To Innovate or Imitate?
Imitators
- wait until a product market is known, growing and maturing and they can copy (legitimately or illegitimately) the design. Once the product specification is known, they can develop their version. Note the American dismay at the pirate copying of music, video and computer software products by certain Pacific Rim countries. Note the supermarket, own-brand copyists of the market leading Timotei and Head and Shoulders shampoo brands.
Legitimate imitators may enter late in the product life cycle.
If an original developer-innovator wants to move on - they may seek to re-coup part of their original investment by licensing older products and selling the designs and tools they are no longer needing. East European low price car manufacturers made old Fiat models with tools and presses bought from Fiat who had re-tooled for new models. An Indian company is still making the old British Enfield motorcycle and indeed are exporting the "retro-Enfield" into the UK.
- introduce early product up-dates and invest in market research/product design. A new product is launched before the current one starts to slide. This pressurises competitors and grabs market leadership. Rising star products offer premium prices and high market share.The innovator researches and develops rising star products with unique selling points. Innovation often comes from quick exploitation of new technology, brand promotion and defence of patents.
The innovator may need to licence out patented designs so that enough can be produced to supply the market. It may not have the capacity to supply the market totally from its own resources. The small innovative company may be short of financing to expand quickly. Expansion itself may result in organisational growth pains and tensions.
References
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