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Case Study One Itec 5550


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Case Study One Itec 5550

  1. 1. Co-Opetition as an Innovation <br />To Aid in the Diffusion of Screw on Wine Caps in the United States<br />Jessica Hollon<br />University of Wyoming<br />Overview of the Case Study<br />Garcia and Atkin’s case study focused on the resistant innovation of the screw on wine cap in the United States. They compare the diffusion of the screw on wine cap, or stelvins, in the United States with the diffusion of this innovation in Australia and in New Zealand. In both Australia and New Zealand, Garcia and Atkin attribute the diffusion of the stelvins to the co-opetition between wine producers in each of these two countries. Co-opetition being, “the strategy of cooperating with one’s competitors as a means of increasing technological diversity and improving innovation output” (Brandenburger & Nalebuff, 1996). This strategy was not used in the United States and Garcia and Atkin theorize that this is why the screw on wine cap is still a resistant innovation in our country.<br />Focus of Evaluation<br />By evaluating the Garcia and Atkin case study using Roger’s model of perceived attributes of innovations (relative advantage, compatibility, complexity, triability, and observability) and Ram and Sheth’s barriers that prohibit consumers from adopting an innovation (usage, value, risk, tradition, and image barriers) I will point out that while a screw on wine cap is still a resistance innovation in the United States, it could be an innovation adopted by the majority of consumers if marketing strategies were utilized in a co-opetition format.<br />Evaluation <br />The screw on wine cap is not perceived as a relative advantage in the United States. Rogers (2003) states that “for an innovation to have a relative advantage is does not necessarily mean that the innovation is of objective advantage, but that an individual perceives the innovation as advantageous “(p.15). The consumers in the United States did not see the screw on cap as an advantage because they were not educated by wineries to the fact that the screw on cap could keep the wine from oxidizing, or that it could eliminate cork taint; therefore they were skeptical of its usefulness. <br />Evaluating this same concept of screw on caps not being a relative advantage to consumers using the Ram and Sheth model of innovation barriers, this problem would fall under the risk barrier category. Ram and Sheth (1998) define risk barriers’ as “becoming relevant when customers are uncertain about physical risks, economic risks, functional risks, or social risks from using a product.” I believe that the risk these consumers were facing was the functional risk, and also the social risk. They had no background knowledge of the functional advantages of screw on caps, and also “most US wine consumers associate the screw on cap with inexpensive jug wines (Garcia & Atkin, p. 5) making it social risks as well.<br />There is also the problem of the screw on cap not being compatible with the past experiences of wine connoisseurs. Compatibly is defined as “the degree to which an innovation is perceived as being consistent with the existing values, past experiences, and needs of potential adopters” (Rogers, 2003, p. 15). In the past wine has largely been associated with a corked top, so for consumers to make a new association on their own, without marketing to help them, is difficult. This is also an example of a tradition barrier. Ram and Sheth (1989) point out that “tradition barriers occur when an innovation requires a consumer to deviate from established traditions.”<br />The complexity of this innovation is actually less complex then the cork. To unscrew a lid is not difficult, in fact most consumers use this type of lid in many other household products, many more then have corks. Therefore, the complexity, or “the degree to which an innovation is perceived as difficult to understand or use,” (Rogers 2003) is really less in the case of the screw on lid then of the cork. <br />However, there is a huge image barrier when it comes to the screw on lid for wine. Ram and Sheth (1998) define an image barrier as “occurring when a consumer associated an unfavorable image with a product.” As pointed out previously in this paper, the majority of the consumers in the United States associate the screw on cap with inexpensive, low quality wine. <br />In regard to Rogers (2003) triability, or “the degree to which an innovation may be experimented with on a limited basis,” (p.16) I do feel as though consumers could buy a bottle of wine they had previously bought with a cork, and try it with a screw on cap. However, later in this paper I will mention some possible additions to the co-opetition process, one of which is putting screw on caps on high priced wine to show that it is not just for lower end products. In this instance the triability of the product would go down, because a consumer may not be willing to spend a lot of cash on a product if they are unsure that the screw on cap will have the same effect of the cork, which they prefer.<br />The major advantages of the screw on cap innovation are not visible with the human eye, the customer has to buy the product, and try it. For this reason the screw on cap is not an innovation with great observability. Observability is defined by Rogers (2003) as “the degree to which the results of an innovation are visible to others” (p. 16). The results of less oxidation and no cork taint are not visible which a problem is for consumers who are not educated on the advantages. <br />Using Co-opetition as an Innovation<br />An innovation is defined as “an idea, practice, or object perceived as new by an individual or other unit of adoption” (Rogers, 2003, p. 36). Therefore, the practice of co-opetition, “the strategy of cooperating with ones’ competitors as a means of increasing technological diversity and improving innovation output” (Bradenburger & Nalebuff, 1996) can be viewed as an innovation in and of itself. It is an innovation that was not used by the United States wine producers, but was used by the Australian and New Zealand wine producers who were much more successful in diffusing the innovation of screw on wine caps.<br />I believe that had the United States wine companies worked together in a form of co-opetition, the screw on wine cap would have been more successful. The cap is an innovation with relative advantage over a cork, as well as being not complicated to use. Had the US wine companies formed a marketing strategy together where the consumers were educated on the advantages, as well as employed strategies through multiple communication channels, given time and much marketing effort the social connotation of screw cap wine being “cheap” may have been dismissed. I believe they will need to form a united front for the consumers to come around. They may also try what the case study suggested, putting the screw on cap on high priced wine. I however see a disadvantage to this. <br />The disadvantage may be, that in the beginning consumers who can and would buy the higher priced wine, may chose not to because they are not totally sold on the screw on lid and are not willing to potentially waist that much money on it. However, if screw on lids were put on mid priced wines of all US brands, the consumers would begin to see that the lid is what most brands are going with, and would then be the change agents the companies need for diffusion. These consumers could become opinion leaders, who are “individuals who lead in influencing others’ opinions” (Rogers, 2003, p. 300). <br />Ultimately I believe that the target audience in the United States to start the diffusion of the screw on cap of wine would be the consumers who on a regular basis by mid-priced bottles of wine. Once these wines start to sell, consumers of high priced wine would likely be more open to the cap as well. I do not believe even this marketing strategy alone will be successful if co-opetition is not utilized. If consumers are getting differing messages from different companies they will likely go with their comfort level and past experience- the cork. <br />Personal Reflection<br />After analyzing this case, I have learned that even though an innovation may seem great on paper, it does not always diffuse. I think that the relative advantage of a screw on lid is high, but that a cork is traditional. It is hard for even the most influential companies to change peoples' feeling on issues that deal with heavy connotation and are rooted in tradition. When discussing changing something that is traditional to most people, I would only assume you would come up against a lot of opposition.<br />Brandenburger, A. M. & Nalebuff, B. J. (1996). Co-opetition: a revolution mindset that combines competition and cooperation: The game theory strategy that’s changing the game of business. New York: Doubleday.<br />Garcia, R. & Atkin, T. ( ). Co-opetition for the diffusion of resistant innovations: A case study in the global wine industry. Institute for Global Innovation Management.<br />Ram, S. & Sheth, J. N. (1989). Consumer resistance to innovations: The marketing problem and solution. Journal of Consumer Marketing, 6(2), 5-14.<br /> <br />