The important first step in market innovation is to identify the target market segment (Schaffner et al., 1998). The company must group consumers, industrial customers, retailers or food service organisations into coherent groups which have similar behaviour, attitudes, needs and wants, so that the same marketing method can be used for all members of the group. Once the target market is identified, then the information on which to build the market innovation strategy can be collected. The innovation strategy can stay with the present target market, expand this into similar market segments, or look for new market segments in the national or international markets. In a true innovation, it can be creating a new market.

The marketing orientation in the business strategy is guided by the company's interpretation of consumer or customer needs and wants. This is implemented in the marketing strategy. The overall marketing strategy is based on developing the consumers/customers' concept of the company and also their concept of different product areas. As consumers' behaviour, needs and wants change, the company needs to adapt and develop an innovation strategy in parallel with these changes. The company needs to be flexible and change its relationship with the consumers as consumers change. The innovation strategy is based on the company/consumer relationship and also the product/consumer relationship:



In the case of the tangible product in the supermarket, the consumer is relating to the brand, the company and the product.

In the case of the food service, there is also the service relationship where seller, buyer and product interact:



In the take-away or restaurant or institution, the consumer is reacting to the service provider and the service as well as the food. In industrial marketing, the customer is also reacting to the seller as well as the product and the services provided.

In developing an innovation strategy in marketing, the company can be changing the consumers' concept of the company, the brand, the products and the services.

The marketing strategy is strongly related to the product strategy. It is influenced by the stage of the product life cycle the product has reached. Is the market innovation to launch a new product in a new market, to launch an old product in a new market, an improved product in the present market, relaunch a product in the present market? Or even to drop a product - also an innovation but with the aim of death instead of life?

Another important aspect of developing the market innovation is the competition and the company's competitive position. Is the innovation reacting to the competitors' actions or is it proactive, acting before the competitors? The positioning of the products relative to the competitors is important in building the market. The market segment may be the same but the positioning of the product to the segment may be the innovation. For example, a tin of baked beans is an everyday commodity product but the new positioning could be to change to a nutritional market segment and position the beans as a high-protein food. This may be too major a change!

The marketing innovation can also come from changes in the marketing technology, e.g. changing the communications, the retailers or other organisa- tions in the market channel, the pricing methods. These changes can cause innovation in the methods of marketing. In evaluating the marketing innovation, sales and profits predictions are often used, but it is also important to study the consumers' reactions to the innovation, difficulties in accessing the market and the company's capability in entering the market.