New Product Development And Product Innovation Essay

2535 WordsMar 22, 200911 Pages
Introduction New products and product innovations are constantly being developed by companies to increase their market share. They need to figure out if the increase in costs is worth the potential sales of the new product being worked on. The firm needs to figure out how these products will affect their performance through normal profits, economic rent, and total firm risk. Product innovations can either be incremental innovations or breakthrough innovations (Sorescu & Spanjol, 2008). The competition will react to new products being developed and introduced into the market by another competitor. This threatens to destroy existing market positions and often yields vast new market opportunities. Competitors will be more likely to respond when the firm introducing the product is large, market dependent, or a large firm is introducing the product into a small market (Aboulnasr, Narasimhan, Blair, & Chandy, 2008). Companies trying to introduce new products into emerging industries will have competition from firms already there (RAO, Chandy, & Prabhu, 2008). Customers are constantly looking for new and improved products and companies are always needed to fill this void. The supplier needs to find out if the consumer is willing to pay for the new product or upgrade from the current product that they are using. Decision-maker satisfaction, service quality, and price have significant influence on a person’s desire to upgrade. The service quality is affected by the price and satisfaction of the decision to upgrade (Bolton, Lemon, & Verhoef, 2008). Customer participation affects the tradeoff between the level of product innovativeness and its speed to market. These two types of customer participation are customer participation as an information

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