What is Product Innovation and Why is it Important?

July 10, 2021 By Hitesh Bhasin Tagged With: Management articles

Product innovation can be understood as the development-driven process that empowers a business in making better products or improving existing products for the consumers.

These new or improvised products enhance the usefulness of the same items available.

So, by incorporating product innovation in your business channelization, you will have the option to give yourself a favorable position over your rivals or competitors in the market.

It makes your organizations fruitful as it guarantees that you appreciate the lion’s share in your target niche. Hence it is principal that you ingrain and support the creative soul of innovation in your business.

In this post, we will dive deep into the world of product innovation and cover different aspects that are related to developing innovative ideas for your product development, so you can stand-out in the market. So, let us get started-

Table of Contents

Introduction to the Concepts of Product Innovation

Product innovation is something that we hear quite often in the business domain, but the majority of people don’t know what it defines. Product innovation is not just about developing new products; it’s broader than that.

In simple words, product innovation is bringing innovation in products to solve the problems of the majority of people.

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.

Millions and millions of products are rolled out into the market every year in almost all the industries. But all of them can’t be termed as innovative products.

A business need not roll-out new product every time to resolve people’s problem, they can work on the pre-existing ones and make them better. For example – Intel has been innovating its pre-existing CPU for a decade and resolving the customer’s problem.

Product innovation is all about finding a solution to the problems of the majority of people.

Before categorizing a new product as product innovation, a business should ask themselves these questions –

1. If it is better than other competitive products in the market?
2. If it is relevant to the majority of customers?

If the answer is definite to both the questions, then yes, the product can be categorized as an innovative product. Let’s dive deeper and understand product innovation broadly.

Why is Product Innovation Important?

Launching a new product boosts not only the company’s revenue but also its recognition in the market is the dream of every next business. But do they always succeed in this?

According to statistics on an average of 9 out of 10 products that are launched fail to serve their purpose. But why this happens? – Because the companies don’t focus on the innovation part.

The market is getting competitive day by day, and only those survive who can meet customer’s expectations.

As every industry is providing customers with so many product options of a single type, it becomes essential for businesses to innovate.

Why did Nokia fail with Windows-OS? – Because it didn’t address people’s expectations.

When people were looking to explore in the android domain, it rolled out windows.

Therefore, it is emphasized that product innovation is not about rolling out a completely new product and addressing a new issue. It should focus on pre-existing problems and provide better solutions to those.

The modern-day market works on a single concept – survival of the fittest. If the business is not able to improve, then it will go down in no-time.

Apple is successful with iOS because it is addressing the issue of a majority of the population and improving its products from time to time.

Don’t wait & be the first with Product Innovation in your Niche

Many businesses think that let competitors innovate and afterward copy their ideas and actualize them in their products by improvising in some or other ways.

But, as per the suggestions of many authors of Innovation books- if you will be the first one to innovate then it can give you an upper hand as you will have a better chance to gain the market and optimize your presence before your rivals do.

Regardless of whether your rivals may try to copy your idea, it will be tough for them to make their presence in the market excepting the fact that their items are a lot less expensive than yours, or they have innovated something state-of-the-art using your idea (which will for sure be the rarest to the rare case).

All things being equal, buyers will take as much time as necessary before they move loyalties. If your product innovation has made them your loyal customers, then there are very lesser chances that they will shift their loyalties.

So, we are clear why product innovation is essential, let us understand the role of market research in product innovation

Market Research for Product Innovation

So, you have planned to develop a new product to solve the problem of the majority of your customers, but how to measure its efficiency before the launch?

Market research is the best way to do so. It may seem cliché, but it’s the most effective measure to take before launching the product in the market.

Market research is the only way to figure out what people are expecting from you. It is the only way to know what they are struggling with. Find out what people think of the pre-existing products that are similar to yours.

Getting Customer Experience (CX) insights will help you understand the market of the product more broadly.

Now, it’s not like no business does proper market research before working on their new product; they do. But here only those win who are quick with the process.

You not only need to do proper market research, but you need to do it in a short duration. Issues will be there every time, but you have to respond to those issues as soon as they emerge.

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 customer’s satisfaction from the product.

Hence market research is the key; let us understand what makes an innovation successful–

What makes Product Innovation Successful?

It is essential to find out what are the criteria that define successful product innovation. Here are a few of them –

1. Relevancy

The product should be relevant to the customer’s demand. 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.

If you are innovating in the music industry, then you should compete with those in the music industry and not in the video industry.

2. Unique yet Simple

Innovation is simply about being unique, but it should be not complex to explain. You have developed the product to solve your customer’s problem so you should be able to explain your product’s efficiency comprehensively.

Your new product should not be complex enough to be tested by users. You are removing their challenges, not creating new ones.

Make sure that users can switch to your product with ease. If they are not comfortable with the change, think again.

3. Potential for Sale and Profit

In the end, sales and profits matter. Your new product should hold the potential for generating sales and good profit. You may launch a good product, but it should not take years to mature in the market.

These are the criteria that should be followed by your new and improved product to be successful in the market. The prime goal is to solve people’s problems, but you should not ignore other important factors.

Let’s now reveal the ultimate way for product innovation –

How to do Product Innovation?

Till now, you must be clear with all the essentials of product innovation and what do we call a successful product innovation.

What is the essential requirement for product innovation? – An entrepreneurial mindset!

Simple, isn’t it? You need to look at things from a different perspective to innovate.

Here is the approach towards successful product innovation –

1. Market Research

Gather everything that you can that defines the people’s expectations. Check for people’s reviews on existing products. It can be done through surveys, interviews, etc.

2. Develop a Concept

Now since you know what everyone is looking for, develop a concept towards that. Meanwhile, analyze to know if you are proceeding in the right direction. Check for the potential in the idea.

3. Test the Product

You developed the product based on the concept; now is the time to test it. It should be done professionally. Testing not only provides you with the ground reality of the product but also opens up to a more competitive idea.

You can also launch the prototype if you want to get the user’s opinion. Find out the flaws and fix them before the final launch.

4. Assess the Market Again

In product innovation, market research plays a significant role. Before launching your product, do final research of the market and check if the requirement is still the same or changed.

This time pick your target customers and find the most profitable way to launch.

5. Refine the Product to max and be prepared for a successful launch

This was the simplest yet effective way towards successful product innovation.

The duration matters a lot hence try to be quick with your development process. It depends entirely on the customer’s feedback; hence market research is the key.

Let’s look at some highly successful product innovation that will inspire you –

Examples of Successful Product Innovations

1. Apple’s iPhone Product Innovation

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.

From camera to touch-id, everything they did fell in their court.

2. Microsoft’s X-box Product Innovation

When it comes to gaming, Play station from Sony and Xbox from Microsoft are the two names that pop up. The controllers of Xbox have always revolved around the concept of innovation.

Microsoft has always improved it to make it more feasible for users.

3. Amazon’s Kindle Product Innovation

Amazon’s Kindle is a perfect example of product innovation. It gave a completely new experience for all the bibliophiles around the world. With increasing, digitalization Amazon introduced Kindle at the right time in the market.

It has been adding newer features to it since its launch.

You can think of countless successful product innovations. From LED bulbs to Eyeglasses, everywhere, brands have made successful innovations.

Final Thoughts!

Product innovation is not a new concept and has been in the market forever.

It’s all about improvement and solving user’s problems. The competition in the market is at its peak, and it will not go down. No matter whatever industry your business belongs to, it will only survive if it is ahead of its competitors in terms of product quality.