New Function of Open Innovation

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From the perspective of business management, companies need to focus on their competitive advantage and marketing strategies to impress consumers through building brand loyalty. Changes in the economy and technology have meant that consumer’s thoughts and behaviours have subsequently altered. People from developed economies possess knowledge and an appreciation of

From the perspective of business management, companies need to focus on their competitive advantage and marketing strategies to impress consumers through building brand loyalty. Changes in the economy and technology have meant that consumer’s thoughts and behaviours have subsequently altered. People from developed economies possess knowledge and an appreciation of branded goods and sophisticated design. However, the current economic climate has meant that consumer spending on disposable goods has largely declined. Companies now have to confront diverse challenges in relation to consumer demands.

 

Glamorous advertisements and brand stories are no longer powerful enough to capture the attention of customers due to the mass information from global competitors. Companies now have to invest more time and money into understanding their customers, and then create their marketing strategies accordingly. Despite the additional research and tailored marketing, the outcome is not necessarily increased revenue. To overcome these shortcomings, a new approach, open Innovation, to marketing and branding is emerging.

 

It is becoming increasingly evident that a brand can only remain relevant in the market through strong communication and direct interaction with its customers, regardless of its products or services. Open Innovation could be a new approach in helping marketing functions to establish a new relationship between brand and consumer, which will in turn increase brand awareness and brand value. Open Innovation, regardless of its genre – whether it is a crossover, mass collaboration, crowdsourcing, or co-creation, has become a novel strategy for marketers and brand strategists in successfully attracting customers. The following illustrate two different forms of Open Innovation to attract customers.

 

Crossover with a Big Brand

Through collaboration, Open Innovation has the potential to eliminate the barriers between different industries, departments, and fields. Through collaboration with a partner who already possesses a strong reputation you not only reduce research and development costs, but automatically increase your brand value. For example, H&M co-design their products with luxury brands and, as a result, customers are able to buy big brand names without the big brand price tag. Co-design is a cost effective approach which has successfully enhanced their brand image of high-fashion design.

 

Co-create with your customer

Another function of Open Innovation is its potential to bridge the gap between brands and consumers. Introducing effective interaction with customers could assist brands in collecting crucial information for what appeals directly to them. Moreover, companies could create an interactive environment by inviting consumers to actively participate in the design and development processes. Through the direct inclusion of the consumer, companies have the potential to increase their commercial appeal.