The marketing applied to farming machinery |
Product innovation – ACGO Corporation, Fendt |
Anaël BIBARD |
Marketing assignment. Teacher: Paul Gaffney. |
* Table of contents
Table of contents 2
Executive summary 3Introduction 4
1. Critical literature review about product innovation 4
1.1. Marketing and product innovation are highly connected 4
a. Efficient innovation brings performance 4
b. Definition of the possible innovations 4
1.2. The new product development (NPD) 5
a. Organizational and market knowledge matters 5
b. A new path to innovation: the Blue Ocean Strategy (BOS) 5
c. From idea toconcept testing 6
d. The NPD process, from business analysis to commercialization 7
1.3. The associated risk with innovation 8
a. Time response of the market and new product (NP) obsolescence 8
b. The payback problem: customers do not act always as expected 9
c. You will face competition anyway 9
2. The company case study 10
2.1. Presentation of the company 10
2.2. The agricultural machinerymarket 10
a. Market overview 10
b. Market perspectives 10
c. Competitors 11
2.3. Fendt and AGCO strategy 11
a. Major recent innovations of the company 11
b. SWOT analysis of AGCO 12
c. Results of Fendt and AGCO 12
2.4. Advices 13
Table of charts 19
Table of appendix 19
* Executive summary
Agriculture has significantly evolved during the lastcentury. Technological innovations, like selective breeding, mechanization improvements or chemical researches, have greatly contributed to increase yields and productivity (Sassenrath, et al., 2008). Therefore, product innovation was a major issue for agricultural machinery firms. Fendt, the high-tech brand of AGCO Corporation, is recognized as one of the leading brand for his innovative culture.Fendt introduced in the market major innovations, like the Continuous Variable Transmission or the front suspension, and the company is currently working on promising concepts like the Trisix Vario. However, marketers of AGCO should work on the Blue Ocean Strategy, based on differentiation and low-cost, in order to avoid a damaging confrontation with his competitors. As a matter of fact, Deere &Company and CNH Global have more resources than AGCO, and they are leaders on the market.
Schumpeter J.A. (1942) introduced the concept of “creative destruction” as an essential element of the capitalism. This theory explains why product innovation is such a major issue for managers. In this paper, we will present a critical literature review of product innovation from amarketing perspective. Then, we will apply some of these concepts to an agricultural machinery company: AGCO Corporation.
Critical literature review about product innovation
Marketing and product innovation are highly connected
Efficient innovation brings performance
Product innovation is a key factor to create a sustainable competitive advantage (Cooper, 2001), and to increase market shares,performance, competitiveness and earnings (Lin & Lu, 2007; Aydin, Tansel Cetin, & Ozer, 2007). The example of 3M is often cited in articles for his strategy focused on innovation (McGregor, 2008).
Definition of the possible innovations
Cooper R.G. (2001, p. 14) classifies product innovation like this:
* “New to the world products”: they are entirely new. The 3M’s Post-It notes (Jobber, 2007, p.419), the Walkman of Sony or the VHS recorder.
* “New products lines”: they are new to the company which launches them. Nokia entering the phone market is part of this category.
* “Additions to existing lines”: when a firm introduces a new item in his product portfolio. The Xsara Picasso by Citroën.
* “Improvements and revisions to existing products”: Megane replacing R19.