable", "eco", "environmental", innovations satisfying customers’ needs "social", "paradigm", "frugal" , "reverse" in new ways and creating new wants. together with "disruptive", "lead-user" and From this perspective consumerism has a "open " innovation. positive impact on innovation as a source of New product development (NPD) is economic growth the process from the of an Sustainable Consumerism and Innovation idea for a new product to its successful commercialization. The new product Nevertheless the rising consumption development process has been integrated of innovative products is often considered in the modern marketing concepts of as one of the reasons for environmental how companies identify and perform deterioration. In the last 20 years consumers their social responsibilities. Creating new have been incresingly concerned about products/services that satisfy long-term sustainability-related issues (Ottman, 2011). needs better and spending less Environmental and health concerns increase on promotion has been a major aspect of the demand for different types of products the enlightened, societal and marketing 3.0 defined as sustainable or green products. concepts (Kotler, 1972; 2011). As Janssens and Jaager (2002) describe them these are products and services that 2. Consumerism concepts minimize the environmental impact of their and innovation consumption. Green gradually becomes . 2.1. Consumerism as a Driver Changes in the lifestyle of the of Economic Growth consumers in the developed markets Consumerism puts consumption at and raised awareness of environmental the very heart of modern economy. The issues influence business decisions on general assumption is that the more we a different type of new products and consume the better off society will be. The services. Companies started to create new consumers’ demand for new products is an choices for consumers. As Ottman (2011) engine of economic growth. Consumers’ states, "Choice is the first step to change needs and desire for new products and their behavior". The higher income of the shortens the product-life cycle population in the developed and serves as a prerequisite for creating makes green or sustainable products better products and services. Desire for affordable. Sustainable consumerism novelty is an essential characteristic of requires that innovation "decouples growth human nature. Graves (2013) states that from natural depletion" (OECD, "we wouldn’t be the extraordinarily creative, 2011). Even the present crisis re-enforced progressive, and successful species that by the mega challenges of health, energy,

7 Consumerism as a Source for Innovation Articles and Product Development food, and poverty cannot be overcome in the energy-efficient products and services traditional way of hyper-consumption and (32 % of the respondents), new products requires a re-design and shift to sustainable or services for older consumers (15 %) consumption. (Burgelman, 2009) and education, social or health services Recent research of the UK Department (12 %). Social innovation defined as "new for Business, Innovations and Skills products, services and models creating (2013) confirms the growth of sustainable social value and new social relationships consumerism. The global market for low or collaborations" (BEPA, 2011, p.11) carbon environmental is expected to be an equally important is estimated at €4.2 trillion and has shown source of the future growth and well- an annual increase of 3.8% in 2010/11 being of modern society as is technology compared with increases in previous enhancement. years of 3.7% and 1.75%. Asia accounts Impact of Sustainable Consumerism for 38% of the global sales, followed by on the Company Innovation Strategy the Americas (29%) and Europe (28%). US accounts for 19.2% of the global total, Many large companies develop followed by China (13%), Japan (6%), India sustainable innovation strategies and (6%) and Germany (4%). redefine their business models. Product The research among business innovation is accompanied with service executives and customers also support innovation to meet the demand for shared the conclusion that consumer demand value which is due both to new the for sustainable products and services is consumer culture of using goods and the a primary driver of investment in NPD. economic crisis. The global leader in One out of three of the developed market rental business Hertz developed a car- consumers surveyed currently consider share service Hertz On Demand which the environmental impacts of purchases contributed substantially to company more often than they did three years ago. . PUMA challenges the business Thirty-five percent buy locally sourced or community and the consumers with the made products more often. One in four idea of "leasing the shoes" in the future by more often buys or uses things that were changing the design, the loyalty program previously owned by someone else. Many and the participation of customers in the of the business managers believe that the NPD process (Baker, 2013). demand for more sustainable products Large companies reported savings and services will speed up in five years. due to re-designing their products. IKEA Therefore launching new sustainable lines sustainability and profitability plans aim to is a priority of future business investments utilize renewable sources for 100 percent in all the markets (Accenture, 2012). of its energy needs and to considerably The results of the Innobarometer increase the sales of sustainable products (2009) research established that European by 2020. These plans will be implemented business sees opportunities for innovation while maintaining the strategy of low- in the coming 3-5 years in four key sectors: cost quality home furnishings. Coca- increased demand for sustainable or Cola increases the usage of PlantBottle

8 Economic Alternatives, Issue 2, 2014 Articles packaging that uses materials up to 30% of new technologies that will improve plants-based. PlantBottle is an example the efficiency of core operations for the of the company approach to consider the production of sustainable products are packaging not as waste but as a valuable crucial areas for sustainable consumption. resource for future use. Currently PlntBottle The balance of consumer needs for quality, is used for mineral water, Coca-Cola, Coca- performance, affordability and convenience Cola Light and Coca-Cola Zero in the US, with environmental protection and social Japan, Brazil, Sweden, Denmark and many engagement is likely to increase the sales other countries from different continents. and satisfy the customers’ and the company The new bottle was introduced in 2013 shareholders’ expectations. for packaging the Bankia mineral water, Frugal Innovation and Consumerism which is one of the most popular brands in in the Emerging Markets Bulgaria. In the long run the company will use PlantBottle instead of plastic packaging In the emerging economies the growing for all its products. (Coca-Cola Company middle class and the increase in disposable Journey, 2013) incomes have elicited an unparalleled wave Green products are offered also of consumerism. The creation of affluent extensively by the financial services consumer markets eager to improve and sector. Green banking products as well expand their lifestyles attracts and sustainability in business operations are inspires the development of new products on the rise in compliance with consumer and services for those markets. Though the demands. emerging economies are slowing down their However, the demand for green or growth in the last years their demand for sustainable products is fluctuating even high-tech, luxurious, healthy new products in the most developed economies. The and services is an important driver of penetration rate of green products is consumerism in the world. growing but still limited because customers At the same time the existence of have to pay more for less and many of them multibillion of people at the bottom of the are concerned with price. The criterion for pyramid pose unique problems for the identifying a product as green is insufficient introduction of new products and services. to justify purchase. (Villano, 2011). The According to Prahald (2010) the emerging reasons for the high prices are the lower consumer is becoming aware of any of more sustainable products products and services and is aspiring to and services, the controlled investment in share the benefits. Consumer communities the face of lower margins, the still emerging and activities develop fast. However, capacity or the development of more they still are "mega markets with micro sustainable products. (Accentuate, 2012) consumers" which defines a different set of The conclusion is that the expansion of needs and wants and consumer behavior sustainable consumerism in the developed (Govindarajan and Trimble, 2012). Frugal or world is dependent on innovations that will jugaad innovation is the approach developed lower the cost of the sustainable products to satisfy the consumer needs under the Process innovation and the introduction conditions of limited resources (Bound and

9 Consumerism as a Source for Innovation Articles and Product Development

Thornton, 2012). Companies of different developed and developing markets taking size are providing innovative solutions at a into consideration resource constraints. low cost. Often cited examples are: SELCO Frugal is actually a sustainable innovation. that provides solar energy at very low prices The growing R&D potential of to over 125,000 households in remote the emerging markets creates new Indian villages; Tata with the cheapest opportunities for sustainable consumerism car in the world and the Kenyan M-PESA, in the developed world. It made possible a service that enables country citizens to the reverse innovation describing the save, spend, and transfer using their new direction of innovations – from the cell phones without having a account. emerging to the developed economies. In South Africa’s eWallet is another innovative the 1960s Raymond Vernon developed the technology based on mobile technologies international product life-cycle model which and is widely adopted. It was developed and described the ideation of innovation in the is used by Africans. The Indian company countries with substantial R&D potential Tata implemented frugal innovation by and the gradual transfer of new products creating the water purifier Swach (Radjou production from the developed into the and Prabhu, 2013; Bound and Thornton, developing economies. In the course 2012; Krishnan and Jha, 2011). of the product life cycle the latter were While frugal innovation was initiated by transforming from importers to exporters. companies in emerging economies and The increased research capabilities especially in India, it soon became part of of the emerging markets and the new the innovation strategies of the multinational technologies that made the world companies from the developed world. For connected brought about important the emerging economies companies like changes. Many innovative ideas appear Unilever and P&G offer the affordable today in the emerging markets and sachet format in categories like detergents, are transferred to the most developed shampoos. designed chula ovens in economies. The GE screener, "small- India to decrease the accidents of fire and mart concept of Wal-Mart" that has been suffocation. A similar approach has worked initially introduced in Central and South well in the cellular telephone service America and brought back to the USA category. Brands like Vodafone have market, low-cost open-heart and cataract been able to penetrate the Indian market surgery are typical examples. The needs by selling pre-paid cellular phone service of sustainable low-cost and high value vouchers for as low as Rs.10. Reaching products and services in the developed mass consumers has been made possible markets is a prerequisite for the intensive by selling the vouchers through grocery and flow of ideas and the entering of "emerging convenience stores. markets giants" like Lenovo, Haier, Tata Frugal innovation is often disruptive in and Mahindra. Multinationals that ignore the sense described by C. Christensen the emerging markets’ potential for because it transforms a complex and innovation are under the threat of being expensive product into an affordable left behind (Govindarajan and Trimble, one. It encourages consumerism both in (2012); Ramamurti, (2012).

10 Economic Alternatives, Issue 2, 2014 Articles

3. Consumerism as a Protection In the past 50 years the EU created of Consumer Rights a complex set of policies for consumer Protection of consumers from the protection. It comprises product safety business and the government practices policy and legislation, consumer law that infringe their rights is the dominant to combat unfair commercial practice, feature of consumerism in the 1960s and it unfair contract terms and misleading continues to be important today. Though the advertising, both in domestic and cross- research shows that motivate border purchases. The recently adopted less the companies’ investments than Consumer Rights Directive has substantially consumers’ needs and wants, the advance strengthened consumer rights, in particular of new domains for business like digital by harmonizing a number of rules applicable world requires constant improvement of to online contracts. Despite the high level consumer protection. of consumer protection already achieved in the EU, the new challenges like new 3.1. Legislation and Innovation developments in technology, unsustainable patterns of consumption or social exclusion The growing concerns of consumers require improvement (EC, 2012). The major about sustainable products and services directions with an impact on innovation and lead to legislative amendments and to NPD are improving consumer safety and the new products and services that follow the education of consumers about their rights regulations or have a pre-emptive role. For and sustainable choices. example the UK is modernizing its consumer In the USA a major area of the impact protection legislation by introducing a new of consumers’ rights on NPD is product Consumer Rights Bill. According to the liability. It has an effect on the innovation UK Department of Innovations and Skills, mainly through the opportunities for currently consumers spend more than inherent, design and manufacturing 59 million hours a year to resolve goods defects, and lack of adequate instructions. and services problems. (UK Department The misrepresentation of their features, of Innovations and Skills, 2013). The new functions and qualities by the sellers has Bill will eliminate the overlapping and will a negative impact on the new products introduce new rights for consumers and and services diffusion. The specialized . The impact on innovation will legislation impacts also the NPD process at be to increase customers’ confidence in different stages. For example the Consumer buying and using new products and services Safety Product Commission based on the in everyday situations. Businesses will Consumer Product Safety Act can order also benefit from the Bill because clearer product recalls or issue public warnings, and regulations are going to be introduced about levy high penalties. It also sets standards the obligation and they will have to observe for products. Recent examples are the them in the NPD process and after the new standards for the nano-technology enabled product launch. The Bill also defines for the consumer products. first time a consumer protection regime for China has also changed and adopted digital content and thus will contribute to its new regulations on product liability that rapid growth.

11 Consumerism as a Source for Innovation Articles and Product Development came into effect in 2011. The new regulations by a joint initiative of six world leading food provide that when a product is defective companies Coca-Cola, DANONE, Kellogg, but has yet to cause actual damages, a Kraft Foods, Nestle, PepsiCo, Unilever potential injured party has legal rights to and Mars with the opportunity for other ask a defendant to remove obstacles and to international and local players to join. eliminate danger. When a product is found The Sustainable Apparel Coalition is to be defective after it is put into circulation, another example of industry self-. the manufacturer or seller of that product It is an industry-wide group of over 100 must give timely warnings and recall the leading apparel and footwear brands, defective product; otherwise it will bear tort retailers, suppliers, nonprofits, and NGOs liabilities. The new laws also enlarge the working to reduce the environmental and scope of recall obligations to all products. social impacts of apparel and footwear According to the legal experts Beconcini, products throughout the world. The coalition Chen and Liu (2012), product liability created the Higg Index that measures the already constitutes a serious factor for environmental performance of apparel foreign companies because there is going to products and in the future versions will be a likely surge in product liability litigation include footwear. The common approach which will threaten foreign manufacturers, of the partners to measure apparel and together with their business organization footwear sustainability is expected to identify and partners in China. New products and priorities and opportunities for technological service development for the Chinese market innovation (Sustainable Apparel Coalition, requires re-evaluation of sales or purchase 2012). contracts to ensure that harmless clauses, Public pressure for consumer protection warranties, guarantees and disclaimers has an important impact on the new are properly addressed. Since the new product development and companies have laws are likely to increase their liabilities to be active participants in the process and the likelihood of litigation, foreign in order to make time strategic decisions. entities need to pay special attention to the The research on public pressure identifies manufacturing of their products, distribution four life cycle phases that define to a systems, product recalls litigation and public large extent the changes in the regulations relations crisis . and their impact on innovations and NPD. Industry initiatives for self-regulation are Crawford and Di Benedetto (2011) describe another form of voluntary guidelines and rules the four stages as stirring, trial support, the that aim to increase consumer confidence political arena and regulatory adjustment. and to enhance more responsible corporate All of them require either monitoring (first practices. The UK experience in determining and second stage) or company involvement the Guideline Daily Amounts (GDAs) for (third and fourth stage) in the process so food developed in 1998 was widely spread as to be able to redefine the products and in Europe by the large companies that services or the whole business on time. supported the FoodDrinkEurope project for For example the teaming of complaining uniform nutrition information on the labels. customers and consumer In Bulgaria the GDA was introduced in 2007 is a sign that the politicians will be soon

12 Economic Alternatives, Issue 2, 2014 Articles engaged in the process and the regulations looked for new ways to encourage this are likely to change in the near future. The form of self-financing, mobile distribution expected changes have to be included in and regular payment collection. Recently the medium-term strategy of the company the users in India have had the chance to and scenarios will prompt alternative download applications for money transfers. ways and influence new products and Social innovation is another area for services decisions. The positive outcome community-needs based innovation. In of the consumer protection measures for 2012 P&G Children’s Safe Drinking Water innovation is the increased acceptance of Program was named as an innovation the new products by the customers. "beyond inspiration." Phil Souter, a 15- year P&G employee, invented the powder 3.2. Consumers’ Rights Protection technology which, when mixed with water, in a Location removes dirt, cysts and pollutants, while The consumers’ rights protection of a killing bacteria and viruses. The innovation community living in a particular location provides a reliable method for providing influences innovation and new product drinking water. development. For many large companies 4. Consumerism and Consumer obtaining "a license to operate" in a Empowerment particular territory (Tidd and Bessant (2013) involves a variety of innovations. New technologies contribute to customers’ Protection of consumer community empowerment in innovation and NPD. The rights leads to process innovation or the changing consumer behavior creates way the product is produced. For example at opportunities for NPD. Customers can the beginning of the P&G and Nestle participate in every decision in the new were under strong pressure to stop buying product development process. A major products from El Salvador. A decade ago characteristic of the contemporary markets Starbucks introduced Coffee and Farmer is the networked customer. Nunes, Yardley Equity (C.A.F.E.) Practices, a comprehensive and Spelman (2013) describe the networked coffee-buying program that ensures coffee customers as increasingly "co-operative," quality while promoting social, economic placing a strong emphasis on responsible and environmental standards. production and consumption. They re- Consumers’ demand brings Innovation use, recycle or share products that they in distribution and financing. A good previously used or owned. example is Nokia practice in India and Social media and digital technologies Africa. The company explored rural India allow the companies to directly engage with with a fleet of blue, Nokia-branded vans. customers on their portfolio of products. Nokia representatives explained the basics According to recent research, 30 percent of of mobile phones to the clustering people. the developed-market consumers provide Similarly, in the African country of Nairobi, more online feedback to companies about Nokia discovered that many poor people their products and services. And 65 percent buy mobile phones by pooling their cash of the developed-market consumers use with friends and neighbors. The company the more to research products and services (Accentuate, 2012). Thus

13 Consumerism as a Source for Innovation Articles and Product Development social media provide opportunities for the companies involve consumers as much as companies to have direct possible in the strategy development process and to create platforms that can be and in the long run have a bigger potential used in every stage of the NPD: strategy for successful business. For example P&G development, idea generation, product Connect+Develop Innovation Model (C+D) development, testing and commercialization. has been implemented for more than a The level of consumer involvement depends decade. A major goal the company is trying on the product or service characteristics. to achieve in the new decade is that C+D The sequential process of new product triples its contribution to P&G's innovation development has been criticized a lot as an development by delivering $3 billion toward ideal and not very realistic one (Baker, Hart the Company's annual sales growth. 2007, Cooper, 2011; Crawford, Benedetto, Market Readers like Hyndai observe the 2010; Trott, 2011). However, the system customers and competition and implement of phases and activities allows analyzing the incremental innovation and the fast consumerism impact on them. follower tactic. Technology Drivers as Google rely primarily on their own research 4.1 Innovation Strategy Development and technological potential for breakthrough The changing consumers and their and continuous innovations that meet expectations to buy from companies that consumers’ needs and rely less on the are more responsible global players require interaction with customers at the strategy the development of sustainable innovation development stage. strategies. The innovation audit identifies 4.2. Idea Generation the company’s capacity to recognize technology opportunities as well as the Idea generation is the stage of NPD where consumer behavior trends that will influence consumer involvement is mostly practiced. the type of products and services needed It is described today with a variety of terms and the way the customers will buy them. like open innovation, crowdsourcing, co- The major elements of the innovation creation, lead-user innovation, etc. Web 2 strategies like objectives, arenas for technologies allow global reach to customers innovation (markets, products and of many large and small companies. The technologies) and the types of innovation open innovation model (Cristensen, 2003) strategy are reconsidered. The sway of has become gradually the model for research consumerism on the innovation strategic and innovation in the 21st century. Its essence decisions depends on the type of the is that companies have to combine internal strategy that the companies implement. research and innovation efforts with ideas According to Jaruzelski, Loehr, Holman from various external sources and customers (2012) Need Seekers like Apple and P&G are one of the most important. base their innovation strategies on "superior Crowdsourcing (Sloane, 2010) as end-user understanding." They put a lot of contracting out a certain job to a large efforts in the identification of clearly defined group of people, allows the companies not and tacit consumer needs and try to be only to collect ideas but also to innovate the pioneers of new products. These types of processes of purchasing and financing. For

14 Economic Alternatives, Issue 2, 2014 Articles example for charity or micro- Lead-user innovation (Hippel, 2005) is lending is a typical process innovation. The another area in which consumers with specific "crowdsourcing" term creator Jeff Howe unmet by the manufacturers needs become (2009) emphasizes that its usage requires initiators and creators of innovation. Social a good understanding of consumers ‘needs. media allows the combination of efforts and Crowdsourcing satisfies the needs of creativity, lead-users become not just individuals with impulsiveness, problem-solving and affiliation. specific needs but communities of otherwise Therefore respecting and motivating the unrelated consumers. crowd is a necessity for successful innovation. Depending on the type of the business Companies from various industries have some companies are almost completely created their crowdsourcing platforms for idea "outsourcing" the front end of NPD to the generation. For example Heineken uses its consumer communities. The products are crowdsourcing platform IdeasBrewery.com to positioned on the market as designed by reach the 'liberated' generation of 60–70 year users. A typical example is Threadless. old consumers who "enjoy more freedom from The practice of using consumers as jobs, children, stress and strive more for quality co-creators poses the question about of life, well-being and self-development". The customers’ perceptions of these companies BMW Group Co-Creation Lab goal is to involve as innovative. Innovating users often serve customers in the ideation and evaluation of other consumers as strong opinion leaders. concepts on tomorrow's automotive world. However, Brownet al., 2006 have found In 2012 the subsidiary of Boeing Company that their influence depends very much on Jeppesen Sanderson Inc. specialized in the the specific characteristics of the product development of navigational solutions for the category. When products are complex, such transport industry involved pilots in the co- as consumer electronics and high-tech creation of Mobile FliteDeck. It is a paperless gardening tools, the innovation effect of user navigation tool for iPad and the first interactive design tends to reverse. mobile enroute flight application What type of consumer should the A major trend in open innovation and companies use in idea generation is crowdsourcing is sustainability. In 2012 another aspect of the co-creation process. Unilever launched an online system which There are two major approaches – random offers outside experts the chance to work sampling and more knowledgeable users. with Unilever on research projects in a Both have advantages and constraints. number of areas that will promote sustainable Integrating qualified lead consumers living, such as cold-water wash laundry into the product development team early products. The company encourages also in the development process can lead to the internal for sustainable success in the market as the resulting manufacturing ideas. The management has products address directly consumer set up a Small Actions, Big Difference budget needs. Schreier, Fuchs and Dahl (2012) and employees can apply for investment for have researched the purposive sampling, their ideas which are evaluated on the basis in which users with a particular profile are of environmental benefit and financial return. specifically sought to ensure participants' In 2012 over 600 projects were identified. familiarity with and knowledge of the

15 Consumerism as a Source for Innovation Articles and Product Development product or product concept field. Their Evaluation of concepts is practiced also conclusion is that targeting potential in the co-creation labs of companies participants with a baseline level of across automotive, fast moving goods knowledge streamlines the process and industry, IT sector, etc eliminates some of the less useful inputs that may emerge from a more random 4.4. Product Development, Testing sampling method. and Launch The co-creation of innovation involves The empowered customer changes the also another aspect of collaboration existing concepts of consumer involvement – across the value chain and with all in the process of innovation diffusion and business intermediaries since they have adoption and the barriers to innovation. the knowledge and skills as well as Downes and Nunes (2013) argue that the understanding of consumers that in new product development today new contributes to innovation. On the other products are perfected with a few trial hand, large companies develop special users and then quickly become part of job positions of managers that translate the vast majority consumers. Instead of the innovation strategy of the company the five adoption categories described to the suppliers and distributors. For by Everett Rogers at the beginning of example Mondelez has introduced the job the 1960s, today the customers can be position of the procurement innovation divided into few trial users and everyone managers that communicate with new else. Even the NPD is shortened to three product teams and suppliers in order stages "development, deployment, and to leverage the supplier capabilities for replacement." company innovations. Companies that try to overcome diffusion and adoption barriers in innovation 4.3. Idea Screening, Concept Development include customers in the overall NDP. A and Testing good example is Audi. Füller et al. (2006) At these stages social media describe the company practice to recruit provide concept and prototype testing randomly car bloggers and subscribers opportunities that are used by companies to its Product and Technology newsletter from various sectors. A typical example section and potential car buyers who of customer involvement in the screening visited the company's website. Audi did process is Lego Cuusoo. The platform not screen participants based on their allows the company not only to generate particular knowledge of the product field. new product ideas but also to involve As part of the idea generation and concept customers in their assessment. When the stages, these participants are asked for idea is supported by 10, 000 customers their opinions on infotainment visions. In the the company analyzes its technical and design and engineering stages, participants market feasibility based on transparent to configure their individually desired concepts the public criteria. The customers whose as virtual prototypes and then evaluate ideas are developed further on receive systems. They also evaluate critically the 1% of the total net sales of the product. final preproduction prototypes.

16 Economic Alternatives, Issue 2, 2014 Articles

Conclusions References:

Consumerism is a complex social Baker, M., Hart, S., 2007. Product Strategy phenomenon. Defined as a driver of and Management, Second Edition, Prentice economic growth, protection of consumer Hall Europe rights or empowered customers it has Baker, R., Will consumerism as we know it a positive impact on the innovation and become obsolete? Marketing Week (Online new product development process. Edition), 6/13/2013 The barriers to satisfy consumers’ Boudreau, K., Lakhani, K., 2013. Using the needs and desires in the old way and Crowd as an Innovation Partner, Harvard the technological enhancement brings Business Review, April 2013 new types of innovation and requires a balance of using the internal innovation Beconcini, P., Chen, E., Liu, H., 2013. capacity of the companies and customers’ Talking Point: Impact Of China’s New involvement. Product Liability Laws, Financier Worldwide, Available at: http://www.financierworldwide. The variety of approaches to define com/article.php?id=9111&page=1 consumerism determines the different aspects of researching the interaction Bound, K., Thornton, I., 2012. Our Frugal between consumerism, innovation and Future: Lessons from India Innovation’s new product development. Consumerism System, NESTA, Available at: http:// today is influenced by the changing buyer www.nesta.org.uk/library/documents/ behavior. The networked and increasingly OurFrugFuture.pdf green customer is interested in high Burgelman, J., Social innovation for post value, high quality low cost products and crisis growth: adapting to the knowledge services and is more ready to share the society, Available at: http://www.oecd.org/ ideas for their creation and the product sti/inno/44076133.pdf themselves. Campbell, C., 2010. What is Wrong with For many customers in the emerging Consumerism? An Assessment of Some markets and transition economies frugal Common Criticisms, Anuario Filosofico; Vol. innovative decisions are the option 43, Issue 2 to benefit from the achievements of contemporary society. Frugality allows Chen, J., Guo Y., Zhu, H., 2012. Can me- new approaches for social innovation. too products prevail? Performance of new The major implications for the innovation product development and sources of idea generation in China – an emerging market, and NPD are that companies will have R&D Management 42, 3, 2012 to continue to search for new business models and co-creation throughout the Chesbrough, Henry, 2003. Open Innovation: NPD of sustainable products and services The New Imperative for Creating and Profiting without being able to rely on long-term from Technology, Harvard unchanged models. Press Books

17 Consumerism as a Source for Innovation Articles and Product Development

Christensen, Clayton M., Baumann, Heiner, Govindarajan, Vijay, 2012. Reverse Ruggles, Rudy, & Sadtler, Thomas M., 2006. Innovation: Create Far From Home, Win for Social Change. Everywhere, Harvard Business Review Harvard Business Review, December 2006. Press Communication from the commission to the Govindarajan, Vijay, Trimble, Ch., 2010. European Prliament, the Concil, The Economic The Other Side of Innovation: Solving the Execution Challenge, , Harvard ans Social Committee and the Committee of Business Review Press the Regions. A European Consumer Agenda - Boosting confidence and growth, Brussels, Graves, Ph., 2013. Consumer.ology, Nicolas 22.5.2012 COM(2012) 225 Brealey Publishing, London.Boston. Cooper, R., 2011. Winning at New Рroducts. Hippel, Eric von, (2005), Democratizing Accelerating the Process from Idea to innovation,. Available at: http://web.mit.edu/ Launch, , Basic Books Perseus evhippel/ www/books.htm Publishing House Howe, J, 2009. Crowdsourcing: Why the Crawford, C.M., Di Benedetto, A. (2011), power of the crowd is driving the future New Products Management. Tenth edition, of business, Crown Business Publishing , New York, McGraw-Hill New York Dahl, M., The Innovation Effect of User Innovation for Development, OECD, May Design: Exploring Consumers' Innovation 2012 Perceptions of Firms Selling Products Janssen, M., Jager, W., 2002. Stimulating Designed by Users, Journal of Marketing diffusion of green products: Co-volution Volume 76 (September 2012) between firms and consumers, Journal of , /2, 283-306. Downes, L. Nunes, B., 2013. Big-bang Disruption, Harvard Business Review, March Jaruzelski, B., Loehr, J., Holman R., 2012. 2013 The Global Innovation 1000: Making Ideas Work, strategy+business, issue 69 Winter Ehrenfeld, J., Hoffmanm, A., 2013. 2012 Flourishing: A Frank Conversation about Sustainability, Press Jugend, D., Luis da Silva, S., Integration in New Product Development: Case Study in a Empowering People, Driving Change, Large Brazilian High-Technology Company, European: Commission Social Innovation Journal of Technology Management & in the European Union, Bureau of Policy Innovation, 2012, Volume 7, Issue 1 Advisers, 2011 Kotler, Ph., 1972. What Consumerism Füller, J., Why Consumers Engage in Means for Marketers, Harvard Business Virtual New Product Developments Initiated Review; May/Jun72, Vol. 50 Issue 3, p48- by Producers, Advances in Consumer 57, 10p Research, Volume 33, 2006 Kotler, Ph., 2011. Reinventing Marketing Gabriel, Y., Lang, T., 2008. New Faces and to Manage the Environmental Imperative, New Masks of Today’s Consumer, Journal Journal of Marketing, vol.75 (July 2011), of Consumer Culture, November 2008, Vol. 132-135 8 Issue 3

18 Economic Alternatives, Issue 2, 2014 Articles

Long-term Growth, -Term Differentiation Ramamourti, R., 2012. Competing with and Profits from Sustainable Products and Emerging Markets Multinationals, Business Services, A Global Survey of Business Horizons, 55 Executives, Accenture, 2012 Rishikesha T., Jha, S, 2011. Innovation MacCormack, A., Crandall, W., Henderson, Strategies in Emerging Markets: What Can P., Toft, P., Do You Need a New Product- We Learn from Indian Market Leaders, ASCI Development Strategy?, Research- Journal of Management 41(1) Technology Management, January— Roberts, D.; Palmer, R., 2012. Developing a February 2012 Visceral Market Learning Capability for New Manktelow, R., Community, consumerism Product Development, International Journal and : the experience of an urban of Market Research, Vol.54 (2) community in North-West Ireland, Schreier, M., Fuchs, Ch., Dahl, D., 2012. Community, Work & Family, Vol. 14, No. 3, Design: Exploring Consumers' Innovation August 2011, 257_274 Perceptions of Firms Selling Products Designed by Users, Journal of Marketing Mathieu, M., Welcome to a world where any consumer is a marketer, Marketing Week Volume 76 (September 2012), 18-32 (Online Edition). 4/3/2013 Schiffman, L., Kanuk, L., Wisenblit, J., 2010. New bill of rights to help businesses and Consumer Behavior, Tenth Ed., Prentice Hall consumers (2013), Press release, Available Sloane, P., 2010. A Guide to Open Innovation at: https://www.gov.uk/government/news/ and Crowd Sourcing, Kogan Page, London new-bill-of-rights-to-help-businesses-and- Solomonn, Michael, 2011. Consumer consumers Behavior: Buying, Having and Being. Ninth Nunes, P., Yardley S., Spelman, M., Don’t Edition, Prentice Hall Europe Despair: Growth from Consumer Behaviour Thomke, S., Reinertsen, D., Six Myths Of Change in Developed-Market Economies, The Product Development, Harvard Business European Business Review May - June 2013 Review, May 2012 Ottman, 2011. The New Rules of Green Towards Green Growth, OECD, 2011 Marketing: Strategies, Tools and Inspiration for Sustainable Branding, Berett_Koehler Trott, Paul, 2011. Innovation Management Publishers, San Francisco and New Product Development: Fifth Edition, Prentice Hall Europe Prahalad, C.K., 2010. Fortune at the bottom Tuten, Tracy, 2013. Promoting Sustainability of the Pyramid. Eradicating Poverty with by Marketing Green Products to Profits, Pearson Education, Inc, Publishing as Prentice Hall Upper Saddle River, New Non-Adopters, Gestion 2000, Mars- Avril 2013 Jersey 07458 Villano, M., 2011. Selling green. Entrepreneur, Radjou, N, Prabhu J, Frugal Innovation: A November: 52-56. New Business Paradigm, Available at: http:// UK Department for Business Innovation and knowledge.insead.edu/innovation/frugal- Skills, Low Carbon Environmental Goods innovation-a-new-business-paradigm-2375 and Services, Report 2011/12, July 2013

19