Understanding Mid-Market Innovators: Strategies for Growth and Expansion

The current essay is based on understanding the mid-market innovators and their overall strategies undertaken for the growth and expansion. The essay studies the pricing approaches undertaken in the intense age of competitive environment. The essay also emphasises on the factors that have contributed to the success of the mid-market innovators by analysing the detailed literature and extensive research framework. Apart from the success and growth of mid-market innovators the study would also place emphasis on the challenges for the incumbent companies as well. In the closing stage the summary of the findings would highlight the key understanding gained from the mid-market innovators and further recommendations based on the findings with greater emphasis on the growth and expansion strategies for the mid-market innovators.

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name of the Student
Name of the University
Authors Note
Course ID

1MANAGEMENT ACCOUNTING
Executive Summary
The current essay is based on understanding the mid-market innovators and their overall
strategies undertaken for the growth and expansion. The essay studies the pricing approaches
undertaken in the intense age of competitive environment. The essay also emphasises on the
factors that have contributed to the success of the mid-market innovators by analysing the
detailed literature and extensive research framework. Apart from the success and growth of
mid-market innovators the study would also place emphasis on the challenges for the
incumbent companies as well. In the closing stage the summary of the findings would
highlight the key understanding gained from the mid-market innovators and further
recommendations based on the findings with greater emphasis on the growth and expansion
strategies for the mid-market innovators.

2MANAGEMENT ACCOUNTING
Introduction:
Over the years the landscape of retail sector has changed and has witnessed greater
upsets than any other sectors in the modern world of marketing. During the year there are
large number of world’s fast moving consumer goods firms has witnessed a slowdown their
revenue. In spite of the slowing environment, the small and middle-market brands were able
to attain success (Silva, Styles and Lages 2017). The question arises is what drives the
success of the mid-market innovators. Primarily the launch of new product has not witnessed
a sustained growth. Nearly around $19 billon of annual sales is boosted by the new products
which were worn down by the sales of the products that has replaced on the shelf.
For several large scale companies, innovations are largely driven by greater amount of
risks management than the group of development. As a consequence of this, there are large
number of manufacturers that have been less fruitful in driving the innovation. During the
year 2015, the top 25 largest foods and beverage companies have produced only 3% of
overall growth, in spite of accounting around 45% of the category sales. Retailers are better
placed in selling more number of goods on the promotion and those efforts is becoming less
efficient (Hashmi and Biesebroeck, 2016). Over the last four years, the retailers have
increased their sales based on the promotion, however those promotional activities have been
less effective. These seismic shifts in the retail landscape have laid the foundation for the
overall disruptions and upsets that business has witnessed over the years.
Literature review:
The rise of the mid-market innovators is viewed as the game-changing innovative
approach. The mid-market innovators are quickly redesigning the dynamics of several
industries that includes the agriculture construction, healthcare and transportation however
there are several competitors that are largely unaware of its existence (Lewin, Kenney and

3MANAGEMENT ACCOUNTING
Murmann 2016). In a collective manner the mid-market innovators represents the subsequent
stage of China’s evolution in becoming the worldwide economic global force and also acts as
the major threat to the well-established international manufacturers, one which may risk the
jeopardise their presence. This might appear exaggerated however the probability is actual.
Incumbents in the capital and scale intensive business to business industries where customer
classification was not important but was particularly vulnerable.
Companies that are identical could possibly arise in the other markets namely India,
Brazil or Indonesia but they have failed to do so. So far only china has maintained to emerge
in the market (Dubois et al., 2015). This is due to the fact that the exceptional features of the
Chinese commercial surroundings currently have the huge size and difficulty in customer
base with rapid fire innovative culture to access the low cost labour. All these factors in a
collective manner provide mid-market innovators with the enormous stage for progression
and endangered from the external competitors that does not have much access to the business
environment of China.
There are large number of mid-market consumers that emerge each year in the newly
developed cities namely those that are in the Chinese inland or those that are molded on the
edge of the current urban regions (Nishitani and Itoh, 2016). The mid-market innovators
similar to several other businesses compete on the price skilfully and persistently. However,
they also contest competition on the innovations by constantly refining their product,
procedure and business models and narrowing the gap in terms of reliability and performance
amid themselves and their established international competitors with extraordinary speed. In
the meantime, the products continue to remain lower in terms of costs and more decisively
they are accustomed to the requirements of Chinese (Nenonen and Storbacka, 2018). For
example, the businesses do not target all the portions of the state on one occasion rather they

4MANAGEMENT ACCOUNTING
identify that the different areas are developed at the different charges and they identify the
provinces which is prepared for specific level of lower cost product.
There are some consumers that purchase from the mid-market innovators in the
present date would ultimately reach a phase where they can afford more dependable
equipment with added features. International businesses would be highly keen to sell them
however the mid-market innovators would have created a long standing relationship with the
Chinese consumers and countries or regions across the world (Winterhalter, Zeschky and
Gassmann 2016). Furthermore, the fiscal crisis and increasing pressure on the government
expenditure have resulted in higher demand for the low priced, higher quality tools, devices,
production equipment and all kinds of machines. This makes the Chinese industrial products
more competitive even in the established market such as US and Germany.
With the veteran understanding of the middle market priorities, the Chinese
innovators can create scale by adding competences and commence encroaching on the turf
which international firms have long dominated. There are some of the mid-market production
equipment companies that are turning into international powerhouse (Baker, Grinstein and
Harmancioglu 2016). For example, Sany Heavy Industry Company which was founded
during 1994 evolved into world’s largest concrete manufacturer in 2009 with the total
revenues amounted to $8 billion.
According to Frank et al., (2016) statement IT is increasingly gaining more value
from the technological shifts. IT is presently witnessed as less administrative and more of
something that can force technological growth, integration and strategy. A part of the
development is more attributable to the mid-market company’s movement towards the cloud
that has laid down the groundwork for quicker adoption of the emerging technology. Due to
this, more mid-market innovators are embracing the ingenuity of virtual and augmented

5MANAGEMENT ACCOUNTING
reality so that it can keep track of the business, expect customer behaviour and increase
growth.
As the mid-market companies are using the predicative and cognitive analytics to
obtain insight in their customer base or inform customer relationships and pricing (Aarikka-
Stenroos and Talvitie 2015). The innovation is helping several mid-market companies not
just to survive but also to thrive and be the rising leaders in their sectors.
Analysis:
The successful mid-market organizations have leaner teams with tighter advertising
budgets and every effort is treated as accountable. While this might apparently restrict the
potential for growth, the limitation might make the mid-market innovators team to be
hungrier for win. With collaboration is much easier across all the functions when a single
team is more accountable for the functions. Majority of the mid-market innovators have
flatter establishments that are nimbler to supply chains with few internal process to follow
(Parida et al., 2015). This enables the mid-market innovators to be more responsible towards
the ever-changing needs of the consumers. In the rapidly changing environment, the speed of
market currently plays a vital role than it has ever played.
The smaller firms are forced to make investment in all of their financial and
organizational resources in fewer areas. Instead of selling everything to everyone, the mid-
market brands have much bigger wood behind the fewer arrows (Sharma and Jha 2016). In
the environment of increasingly diverse and fragmented market place, the strategies are well
focussed on the better placed segment of audience that would win larger amount of appeals
from market.
In the study of Thun, (2018) around 70% of the respondents have stated their
company is more interested in mitigating risks upon the launch of new product in contrary to

6MANAGEMENT ACCOUNTING
finding the breakthrough innovation. However, it is noticed that mid-market innovators or
brands have greater level of tolerance than the smaller ones which is less meticulously proven
conceptions with lower failure of failures and more thirst for learning.
The rules relating to the success have changed and the business strategies as well tools
need to be in pace with the latest market trends. However, all the companies can take note of
the middle-market innovators and discover success (Heyden, Sidhu and Volberda 2018).
While the traditional analyst can provide guidance for the long term planning and decision
making but it should be fresh enough to adjust to the new threats. Data can result in
collaboration if the data is harnessed in the right manner and at the right hands. In order to do
this, it is necessary to make the analytics typically saved for the longer strategic planning
with more accessible for regular use by the daily decision makers in the business.
According to Kivimaa and Martiskainen, (2018) the larger organizations are better
established that they require process to support the development and application of the
innovating thinking. With the mid-market companies there is more or expectations that they
can bring new ideas. While this can work, the reality is that there is a regular need for
procedure to drive the innovative activities at the certain points of the life cycle. Given that
the mid-market innovators tends to keep their organization flat, they can react and respond to
the ever changing market conditions. This provides them with the competitive advantage
against the larger companies.
Though the mid-market innovators have demonstrated the clear sign of growth
however, they have faced the operations and economic challenges that can test their resolve
across the world (Freel 2018). The mid-market innovators usually require quick returns to
validate the investments because they feel that they cannot absorb the continuous flow of

7MANAGEMENT ACCOUNTING
funds over the time. While lacking resources, it can be easy for the mid-market innovators to
cut the corners, particularly in the research and development innovative opportunities.
The strategy adopted by the mid-market innovators is to ignore the risks and avoiding
competition from China. However, the mid-market innovators are big enough to enable the
native innovators to make use of it to expand expertise and quickly introducing their
competences and lowering the prices for the incumbent’s customary space (Anning-Dorson,
2018). Another strategy that is adopted by the mid-market innovators is to constantly provide
international products in China waiting for the rising markets to meet the premium demand.
For example, the western construction equipment maker may station itself to sell products at
higher prices in china by assuming that the subcontracts would soon gain from the scale and
access the long term financing and start purchasing highly expensive long lasting higher
quality products. With the modest difficulties to entry at the lesser end of price spectrum, the
mid-market innovators would have the tendency of exceeding the capacity and price-based
competition.
The mid-market innovators have adopted the strategy of “good enough”. Companies
that are following the good enough strategy would focus on the upper-tier by producing
products at lower price for the mid-market consumers. The mid-market innovators reduce the
costs for the brands that are valued by stripping out the functions or features by being careful
of not cannibalizing the current lines of premium products.
The middle-market entrepreneurship companies are not considered as the large-cap
companies but are poised for the significant growth and market opportunities given that they
embrace their own disruptive innovation (McAuley, 2018). The mid-market innovators are
successful because of the new entry of the ongoing demand economy. This helps the mid-

8MANAGEMENT ACCOUNTING
market innovators in delivering bulky items around the town. For the small and medium sized
business there is a significant opportunity for innovation and disruption.
According to the recent research conducted by the National Centre for the mid-market
represents that in near three quarters, the mid-market firms around all through the revenue
segment and industries usually perform innovation products by using the internal teams that
may be devoted towards the Research and Development teams or through the specific
business or function (Belkhouja, Genet and Mangematin 2018). The internal innovative
teams are mostly engaged in producing and applying the innovative ideas through which they
play the vital role of helping their companies where innovative ideas are funded.
The middle market companies and employers appear to adopt innovation. Even
though the large part of mid-size business innovates without the external help. This enables
the mid-market innovators to enjoy the reasonable rate of success for their innovation with
around 57% of the mid-market ideas have made to the market (Ashman, 2018). Over the
period of five years 54% of the ideas that has been implemented are considered successful for
the mid-market innovators. Nevertheless, the most effective innovators are those that rate
themselves the best in innovation and look beyond their devoted innovative teams or their
respective business units.
Apart from the success there are certain challenges to the success of incumbents.
There are several large multinationals that have been slow to identify the threat that the
emerging mid-market is barely visible to the global organizations that are headquartered in
U.S or in Europe (Anning-Dorson, 2018). There are several incumbents that are held back by
their view of china’s billions of the new metropolitan customers in the largely increasing
source of demand for the products. The mid-market innovators are avoiding the customer’s
sectors where there is high competition but the profits are thin even by their own standards.

9MANAGEMENT ACCOUNTING
In spite of the international companies have identified this threat but several have
noticed that it is difficult to answer appropriately. The mid-market innovators wrongly
assume that they have great amount of time to adopt however their own products would
steady when the Chinese marketplace develops. These popular strategies among the
incumbents have by large yielded poor results. The two-tiered strategy of the mid-market
innovators with distinct but equivalent business models can be treated as effective. They are
positively better than overlooking the mid-market completely and empowers the businesses
to contest competition in the mid-market where they may not otherwise be able to compete.
However, it is extremely challenging to get rid of for the mid-market innovators.
Summary of the findings:
The findings from the summary suggest that there are fewer international companies
in spite of facing challenges of mid-market innovators facing them have undertaken the
comprehensive approach of change. The mid-market innovators are emphasising on the low-
price as opposed to the low-cost goods.
The mid-market innovators do this by establishing an incorporated capability that
approaches the Chinese and western mid-market customers with the one group of products.
This cannot be achieved in instant manner but requires a persistent focus on enhancing the
operations and products expansion together with the local integration.
Recommendations:
The international multinationals can tap on their strength that their local upstart
competitors do not have. Distributions and the other areas of marketing are the areas of
competitive advantage. It is recommended that the manufacturers can harness the global
experience in the promotion and delivery so that it offset the better local knowledge of
domestic competitors.

10MANAGEMENT ACCOUNTING
The international incumbents can use their knowledge in associations with merger and
acquisitions can forge partnership with the other companies as this would make better use of
competencies and ambitions in establishing a solitary line of products.
Conclusions:
As a whole the mid-market innovators have outperformed all the other sectors in the
economy. Inside this small but huge sector, there are some companies that have naturally
performed much better than other innovators. Similar to majority of the middle market
innovators, the main route of growth for the innovators is the market growth and the pursuit
of new customers by establishing new geographic territories.
For the majority of the innovators, expanding the market share leads to creation of
new market with improved products and services. Conclusively, the aggressive innovations
have resulted the company to retain customers in more than 130 nations and to do business
with more number of firms.

11MANAGEMENT ACCOUNTING
References:
Aarikka-Stenroos, L. and Talvitie, M., 2015, January. Distributors as market orientation
agents in innovation development and commercialization. In ISPIM Conference
Proceedings (p. 1). The International Society for Professional Innovation Management
(ISPIM).
Anning-Dorson, T., 2018. Innovation and competitive advantage creation: The role of
organisational leadership in service firms from emerging markets. International Marketing
Review.
Ashman, H.J., 2018, March. Redefining Innovation within a Small Market, and the factors
required to drive success to a Large Market. In ISPIM Innovation Symposium (pp. 1-10). The
International Society for Professional Innovation Management (ISPIM).
Baker, W.E., Grinstein, A. and Harmancioglu, N., 2016. Whose innovation performance
benefits more from external networks: entrepreneurial or conservative firms?. Journal of
Product Innovation Management, 33(1), pp.104-120.
Belkhouja, S., Genet, C. and Mangematin, V., 2018. The impact of lead users on decision
making process: giving legitimacy to innovative technologies.
Dubois, P., De Mouzon, O., Scott‐Morton, F. and Seabright, P., 2015. Market size and
pharmaceutical innovation. The RAND Journal of Economics, 46(4), pp.844-871.
Frank, A.G., Cortimiglia, M.N., Ribeiro, J.L.D. and de Oliveira, L.S., 2016. The effect of
innovation activities on innovation outputs in the Brazilian industry: Market-orientation vs.
technology-acquisition strategies. Research Policy, 45(3), pp.577-592.
Freel, M., 2018. Entrepreneurship, Innovation and Small Business. Blackburn, R., Clercq,
DD, &.

12MANAGEMENT ACCOUNTING
Hashmi, A.R. and Biesebroeck, J.V., 2016. The relationship between market structure and
innovation in industry equilibrium: a case study of the global automobile industry. Review of
Economics and Statistics, 98(1), pp.192-208.
Heyden, M.L., Sidhu, J.S. and Volberda, H.W., 2018. The conjoint influence of top and
middle management characteristics on management innovation. Journal of
Management, 44(4), pp.1505-1529.
Kivimaa, P. and Martiskainen, M., 2018. Innovation, low energy buildings and intermediaries
in Europe: systematic case study review. Energy Efficiency, 11(1), pp.31-51..
Lewin, A.Y., Kenney, M. and Murmann, J.P. eds., 2016. China's innovation challenge:
Overcoming the middle-income trap. Cambridge University Press.
McAuley, A., 2018. Central Planning, Market Socialism and Rapid Innovation.
In Technology Transfer and East-West Relations (pp. 32-49). Routledge.
Nenonen, S. and Storbacka, K., 2018. Smash: using market shaping to design new strategies
for innovation, value creation, and growth. Emerald Publishing Limited.
Nishitani, K. and Itoh, M., 2016. Product innovation in response to environmental standards
and competitive advantage: a hedonic analysis of refrigerators in the Japanese retail
market. Journal of Cleaner Production, 113, pp.873-883.
Parida, V., Sjödin, D.R., Lenka, S. and Wincent, J., 2015. Developing global service
innovation capabilities: How global manufacturers address the challenges of market
heterogeneity. Research-Technology Management, 58(5), pp.35-44.
Sharma, A. and Jha, S., 2016. Innovation from emerging market firms: what happens when
market ambitions meet technology challenges?. Journal of Business & Industrial
Marketing, 31(4), pp.507-518.

13MANAGEMENT ACCOUNTING
Silva, G.M., Styles, C. and Lages, L.F., 2017. Breakthrough innovation in international
business: The impact of tech-innovation and market-innovation on
performance. International Business Review, 26(2), pp.391-404.
Thun, E., 2018. Innovation at the middle of the pyramid: State policy, market segmentation,
and the Chinese automotive sector. Technovation, 70, pp.7-19.
Winterhalter, S., Zeschky, M.B. and Gassmann, O., 2016. Managing dual business models in
emerging markets: an ambidexterity perspective. R&D Management, 46(3), pp.464-479.