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Product innovation is the creation and subsequent introduction of a goods or service that is either new, or an improved version of previous goods or services. This is broader than the normally accepted definition of innovation that includes the invention of new products which, in this context, are still considered innovative. [1]
Product innovation is defined as:
the development of new products, changes in design of established products, or use of new materials or components in the manufacture of established products [2]
Numerous examples of product innovation include introducing new products, enhanced quality and improving its overall performance. Product innovation, alongside cost-cutting innovation and process innovation, are three different classifications of innovation which aim to develop a company's production methods. [3]
Thus product innovation can be divided into two categories of innovation: radical innovation which aims at developing a new product, and incremental innovation which aims at improving existing products. [4]
Advantages of product innovation include:
Disadvantages of product innovation include:
Popular theories of product innovation - what causes it and how it is achieved - include Outcome-Driven Innovation and "Jobs to be Done" (JTBD). [10] JTBD Theory is used extensively as part of a methodical approach to product innovation [11] postulating that users "hire" a product to do a "job" and that innovation can be achieved by providing a better way of getting a particular job done.
Used as a framework, JTBD is very similar to outcome-driven innovation, focusing on the functional, emotional, and social 'jobs' that users want to perform. However, this is one of two main interpretations of the theory known as "Jobs-as-action." [12] The second interpretation is known as "Jobs-as-progress" and focuses on what the user wants to be, stating that the jobs a product user wants to do are secondary to (and a result of) the person they want to be.
New product development is the initial step before the product life cycle can be examined, and plays a vital role in the manufacturing process. To prevent loss of profits or liquidation for businesses in the long term, new products have to be created to replace the old products. [13] Peter Drucker suggests in his book 'Innovation and Entrepreneurship' that both product innovation and entrepreneurship are interconnected and must be used together in unison for a business to be successful, and this relates to the process of new product development. [14]
These are the few stages that a business has to undergo when introducing a new product line into the market:
After all these stages have been successfully run through, then the business can officially launch the product.
Product innovation can be classified by degree of technical novelty and by type of novelty in terms of market. Technical product innovations include the use of new materials, the use of new intermediate products, new functional parts, the use of radically new technology and fundamental new functions. Classification by levels of novelty include new only to the firm, new to the industry in the country or to the operating market of the firm, or new to the world. [19]
Existing product development is a process of innovation where products/services are redesigned, refurbished, improved, and manufactured which can be at a lower cost. This will provide benefits to both the company and the consumer in different ways; for example, increased revenue (benefits the company) cheaper costs (benefits the company and consumer) or even benefits the environment by implementation of 'green' production methods.
The Oslo Manual recommends certain guidelines for measuring innovation through the measurement of aspects in the innovation process and innovation expenditure. [20] Measurement processes consists of collecting and systemizing qualitative and quantitative data regarding different factors of the innovation process, investment and outcome.
Quantitative analysis focus on investment, impact and life cycle. Examples of key quantitative indicators include product investment, total innovation investment, product sales share that comes from innovation, manpower use, material consumption, energy consumption, time taken to reach the commercialisation phase or the expected cost recovery or payback period.
Qualitative data includes benefits of the innovation, sources of information or ideas for the innovation, and diffusion or reach of innovation. Even though similar information can be obtained through quantitative methods, the guidelines argues that due to the qualitative nature of the answers, firms are inclined to provide richer and a different set of data, avoiding duplication. [19]
While the difference between different forms of innovation seems intuitively clear, it is not always obvious what kind of innovation is occurring in practice. While there are different dimensions to consider whether it is a product innovation rather than e.g. a technology or business model innovation, it is not always possible to clearly differentiate one from the other. For example, compared to a business model innovation, a product innovation often has: [21]
Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to emphasize in advertising; operation of advertising campaigns; attendance at trade shows and public events; design of products and packaging attractive to buyers; defining the terms of sale, such as price, discounts, warranty, and return policy; product placement in media or with people believed to influence the buying habits of others; agreements with retailers, wholesale distributors, or resellers; and attempts to create awareness of, loyalty to, and positive feelings about a brand. Marketing is typically done by the seller, typically a retailer or manufacturer. Sometimes tasks are contracted to a dedicated marketing firm or advertising agency. More rarely, a trade association or government agency advertises on behalf of an entire industry or locality, often a specific type of food, food from a specific area, or a city or region as a tourism destination.
Innovation is the practical implementation of ideas that result in the introduction of new goods or services or improvement in offering goods or services. ISO TC 279 in the standard ISO 56000:2020 defines innovation as "a new or changed entity realizing or redistributing value". Others have different definitions; a common element in the definitions is a focus on newness, improvement, and spread of ideas or technologies.
Marketing research is the systematic gathering, recording, and analysis of qualitative and quantitative data about issues relating to marketing products and services. The goal is to identify and assess how changing elements of the marketing mix impacts customer behavior.
In business and engineering, product development or new product development covers the complete process of bringing a new product to market, renewing an existing product or introducing a product in a new market. A central aspect of NPD is product design, along with various business considerations. New product development is described broadly as the transformation of a market opportunity into a product available for sale. The products developed by an organisation provide the means for it to generate income. For many technology-intensive firms their approach is based on exploiting technological innovation in a rapidly changing market.
In the field of management, strategic management involves the formulation and implementation of the major goals and initiatives taken by an organization's managers on behalf of stakeholders, based on consideration of resources and an assessment of the internal and external environments in which the organization operates. Strategic management provides overall direction to an enterprise and involves specifying the organization's objectives, developing policies and plans to achieve those objectives, and then allocating resources to implement the plans. Academics and practicing managers have developed numerous models and frameworks to assist in strategic decision-making in the context of complex environments and competitive dynamics. Strategic management is not static in nature; the models can include a feedback loop to monitor execution and to inform the next round of planning.
In marketing, market segmentation is the process of dividing a broad consumer or business market, normally consisting of existing and potential customers, into sub-groups of consumers based on shared characteristics.
Market research is an organized effort to gather information about target markets and customers: know about them, starting with who they are. It is an important component of business strategy and a major factor in maintaining competitiveness. Market research helps to identify and analyze the needs of the market, the market size and the competition. Its techniques encompass both qualitative techniques such as focus groups, in-depth interviews, and ethnography, as well as quantitative techniques such as customer surveys, and analysis of secondary data.
Marketing management is the organizational discipline which focuses on the practical application of marketing orientation, techniques and methods inside enterprises and organizations and on the management of a firm's marketing resources and activities.
In business, a competitive advantage is an attribute that allows an organization to outperform its competitors.
Marketing strategy is an organization's promotional efforts to allocate its resources across a wide range of platforms, channels to increase its sales and achieve sustainable competitive advantage within its corresponding market.
A value network is a graphical illustration of social and technical resources within/between organizations and how they are utilized. The nodes in a value network represent people or, more abstractly, roles. The nodes are connected by interactions that represent deliverables. These deliverables can be objects, knowledge or money. Value networks record interdependence. They account for the worth of products and services. Companies have both internal and external value networks.
Design management is a field of inquiry that uses project management, design, strategy, and supply chain techniques to control a creative process, support a culture of creativity, and build a structure and organization for design. The objective of design management is to develop and maintain an efficient business environment in which an organization can achieve its strategic and mission goals through design. Design management is a comprehensive activity at all levels of business, from the discovery phase to the execution phase. "Simply put, design management is the business side of design. Design management encompasses the ongoing processes, business decisions, and strategies that enable innovation and create effectively-designed products, services, communications, environments, and brands that enhance our quality of life and provide organizational success." The discipline of design management overlaps with marketing management, operations management, and strategic management.
In marketing, segmenting, targeting and positioning (STP) is a framework that implements market segmentation. Market segmentation is a process, in which groups of buyers within a market are divided and profiled according to a range of variables, which determine the market characteristics and tendencies. The S-T-P framework implements market segmentation in three steps:
A point of difference is a factor of products or services that establishes differentiation. Differentiation is the way in which the goods or services of a company differ from its competitors. Indicators of the point of difference's success would be increased customer benefit and brand loyalty. However, an excessive degree of differentiation could cause the goods or services to lose their standard within a given industry, leading to a subsequent loss of consumers. Hence, a balance of differentiation and association is required, and a point of parity has to be adopted in order to allow a business to remain or further enhance its competitiveness.
In marketing, a customer value proposition (CVP) consists of the sum total of benefits which a vendor promises a customer will receive in return for the customer's associated payment.
The following outline is provided as an overview of and topical guide to marketing:
In marketing, a company’s value proposition is the full mix of benefits or economic value which it promises to deliver to the current and future customers who will buy their products and/or services. It is part of a company's overall marketing strategy which differentiates its brand and fully positions it in the market. A value proposition can apply to an entire organization, or parts thereof, or customer accounts, or products or services.
A target market, also known as serviceable obtainable market (SOM), is a group of customers within a business's serviceable available market at which a business aims its marketing efforts and resources. A target market is a subset of the total market for a product or service.
Product Planning, or product discovery, is the ongoing process of identifying and articulating market requirements that define a product's feature set. It serves as the basis for decision-making about price, distribution and promotion. Product planning is also the means by which companies and businesses can respond to long-term challenges within the business environment, often achieved by managing the product throughout its life cycle using various marketing strategies, including product extensions or improvements, increased distribution, price changes and promotions. It involves understanding the needs and wants of core customer groups so products can target key customer desires and allows a firm to predict how a product will be received within a market upon launch.
Product strategy defines the high-level plan for developing and marketing a product, how the product supports the business strategy and goals, and is brought to life through product roadmaps. A product strategy describes a vision of the future with this product, the ideal customer profile and market to serve, go-to-market and positioning (marketing), thematic areas of investment, and measures of success. A product strategy sets the direction for new product development. Companies utilize the product strategy in strategic planning and marketing to set the direction of the company's activities. The product strategy is composed of a variety of sequential processes in order for the vision to be effectively achieved. The strategy must be clear in terms of the target customer and market of the product in order to plan the roadmap needed to achieve strategic goals and give customers better value.
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