Downstream innovation - Why the iPhone is such a success story

This study by Prof. Dr. Niraj Dawar and Dr. Frank Goedertier emphasises that clever innovative companies place the focus not on the development of a new product but rather on the development of a new market segment. New market segments can be developed in a variety of ways. This report explores the impact of consumers’ thought processes on their buying behaviour and shows that companies that take astute advantage of these processes can create a cognitive competitive advantage.

The Context: Increasingly ‘Downstream’ Activities are Making the Difference

A company’s activities can be divided into upstream activities and downstream activities − or, respectively, everything that happens before and after a product comes onto the market. In the last few years, the ability of upstream factors (raw materials, production, R&D, etc.) to build competitive advantage has fallen off sharply. In fact, a majority of companies in many Western economies now have easy access to upstream factors of equal quality via outsourcing or in-house development. This means that the relative capacity of downstream activities (marketing, sales, service, brand policy, etc.) to build competitive advantage is on the rise. A good example of this evolution is the car industry: all of the manufacturers produce cars of equivalent quality, but they differentiate themselves from each other in the area of brand perception. So, investing in downstream pays off!

About Flanders DC

Flanders District of Creativity is the Flemish organisation for business creativity. It was founded by the Flemish Government as a non-profit organization and enjoys broad support. Flemish businesses, academics, and public institutions use Flanders DC as a platform for cooperation and for building a more creative region. Creativity is the key ingredient in making companies more successful and in helping regional governments fuel a healthy economy with more jobs.

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