Product innovation refers to when a company develops and introduces new products, services or features to the market, such as when a car company releases a new model with a fresh design and updated features.
The process hinges on creating something novel and differentiated — something that addresses customers’ needs or solves their problems in a better or novel way than what’s available.
Product innovation ranges from incremental improvements to radical breakthroughs. It encompasses multiple aspects of business, from technology to design to packaging to pricing.
Considering its scope, it’s no surprise that product innovation can offer numerous benefits to companies, including:
Here, we sit down with Joseph Aranyosi, an associate dean of the College of Business and Information Technology at University of Phoenix, to learn more about product innovation and how to implement innovative practices into your business model.
Associate Dean, College of Business and Information Technology
The product innovation process involves a series of steps aimed at developing and introducing new or improved products to the market. A product design and development course can help business owners jump start their creativity when it comes to product development.
While the specific process can vary depending on your industry and company, here’s what’s usually involved:
Disruptive innovation can create new markets or disrupt existing ones by introducing novel solutions that offer significant advantages over established ones. Most of the time, disruptive innovations check the following boxes when they’re brought to market:
An example of disruptive innovation in marketing is the rise of influencer marketing. Influencer marketing has disrupted traditional advertising and marketing practices by leveraging the popularity and credibility of individuals on social media platforms to promote products or services.
In the past, businesses primarily relied on TV, radio, print and digital ads. However, influencer marketing has transformed this landscape by introducing a more direct way to connect with consumers.
Disruptive innovation improves upon existing markets and business models whereas radical innovation creates entirely new markets or value networks.
Radical innovation is characterized by its transformative nature, disruptive impact and ability to reshape industries. Often, this means introducing entirely new technologies, products or business models to the market. Radical innovations might have the following qualities:
These examples illustrate how radical innovation in marketing can lead to significant changes, opportunities, and challenges in the business world.
Incremental innovation refers to making small, gradual improvements or modifications to an existing product, service or process rather than introducing radical changes. Some key features of incremental innovation are:
These examples demonstrate how incremental innovation involves making steady, small-scale improvements to existing products, processes and services, providing benefits such as risk reduction, cost effectiveness and stability in the market.
Platform innovation refers to the development of new technologies, systems or frameworks that enable applications, services or products to be built on top of a common foundation, creating a scalable ecosystem and facilitating interactions and exchanges between different stakeholders, often leading to new business models and opportunities. Here are some benefits of platform innovation:
Process innovation refers to changing production technology or methods for improved outcomes. This usually benefits the people involved in the process or the end users of the product or service, or both! Here are some ways in which process innovation can create efficiencies within a business:
Social innovation is the development and implementation of new ideas, strategies and solutions that address social and environmental challenges. It usually involves finding novel approaches to tackle complex problems and create positive social impact. Unlike traditional approaches, social innovation considers the broader societal and environmental implications of solutions.
This type of innovation can improve society or the environment by:
Marketing innovation is the development and implementation of novel marketing strategies, tactics and approaches that lead to improved customer engagement, brand awareness and, ultimately, increased sales.
By differentiating themselves from competitors, businesses can stand out and attract the attention of their target audience. Then, they can enhance customer engagement and create memorable brand experiences.
From there, it’s about market expansion and discovery of new markets or opportunities, market dominance or partnerships. Through innovative market research, segmentation and targeting, businesses can identify untapped customer bases or new geographical markets.
Marketing innovation also plays a critical role in launching new products or promoting existing ones. From guerrilla marketing to social media contests or interactive product demonstrations, there are many ways businesses can generate buzz about their products or services.
Marketing innovation leverages data and analytics to gain insights into customer behavior, preferences and purchasing patterns. This empowers organizations to optimize marketing campaigns, target specific customer segments and personalize marketing messages.
As with any strategy, product innovation comes with drawbacks. Here are a few examples:
By conducting thorough cost-benefit analyses, risk assessments and market evaluations, businesses can make informed decisions and mitigate potential challenges associated with product innovation.
Despite potential challenges, the ultimate goal is for the reward to outweigh the risk. A variety of benefits can come from taking a chance on innovative product development.
Product innovation can contribute to a business’s overall success in several ways. These include:
By consistently offering new products, businesses may continue to attract additional customers while retaining existing ones.
A bachelor’s degree in business can provide individuals with a solid foundation in business functions, including marketing, finance, operations and strategy. Courses in innovation management, marketing strategy, market research and entrepreneurship can specifically contribute to a better understanding of product innovation principles and practices.
Research and data analysis skills can be learned in programs such as a Bachelor of Science in Business. Through research courses, you will learn how to evaluate data for validity, reliability, patterns and trends. And with data analysis courses, you’ll learn how to present quantitative and qualitative data in a way that drives strategy, decisions and, yes, innovation breakthroughs.
By following these best practices, individuals and businesses can navigate the complexities of product innovation more effectively and potentially increase their chances of developing successful and impactful innovations.