PRODUCT INNOVATION

  

The meaning of Product innovation

Product innovation can be referred as the process inventing new products. However, it also can be refers as   improving the design and function of existing products, as well as using new technologies, manufacturing processes, and materials to differentiate them from competitors’ products.

If a company is successful in product innovation it can lead not just to products that satisfy the existing needs of customers — it can also lead to market expanding breakthrough products that satisfy needs that customers never knew they had.

Some of the advantages of product innovation can be

• Increased Market Share: Innovating a product that alleviates customer “pain points” and disrupts the target market can greatly improve market share, which can enable economies of scale and increase a company’s market power.
• Increased Profit: Developing an innovative product that’s unique and superior to what the competition offers can lead to profit growth.
  
• Success in Failure: The “failed” result of innovation for one target market can end up being a disruptive and profitable innovation that can be applied to other markets.

Risks of Product Innovation

With its ability to generate profit and increased market share but also the product innovation have some risks as following;

• Innovation is expensive: While the amount of time and resources invested in product innovation varies, companies can expect to spend more revenue in doing innovation, for example sometime the company may need to do some researches in order to do innovate new product.
• Unwanted Market Cannibalization: Introducing an innovative “new” product to expand market share can backfire if a company’s product ends up eating into the market share of its other products, which can reduce product life cycles and lead to little or no sales growth.
• Wasted Time and Resources: A company can spend months and a 5- to 7-figure budge developing a new product only to see it fail because competitors went to market faster or the market was simply uninterested in the product.
• Employee Dilemmas: Developing an innovative product that improves efficiency and saves costs can also render employees redundant, leaving companies with the tough dilemma of either having to retrench staff, or invest time and resources retraining them for other tasks.

Generally ; even if innovation has some risks as mentioned above but it is one among the important factor for any organization to survive due to the fact that it will be easy for a company to win a competitive advantage.

Therefore every organization must struggle to ensure that it comes with new idea in its business operations in order to get profit because nowadays most of the customers want to get new versions of products like what it occurs in products like clothes and cellphones.

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