If your competitor cuts its price directly (or indirectly), and you are forced to either cut price or lose share isn’t the choice set similar to the choice set facing a rogue innovation? Would then, price cuts be considered rogue innovations?
Short answer is – such price cuts are not rogue innovations. Firms have a lot of options to react to price cuts by competitors including temporary promotions, additional items in a bundle, bundling in general and several profit enhancing innovations. Microsoft entered portable media player market with Zune at a price lower than iPod. Apple quickly launched iPhone and iPod touch at higher prices and made a bundle. The iPhone was a profit creating innovation and a great response to Microsoft. Often, agile incumbents use one or more of such moves to deal with price cuts.
When faced with a rogue innovation, firms do not have options like I mentioned above. They may have some options to delay the impact of rogue innovation but rarely can they overcome a rogue innovation with either incremental innovations or small profit enhancing innovations.
Finally, what is the innovation in price cuts? If there is an innovation that leads to significantly lower prices then it is probable that the innovation may be a rogue innovation. But without any underlying innovation, a simple price cut wouldn’t qualify as a rogue innovation.
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