3. Innovation: Business Context
• The process of translating an idea or invention into a good or service
that creates value or for which customers will pay.
• Customer-centric !!!
• Evolutionary innovations (continuous or dynamic evolutionary
innovation) that are brought about by many incremental advances in
technology or processes and
• Revolutionary innovations (also called discontinuous innovations)
which are often disruptive and new.
6. Watkinson’s 10 principles of customer experience
1. Great customer experiences strongly reflect the
customer’s identity – self value brand level
2. Satisfy your higher objs, product or service level
3. Leave nothing to chance, interaction level
4. Set and meet expectation
5. Effortless
6. Stress free
7. Indulging the sense
8. Socially engaging
9. Put customer in control
10. Consider the emotions
8. 3. Product Innovation
For a successful product innovation E.M. Rogers suggests the following
points of consideration
3.1 Relative Advantage
• new products must be substantially better value-for-money than
those they are replacing, in order for consumers to accept the risks of
using them
9. 3. Product Innovation
• 3.2 Compatibility
• An innovation is unlikely to be successful if it is a very radical
departure from the existing ways in which business is done in the
market sector in
- This could be wrong for inflight product (e.g. flatbed on BA, Etihad
Suite)
- But could be right for standing seats
- How about charging for cabin luggage? (like Spirit and Wizzair)
10. 3. Product Innovation
• 3.3 Complexity
• Some innovations fail because they are perceived as being extremely
difficult to use, requiring purchasers to invest a great deal of time and
effort
• Nok Air has a policy of not collecting irrelevant passengers’ data
(DOB, passport no, etc.) This is a double-edged sword for CRM
Analysis.
11. 3. Product Innovation
• 3.4 4. Divisibility
• It is often easier to persuade consumers to take a series of short
steps, rather than one very large and risky one.
• The principle of Divisibility is very well illustrated by the growing
popularity of so-called Fractional Ownership schemes for business
jets. (In which the manufacturer expect the fractional owners will buy
the plane outright at the later stage
12. 3. Product Innovation
• 3.5 Communicability
• Customers are unlikely to be persuaded to buy a product if the
benefits this product will bring cannot be communicated to them
persuasively.
• Miscommunication and the so called ‘internet drama’ is very difficult
to handle by airlines
13. Innovations: in Aircraft Manufacturing Factors
• Stagnation in Technology
• Duopolistic market Market power A v B / Particularly pronounced in the
regional aircraft segment.
• No willpower to produce radicalised design
- NO Longer about speed
- Fuel Efficiency Only focus since 1970
- Engine
- ETOPs
- Material
- Manufacturing Process
14. DevelopmentFirst Flight: 1903
Oldest airline with continuing ops (95 years)
Progress:
WW I -> Air Mail
Colonial powers: The golden age of flying boat
WWII -> Long range passenger planes
Fast-paced development in technology
https://www.youtube.com/watch?v=S4s2spL0O0Q&list=PLDF12C831C4
1E1B44&index=4
15. History: The Flying Public (60s-80s)• Safe and reliable
• The Jet Age
• Sexual Appeal
• The Jumbo jets – Unit cost
• The deregulation – Free competition
• Oil crisis – cartel
• The rise and fall of Concorde – Govt spending
• The fall of British jets – Govt intervention
• The charters – unit cost
https://www.youtube.com/watch?v=v9bVFkDhGPE
24. Key Take Away
• Stagnation
• Airline has no market power
• Where next?
25. Innovation In Airline Industry
• Following Touch Points: Pain Points!
• Remember Innovations cover all marketing aspects!
• Digitisation
• Personalisation
• Seamless Experience
• Automation
• Underlying Points: Driven by Costs // Profit Maximisation Through
marketing
26. Innovation: Distribution
• Lesser-developed markets appears to be much more innovative than
developed ones.
• Primarily led by the growth of LCC sectors (Thailand is a prominent
example
• PAYMENT CHANNEL: Absolutely Vital
• E-commerce
• Online Travel Agency
33. Mobile web/App: fastest growing
• Thais are particularly addicted to mobile phone
• Nok Air has 21% from mobile we have dedicted mobile
department – Most are from app than m.web
