Innovation and Distribution Structure: Exploring Consumer Behavior Via Responses to Innovation Across Distribution Channels
Dr. Peter Boumgarden; Dr. Thomas Smith
The following study explores the differential performance of radical and innovative products across distribution channels in a high fashion product design firm. While previous research has clearly demonstrated that radical and incremental innovation are a necessity for long term success for a firm, the focus of much of this work has been on how firms manage the production of these different forms of innovation, and specifically the process by which they are designed to do both simultaneously. One limitation of this work however is its failure to look at differences in how products are eventually distributed to customers, and whether different forms of innovation may perform across distribution channels differentially By looking at radical and incremental product sales data from a high design retailer across direct (company stores), indirect (large retailer and boutique stores), and e-commerce (company website) channels, a number of implications can be teased as to how a given firm can best strategically plan product roll-out across the pipeline of innovation. Specifically, we find that radical and incremental innovation do perform differentially across the three channels, and then seek to explain such differences in terms of the level of control the retailer has, the level of competition the products experience, and the type of customer likely to end up in a given channel. We conclude by delineating the corresponding implications for multi-channel firms looking to manage a radical and incremental innovation process simultaneously.
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