Product innovation is a continuous process in a business firm. If a firm fails to develop new products it will be hard for it to compete and survive in the market. "Innovate or die" is a popular saying in marketing. There are several reasons for investing on new product innovation.
Need or reasons for product innovation can be highlighted as follows:
1. Growth
Every firm desires to grow and dominate the market. A firm's growth is only possible if it is able to bring new products in the market. Japanese and American companies spend huge sums of money on research and development on product innovations.
2. New Technologies
The introduction of new technology in every field provides several opportunities for product innovation. The technological revolution in communication, medicine, and office automation has brought thousands of new products in the market.
3. Product Life Cycle
The product life cycle concept suggests that every product has a finite life period at the end of which it is eliminated from the market. Products become obsolete due to introduction of technology and changes in consumer taste and preferences. Since human needs have very long life cycles, products must be constantly developed and introduced to the market in order to meet those needs.
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4. Competition
Competition in the market forces many firms to constantly introduce new products. In the current competitive environment, a firm can only survive and make profit if it is able to constantly innovate, develop, produce and launch new products into the market.
