What is product innovation and why is it important?

All business innovations directly improve product quality and performance. In turn, this increases the efficiency and effectiveness of business processes and makes radical structural and operational reforms possible. What’s more, every new feature adds complexity, and complexity slows you down and makes additional development harder still. Of course, this can’t count as the most radical innovation out there, but it shows how products can be improved by answering customers’ pains. Simply put, identifying and understanding customers’ pain points can lead to major opportunities for improvement. Once you have understood the extent of these pain points it’s important to address them as opportunities for innovation, not as ways of mitigating damage.

There’s a gap between your product and customer’s expectations; market research will help you minimize that gap. This gap is inversely proportional to your what is product innovation customer’s satisfaction from the product. The market is getting competitive day by day, and only those survive who can meet customer’s expectations.

what is product innovation

The Finnish company HMD bought the brand license to produce and sell Nokia phones and have recently launched six new models. When Apple took the world by storm with their smartphones, Nokia was not able to catch up. They were close to bankruptcy but once they sold their cell phones business to Microsoft, they pivoted their business once more and turned to high-end networking and software products. This helped them in the past 10 years to increase their enterprise value 20 times.

stages of product innovation process

But we focus on high-end nutrition, and we will always strive to deliver that to customers,”​ Davies stressed. Extreme weather events, coupled with limited supply of raw materials https://globalcloudteam.com/ from Ukraine since Russia’s invasion, have disrupted global supply chains. A combination of many functions that already existed individually, but not in this combination.

The complicated and complex story of Nokia perfectly depicts that the action you take on product innovation can make or break a company. It can easily become your worst enemy or the most powerful tool that keeps the business afloat and supports their growth. It is common for companies that miss the innovation train and lag behind their competition to eventually disappear altogether.

Almost every firm places high importance on product innovation in marketing. Marketing firms with high ambitions to sell their products worldwide must embrace innovation. However, to succeed through innovation, businesses must devote as much time and money to promoting new products as they develop them. Companies have to allocate resources, such as money, people, and time, to create new products, services, and processes. On the other hand, innovation can lead to massive cost savings. When companies use a differentiation strategy focusing on one aspect of the product , they create a perceived value among potential customers and consumers.

What Is Product Innovation?

Unfortunately, many companies miss this as they fail to create relevant products that really answer to customer needs. Speaking of the capabilities of your workforce, we’ll state the obvious, that you need to get the best people for the job. We laid out below the most common seven stages new products normally go through.

what is product innovation

It should address the problem of a large section of your customer base. By relevancy, we also mean that the product should be relevant to your competitor. You not only need to do proper market research, but you need to do it in a short duration.

Examples of product innovation done right

Sometimes it’s not enough to just ask yourself as your biases might hinder your judgment. Go further and look into the jobs to be done theory and make sure your product is performing a job customers need done. Research the market thoroughly and get as much insights as possible and remember that you can’t do it at your desk. Beyond Meat is driven by their philosophy to continuously improve and their approach to innovation placed them in top 50 most innovative companies. Instead of going only after vegans and vegetarians, Beyond Meat were among the first to target omnivores and people who want to reduce meat consumption.

  • Consider sales forecasts, product price, profitability estimates, and overall production costs.
  • The tricky part is not just coming up with ideas for new products, or even taking them to completion.
  • Doing this will help you to produce products that people need and want — and not something that just sounds like a good idea.
  • You can think of them as the costs of designing, testing and re-adjusting the product into its final form.
  • Revuze is fundamentally changing the way companies measure user perception of products, services, and the shopping experience.

It is aided by taking customers’ feedback and making improvements by adding features of technologies. Apple’s innovation strategy involves introducing exciting new products and improvements and using innovative business models for maximumproduct success. It utilizes both radical and incremental innovation to its advantage and focuses on product design and functionality. One of the more widely accepted definitions for innovation is the introduction of something new. That something could be anything from new services to products, processes and even incremental improvements to something that already exists. In practice, however, people usually refer to new or improved products when they talk about innovation.

Measurement processes consists of collecting and systemizing qualitative and quantitative data regarding different factors of the innovation process, investment and outcome. After all these stages have been successfully run through, then the business can officially launch the product. On the surface, Diet Coke, oat milk, and Flamin’ Hot Cheetos don’t have much in common. But all our favorite products have the same origin story as innovations. Suppose you are thinking about starting a new business or already have one and want to make changes so that it can flourish.

Innovation requires talented individuals, so companies looking to innovate their products or services must seek top industry talent to ensure success. Successfulproduct innovationand adoption boosts the growth of business and industrial enterprises. It allows companies to grow, conquer new markets and turn higher profits. Companies can find a way out in oversaturated markets by turning to product innovation. It gives them a leeway to expand to new markets and get new customers simultaneously.

Who is responsible for Product Innovation in the Company?

Committed to new markets and to value innovation, they launched Nintendo Wii in 2006 and won over families and children. With a significant lower cost, a few novel features and a wireless motion control stick, they were back in the game. However, to save costs and increase buyer value at the same time, they had to reimagine the market and redefine what quality means for their new segment.

what is product innovation

While they were trailblazers at first, it won’t be easy to maintain this position on such a crowded market. If they want to continue growing and surpass their competitors, they definitely have to up their innovation game. Companies that have a great track record of launching successful new products use a systematic way of taking their ideas from concept to a marketable product. They can be radical or disruptive, but usually they are actually incremental and sustaining by nature. We’ll explain a bit more in detail the NPD process later in this article. Redefining the competition is also about redefining the value of a product.

Targeted Innovation

The consumer has a wide variety of products and services to choose from, but it is more likely that their choice will fall on something that has an individual approach. Customer preferences are always at the top of the list, and the companies that keep that in mind always end up winning the race. Performing changes in small steps like these means that you’re unlikely to lose sight of your goal – to improve the existing standard for your product. Every failure is a lesson to learn from, as it gives you information on what features/alterations will be received positively and which won’t.

You’ve probably seen updates to mobile or PC applications, new models and versions of types of smartphone – these are all examples of improving an existing product. Generally speaking, this type of change is slow and incremental. If your product or solution is innovative, you’ve got a much higher chance to survive and thrive. In this article, we’ll explore the definition of product innovation, how we can see and identify innovation, and how we can measure it. Undoubtedly, Apple has innovated its products like no one else in the smartphone industry. They launched their first iPhone in 2007 but kept introducing new features that exactly matched the customer’s requirement.

Theories of product innovation

Thus, innovation simplifies customer choices by solving their problems. Introducing new product features is the third type of product innovation. Developers and designers develop new features to improve products and increase their frequency and adoption. The trick is not to overburden consumers with numerous additional features that distract them from the product’s original usability and utility.

Constantly improving on your products will give you a steady advantage and you won’t be left behind. In a time when technology and communication channels are so easily accessible at large scale, anyone can make and launch products. The bar has been lowered, but not when it comes to good product development. Increased competition led to higher standards, so the bar is actually higher if you want to have a successful product on the market. Radical and disruptive innovations are not the most common and for good reason. They are harder to get right, they present more risks, and the success rate is not very high.

Product managers and managing directors don’t see what others already know. Innovation consulting helps to open your eyes and think outside the box. Does not need to be present only the production’s process case.

Learn what product innovation is and how CPG companies use different types of innovation to grow and survive in a fragmented market. The next time you’re trying to explain what data driven innovation truly means, you can turn to these two examples. The reason is that these two are examples of new platforms, products or systems that were created because of observable data correlations. The nappies and beer story is a perfect example of data driven optimisation of an existing system, but there is no true innovation happening there. Innovation and creativity are the go-to tools to ensure the maximum growth of an organization.

How does innovation affect your business

This, in turn, makes it much easier for everyone to work successfully towards a shared goal — a must in the fast-paced world of product innovation. When seeking innovation opportunities for your product, consider both types. The difference between the three types of innovation lies in their relationships to the existing market. Low-end and new-market disruption are both types of disruptive innovation, meaning they’re used by companies with fewer resources to challenge well-established businesses. Initially believing that customers were spending company time on their personal finances, they scheduled some interviews with users.

If there are some flaws during this stage, it is not a problem because you can always keep on working on it and/or continue providing the previous product. Make a prototype of the concept or try to implement it into an existing product. See your customers’ reactions and check what else must be done.

It involves visual design, interaction design, usability, information architecture, and human-computer interaction. Without a proper UX Design process, companies run the risk of creating products and experiences with a sub-par user experience. From LED bulbs to Eyeglasses, everywhere, brands have made successful innovations. Therefore, product innovation is not just developing a new product; a business can improve the quality of pre-existing products and call it product innovation. Companies can do primary or secondary market research when initiating their product innovation process.