Product innovation: New tier, or new category?

Shekhar Deshpande and Kyle Lusk

This article demonstrates the best way of exploiting a new innovation and how to far to stretch it.
  • A study of 40 examples of leadership innovation showed that the main points of difference are whether the innovation delivers tangible or intangible benefits and whether it initiates a change in consumer habits or not.
  • Category leadership does not require a change in consumer habits and provides a tangible benefit to the consumer, delivering a short or medium term advantage, e.g. LED light bulbs.
  • Competitive leadership does not require a change in consumer habits and provides a largely intangible benefit, with success depending on how the product is marketed, e.g. VitaminWater, the soft drink, and Whole Foods, the...

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