Innovation and New Product Development for Small Business

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By: Site Engineer, Staff

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New products are essential for corporate survival and growth. That is why we often say that in business the maxim is “innovate or die”. A firm that is not innovative can quickly become obsolete.

There are many reasons why firms must innovate, these include:

⦁ Competitors can easily overtake any firm that refuses or is unable to innovate.

Customer needs and preferences are constantly changing as a result of growing sophistication, improved education and changing values among customers and the general public. Improvements in technology can also bring about such changes. As these variables change, customer requirements in terms of specific goods and services also change. These changes also have implications in terms of product quality and other specific product attributes that will need to be built into the product.

⦁ Firms develop and introduce new products into the market to more fully utilize idle plant capacity or other idle resources such as money and idle man-hours.

⦁ Fast-paced developments in technology mean that new and better products come into the market daily and that old one gives way. Manual and electric typewriters are being replaced by computers while esoteric car models come into the market annually. Fashion designers introduce new designs from time to time.

⦁ One important reason why firms develop and add new products to their portfolio is to diversify their risk. It enables them to obviate the risk of laying all their eggs in one basket.

⦁ Product innovation has the potential to boost the image of the firm concerned. For some business owners, this may be enough motivation or rationale for new product additions.

⦁ The desire for growth in terms of turnover, profits, and market share or market coverage is yet another reason why firs add new products to their lines.

The decision to offer a product or service or to develop a new one has to be deliberate to ensure success. This is of particular importance because of the high mortality rate of new products.

Before a new product is added to the company’s product portfolio, it would normally have gone successfully through the following stages of development.

⦁ The conception and generation of new product ideas.

⦁ The screening of the new ideas so that untenable ideas are dropped at this stage.

⦁ A feasibility study of the product to enable judgment of its potential profitability.

⦁ Engineering development of several experimental prototypes of the product.

⦁ Technical testing of the prototypes to ensure that they will function effectively as envisaged.

⦁ Consumer testing aimed at determining the acceptability of the proposed product to customers.

⦁ Further improvements of the product based on the results of the technical and consumer testing.

⦁ Test marketing of the product. This stage involves the actual sale of the product in test markets to determine market response and the most appropriate marketing strategies to adopt.

⦁ Development of the marketing strategy for launching or introducing the new product to the market.

Commercialization, that is, the actual introduction and launching of the product into the market.

This elaborate process for developing new products underscores the need to thoroughly and critically collect and analyze data about the feasibility or otherwise of the proposed product before investing huge sums of money on it. This is imperative for every new product or service, irrespective of the size of the organization.

Many new products and new companies fail in the marketplace because management either did not bother at all to take them through the above process or they did a bad job of following the process.

 

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