Induction of a new product in a company’s product line is product innovation. Product innovation has a vital significance in the growth and development of the marketing company. Marketing companies can make their goal Global presence by developing innovative products.
In the era of globalization now the companies are also in the race of product innovation. For example, Ranbaxy, Dr. Reddy’s Laboratrios, Titan Watches, etc. have done a remarkable job. In the number of European countries, the “Scorpio” is a favored car vehicle.
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Importance of Product Innovation
The importance of product innovation may be understood well from the following points:
- In the era of globalization, the role of innovation company can get legal protection of its breakthrough the product in the form of “Patents”.
- The marketing company can adopt Skim the Cream Pricing for its innovative products. Under this pricing, the company charges maximum possible high prices from the customers, due to lack of price comparison.
- By following the above pricing policy the company may earn handsome profits.
- The marketing company may remain “Market Leader”, with the support of continuous innovation. Twin strategy of induction of new product and significant improvements in existing products may bring fruitful results in this regard.
- Product innovation is a key factor in the success of global marketing. The marketing companies having high dreams to market their products globally, cannot ignore innovation.
- Consumer’s selectivity is increasing due to growing disposable income, change in taste values, attitudes, believes and with the Rapid expansion of education and knowledge. In this situation the company’s product planning efforts should place emphasis on leading the market, not just meeting competition.
- New products are essential for the growth of a marketing company.
- The profitability of a company can be maintained by the induction of new products in the existing product lines. When one product is in the saturation stage, another product must be in the introduction stage of the product life cycle to maintain profitability.
- New products are essential for the optimum use of the resource of a company.
- By-products of a manufacturing process can be effectively used as a new product.
- The new product can be used as a weapon to face competition effectively.
- The innovative product is an indication of managerial abilities.
- Innovation is also necessary to recover the losses incurred due to product failures.
Read More: 14 Importance of Study Consumer Behaviour (Explained)
Pre Requisites for Effective Innovation
The following prerequisites are essential for innovation:
- The marketing company must be financially very sound because the heavy cost is involved in it. Keeping in view the high rate of product failure. Which is about 80% at present, the firm must be in a position to bear the losses.
- Innovation requires the vision of today and tomorrow.
- State of the art infrastructure of research and development (R&D) is required for innovation.
- Hiring and retaining of highly skilled people is another prerequisite for innovation, only these people can take full advantages of state of the art infrastructure.
- R&D people requires a free hand in their planning and execution.
- Great patience and tolerance are required in the top management of the company. In the case of product failure, R&D people require support and in the case of success stroke and motivation.
Related: Product Mix: Concept, Elements, Strategies, Dimensions.
Reasons for Product Innovation
There are many reasons for product innovation. Some of the important reasons are as under:
1. Business Growth
Product innovation is a tonic for the growth of a business and industrial enterprise.
It has been the experience that only those Enterprises have been successful in achieving the marketing objectives which have adopted product innovation.
2. Competition
Competition is perhaps the most important reasons for product innovation.
Every business and industrial Enterprise wants to capture the market and to defeat its competitors in the market, For achieving this object the enterprise must represent its product to the consumers in a new and improved style so that the consumers may be affected and the demand of product may be increased.
Related: 14 Essential Features and Importance of Product (Explained).
3. Market Changes
Conditions and atmosphere of a market keep on changing from time to time.
The habits, taste, nature, and attitudes of consumers change at a very fast rate. these changes make it necessary for an enterprise that necessary changes must be made in its product specifications so that these changes may be effectively met.
4. Technological Changes
Scientific and technological developments are taking place in every country, and it becomes necessary, for every Enterprise to adopt product innovation because these scientific and technological development create a situation in which no enterprise can maintain demand for its existing products. reasons and importance of product innovation.
5. To Minimise Risk
Every product has a life cycle and passes through different stages in its life cycle.
When a product of an enterprise reaches the stage of saturation or decline, it becomes necessary for the Enterprise to innovate it.
Bonus: How to Select a Suitable Marketing Strategy for Market Segmentation.
4. Maximum Utilisation of Resources
Every enterprise wants to make maximum possible utilization of its physical and human resources.
For this reason, also, product innovation becomes necessary sometimes.
For example, a new product may be produced by using the wastage and scrap.
5. Other Reasons
There may be some other is also for product innovation.
These reasons may be – 1. To write the standard of living of consumers. 2. To impress the consumers 3. To Impress the channels of distribution, 4. To complete the product line, 5. To make the marketing program of the enterprise more effective.
Thus, now you know the reasons and importance of product innovation.
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