Innovation Flashcards
(15 cards)
Innovation
The development of an idea into a new product or process
Product innovation
Adapting a product that already exists
Purpose of innovation
Firms cannot afford to stand still in competition markets
Risks of innovation
Firms can made losses on innovation fails
Benefits of innovation
USP
Less competition due to patent
Increase prices
More efficient
Drawbacks of innovation
R and D costs
Few innovations are effective
Opportunity costs
How can R and D lead to success
a firm can differentiate its product leading to success in either a mass or niche market
Differentiation means being able to offer a product or service that stands out from the competition
Process innovation
changing a process of production that already exists or putting into practice a brand new production process
Product lifecycle
Product life cycle is a technique used to track the stages a product goes through during its life
It tracks sales over time from the development stage of a product through launch and until it is removed from the market Although a product life cycle relates to just one product business will want to have products at different stages
Development in the product lifecycle
negative cash flow due to market research and Research and Development (R&D). No sales revenue before launch
Introduction stage of the product life cylce
production and promotion costs can be high
Growth stage of the product lifecycle
sales revenue increases but as more units are sold production costs also increase. However, there will be economies of scale
Maturity stage of the product lifecycle
sales revenue increases but as more units are sold production costs also increase. However, there will be economies of scale
Decline stage of the product lifecycle
at some point the product will start to lose sales.
