Case Study Description of Overcoming Consumer Resistance to Innovation
This is an MIT Sloan Management Review article. When consumers resist adopting an innovation because it requires them to alter established habits, the innovation is called a resistant innovation. Uses a study involving the diffusion of screwcap wine closures in three countries--Australia, New Zealand, and the United States--to analyze strategies for marketing a resistant innovation. For winemakers, screwcap closures represent a solution to "cork taint," a quality problem that can be caused by poor-quality corks and that can affect wine flavor. But consumers have shown resistance to screwcap closures, associating them with cheap wines or preferring the tradition associated with cork. However, among wine consumers in Australia and New Zealand, screwcaps have now achieved widespread acceptance. But 2005 wine industry statistics showed that less than 5% of U.S. wineries used screwcaps on fine wines. What is the reason for this difference? Earlier research in 2004 had found few differences between U.S. wine consumers and those in Australia and New Zealand--except in their attitudes toward screwcaps. Interviews decision makers at more than two dozen wineries in the three countries, and concludes that winemakers in Australia and New Zealand had generally taken a different approach to marketing screwcap wine closures than United States wineries did. Concludes that under certain circumstances coopetition strategies, which involve some cooperation among competitive firms, can be an effective strategy for marketing a resistant innovation. Suggests that managers should analyze the marketing problem the new innovation faces and the resources available to address it; consider the kind of specific resources and knowledge that might be exchanged during coopetition; and evaluate the industry climate, including the role of trade associations and industry experts.
Authors :: Rosanna Garcia, Fleura Bardhi, Colette Friedrich
Swot Analysis of "Overcoming Consumer Resistance to Innovation" written by Rosanna Garcia, Fleura Bardhi, Colette Friedrich includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Screwcap Wine facing as an external strategic factors. Some of the topics covered in Overcoming Consumer Resistance to Innovation case study are - Strategic Management Strategies, Leadership and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Overcoming Consumer Resistance to Innovation casestudy better are - – there is backlash against globalization, technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, cloud computing is disrupting traditional business models,
supply chains are disrupted by pandemic , challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Overcoming Consumer Resistance to Innovation
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Overcoming Consumer Resistance to Innovation case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Screwcap Wine, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Screwcap Wine operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Overcoming Consumer Resistance to Innovation can be done for the following purposes –
1. Strategic planning using facts provided in Overcoming Consumer Resistance to Innovation case study
2. Improving business portfolio management of Screwcap Wine
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Screwcap Wine
Strengths Overcoming Consumer Resistance to Innovation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Screwcap Wine in Overcoming Consumer Resistance to Innovation Harvard Business Review case study are -
High brand equity
– Screwcap Wine has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Screwcap Wine to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Screwcap Wine is one of the leading recruiters in the industry. Managers in the Overcoming Consumer Resistance to Innovation are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Screwcap Wine has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Overcoming Consumer Resistance to Innovation - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Screwcap Wine digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Screwcap Wine has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Ability to lead change in Strategy & Execution field
– Screwcap Wine is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Screwcap Wine in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Screwcap Wine is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Rosanna Garcia, Fleura Bardhi, Colette Friedrich can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Successful track record of launching new products
– Screwcap Wine has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Screwcap Wine has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Training and development
– Screwcap Wine has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Overcoming Consumer Resistance to Innovation Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Innovation driven organization
– Screwcap Wine is one of the most innovative firm in sector. Manager in Overcoming Consumer Resistance to Innovation Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Screwcap Wine has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Strong track record of project management
– Screwcap Wine is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Screwcap Wine is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Screwcap Wine is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Overcoming Consumer Resistance to Innovation Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Overcoming Consumer Resistance to Innovation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Overcoming Consumer Resistance to Innovation are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Overcoming Consumer Resistance to Innovation, is just above the industry average. Screwcap Wine needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
No frontier risks strategy
– After analyzing the HBR case study Overcoming Consumer Resistance to Innovation, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Lack of clear differentiation of Screwcap Wine products
– To increase the profitability and margins on the products, Screwcap Wine needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Overcoming Consumer Resistance to Innovation, in the dynamic environment Screwcap Wine has struggled to respond to the nimble upstart competition. Screwcap Wine has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Screwcap Wine has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Workers concerns about automation
– As automation is fast increasing in the segment, Screwcap Wine needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Screwcap Wine is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Overcoming Consumer Resistance to Innovation can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow to strategic competitive environment developments
– As Overcoming Consumer Resistance to Innovation HBR case study mentions - Screwcap Wine takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High cash cycle compare to competitors
Screwcap Wine has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Overcoming Consumer Resistance to Innovation, it seems that the employees of Screwcap Wine don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Capital Spending Reduction
– Even during the low interest decade, Screwcap Wine has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Opportunities Overcoming Consumer Resistance to Innovation | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Overcoming Consumer Resistance to Innovation are -
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Screwcap Wine can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Screwcap Wine to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Screwcap Wine can use these opportunities to build new business models that can help the communities that Screwcap Wine operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Screwcap Wine can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Leveraging digital technologies
– Screwcap Wine can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Using analytics as competitive advantage
– Screwcap Wine has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Overcoming Consumer Resistance to Innovation - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Screwcap Wine to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Screwcap Wine has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Screwcap Wine in the consumer business. Now Screwcap Wine can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Screwcap Wine to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Screwcap Wine to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Screwcap Wine can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Overcoming Consumer Resistance to Innovation suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Building a culture of innovation
– managers at Screwcap Wine can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Screwcap Wine can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Screwcap Wine can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Screwcap Wine can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Threats Overcoming Consumer Resistance to Innovation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Overcoming Consumer Resistance to Innovation are -
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Screwcap Wine will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Screwcap Wine can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Overcoming Consumer Resistance to Innovation .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Screwcap Wine with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Screwcap Wine needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Environmental challenges
– Screwcap Wine needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Screwcap Wine can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
High dependence on third party suppliers
– Screwcap Wine high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Screwcap Wine.
Regulatory challenges
– Screwcap Wine needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Screwcap Wine business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Screwcap Wine
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Screwcap Wine.
Consumer confidence and its impact on Screwcap Wine demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Screwcap Wine in the Strategy & Execution sector and impact the bottomline of the organization.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Screwcap Wine can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Overcoming Consumer Resistance to Innovation Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Overcoming Consumer Resistance to Innovation needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Overcoming Consumer Resistance to Innovation is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Overcoming Consumer Resistance to Innovation is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Overcoming Consumer Resistance to Innovation is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Screwcap Wine needs to make to build a sustainable competitive advantage.
