Innovation Project - Session 2

Before you start to develop your new idea,. you should have as much information as possible about the industry of your imaginary company. Choose an industry you are interested in and try to complie as many interesting details as possible, including information about the following aspects:

Everything that happens in your industry affects your company. The more you know about your industry, the more advantages you have. This is why you should outline and discuss everything that describes the nature of the industry you are operating in. Try to answer the following questions:

What do you know about the history of your industry? What is the main goal of this industry?

What are interesting facts and figures?

Here is useful vocabulary:

Some industries are concentrated - there are only a few companies. There are, however, also industries that are fragmented - this means that many companies have a small market share. Some industries are characterised by low entry barriers. This means that it does not take a lot of capital to set up a business, so there are always new entrants.

Sometimes an economy is classified into primary industries (e.g. agriculture, forestry and mining) and secondary industries (construction and manufacturing of capital goods, durable goods and non-durable goods).

Some examples of different industries are given below:

Chemical industry: In this industry, chemical reactions are used to turn raw materials, such as oil, natural gas or minerals into different products. Examples for chemicals are paints and coatings, plastic and fibres, petrochemicals, or agricultural chemicals.

Pharmaceutical industry: This industry produces medicinal drugs for the diagnosis, treatment, cure, or prevention of diseases.

Construction industry: This industry deals with the erection or assembly of buildings.

Electric power industry: This industry is concerned with electricity in connection with systems that use electric power and signals.

Pulp and paper: In this industry, wood is used as a raw material to produce pulp, paper, board and other cellulose-based products.

Try to find out how distribution works in your industry.

Are your products sold B2B or B2C and what influence does this have on the path between supplier and user?

Do you need retail stores, distribution companies or sales representatives to sell your products?

How has technology changed the patterns of distribution in your industry?

Here is useful vocabulary:

B2B describes business transactions between different companies rather than between companies and final consumers. We talk about a B2B exchange, a B2B company or B2B commerce. 

The term B2C is used when products are sold directly to customers (for their own use).

Direct distribution takes place from the producer to the final consumer. Sometimes, middlemen (intermediaries) - agents, distributors, wholesalers or retailers - are used.

When it comes to physical distribution, the terms transportation and shipping can be used interchangeably.

E-tailing happens, when goods are sold online, the opposite is a bricks and mortar business.

Consider the general nature of competition in your industry. In order to be successful, you have to know who else sells in your market.

It is vital to know if your industry is composed of many small participants or a few large players.

Who dominates your industry?

Who are your competitors?

Make a list about who your main competitors are and define their strengths and weaknesses. Aspects you could take into account are their products, prices, reputation, financial position, channels of distribution, unique selling proposition, technology and of course any other factors that you think are of importance.

How much market share do they have and in what segments of the market do they operate? What seems to be their strategy and how does this influence your company and industry?

Here is useful vocabulary:

The most important companies in a particular industry are referred to as key players. while smaller competitors are called minor players.

When we talk about competition, we can say that it is:

• cut-throat
• intense
• keen
• stiff
• ferocious
• fierce
• low-key
• tough
• fair / unfair

If you compete for something, you fight for it. Competing brands address the same target group. If customers prefer your product over another company´s products, you have a competitive advantage / competitive edge. In a highly / fiercely competitive market, all the players are in competition with one another.

Products which are competitively priced offer good value for money.

If you sign a non-competitive / non-compete agreement, your are not allowed to work for a competitor for an agreed period of time after leaving your employer.

Based on which factors do customers choose one provider over another? 

What, in your opinion, are the keys to success and which buying factors make the most difference— price, product features, service, support, software, delivery dates?

How important is reputation?

Does word of mouth play a role?

Here is useful vocabulary:

Identify your target market by asking yourself whose problems your product solves.

Market research helps companies understand the needs, tastes and spending habits of different groups of potential customers.

Gaps in the market are unmet consumer needs or potential customers who are not yet purchasing a good.

Specialist companies often capitalise on a niche market.