Product Innovation on Firm Performance - Research Paper Example

Download file to see previous pages The intention of this study is product innovation as the introduction of a new product in the market that uses different technology and has a higher utility for the consumer than the existing products. In the contemporary competitive environment, a business requires to maintain leverage in relation to its competitors through ensuring that consumer loyalty is maintained and hence a greater market share. Precautions should be observed during product innovations since the process may have a positive or negative impact on the existing product categories. They may result in a greater market share, cannibalism and destabilization of products. Nevertheless, the significance of product innovation can not be ignored. This study explores the positive relationship between product innovation and firm performance. Aboulnasr et al. established that innovation originates from the application of creative ideas to develop marketable products from the existing ones. This process begins through invention whereby the new ideas are generated in relation to the performance targets of business. Products usually have a life cycle that decreases over time and requires enhancement through constant innovations to maintain competitiveness in the market. Kim & Huang noted that innovations can be accomplished through development of fresh knowledge or new products in the market that increases a firm’s leverage through increased profits and consumer satisfaction. Customer preferences change with time and therefore continuous assessment of the market is needed. Innovations targeted at consumer satisfaction depend on research that helps managers to determine market dynamics in terms of consumer preferences. Studies indicate that innovativeness leads to improved quality of products and services (Lee 2010). Any invention in business is focused on the improvement of the current product in the market. Innovations emerge from understanding of the need to change the prevailing product quality to match market demand. Radical changes need to enhance product quality and to strengthen its competitiveness in the market. Firms engage in research and development to identify the gaps that hamper profitability. It also assists them to identify the strategic responses to competition. Strategic response is a continuous process that involves decision making and analyzing a firm’s strengths and weaknesses, opportunities and threats. In many situations, a firm capitalizes on its strengths and takes opportunity of the competitor’s weaknesses. With this regard, innovation is necessary to keep an organization abreast with the prevailing market circumstances hence a greater capacity to cope with competition (Kim & Huang 2011). Innovations allow product differentiation giving consumers an array of products to choose from. An organization is able to serve a ...Download file to see next pagesRead More