What Is Product Innovation?

Product Innovation refers to creating a new product or innovating the function of a new or old product. This strategy can be divided into two situations. It may mean the relaunch of earlier products suitable for a particular country. ^[1]

Product Innovation

As a basic corporate behavior, innovation has a variety of specific manifestations, covering all aspects of corporate activities. According to the different occasions, it can be divided into product innovation,

Enterprise development has a long-term strategy, and product innovation plays a key role in this strategy. Product innovation is also a system engineering. The comprehensive strategic deployment of this system engineering is a strategy for product innovation, including selecting innovative products, determining innovation models and methods, and coordinating with other aspects of technological innovation.

In the specific reality of product innovation, there are mainly independent innovation,

Product innovation internal R & D

Internal R & D means that enterprises mainly develop new technologies and develop new products through their own strength. Internal R & D is definitely not behind closed doors. In fact, the company's scientific and technological capabilities are the result of long-term accumulation through cooperation with relevant parties. As Pavter (1986) points out, the source of a company's technology accumulation reflects the interdependence of sources such as suppliers, users, production engineering, and government-funded research. ^[2]

(I) Independent Innovation

Independent innovation is the research and development department of the company to invent new products or improve old products. Many large companies have their own scientific research departments, engaged in basic research and application development of related products, and can actively participate in the new trend of the market. Among all kinds of daily necessities manufacturers in the world, Procter & Gamble is second to none in product research and development. The company invests US $ 1.7 billion annually and has more than 8,300 scientists, including 2,000 researchers with doctorate degrees. At 18 large research centers around the world, it specializes in basic research, product development, process design, engineering and equipment development On average, more than 20,000 patents are applied each year. After entering into China, Procter & Gamble cooperated with Tsinghua University and established a large-scale technology research center in Beijing in April 1998, specializing in researching products suitable for the Chinese market. Nokia has always believed that the only way to survive in the high-tech field and fierce market competition is to always stay ahead of others. To this end, the company was the first to break the industry's law of releasing a new product every two years, and replaced it with an average of more than one month.

Its series of mobile phones, while optimizing basic functions, continue to innovate from a young perspective, filling one market after another and always doing better than competitors. As a result, a wave of mobile phone sales has set off, taking the lead in market competition. Nokia is like a very talented creator, always alive and innovating. Its technology and products represent innovation and the future, leading the trend in the industry. For example, the enhanced voice encoder developed by it for improving the voice quality has been adopted by the GSM mobile communication industry and has become the industry standard; the infrared device is built into the mobile phone, and it can complete mobile phones, fax machines, computers and other equipment without connecting lines. Contact; Nokia actively participates in the development and development of third-generation wireless communication technology, and plays a pivotal role in the specification of the entire third-generation wireless communication technology. Nokia has reached an agreement with Japan's DoCoMo to jointly develop the third generation Wireless communication terminal products, and has successfully conducted the first WCD-MA (wideband CDMA, third-generation mobile communication standard) terminal call test.

(Two) reverse development

Reverse development is also a form of internal development, also known as technical cracking, which refers to the research on the performance and structure of other companies' products, and cracking their manufacturing processes and technical formulas in order to imitate and improve. The reason why it is called reverse development is because normal product innovation is to transform new formulas and processes into new products, and technical cracking is the other way round-exploring the technology contained in existing products. ingredient. Technical cracking involves business ethics and legal issues, but it is still used as a way for companies to compete outside the market

(3) Entrusted innovation

Entrusted innovation refers to the fact that an enterprise assigns the work of developing new products to a person or organization outside the enterprise through a contract. The combination of industry, university and research is a scientific and technological innovation method strongly advocated by the country. Many companies have entrusted a new product project or topic to a university or a specialized research institution for research and development. In recent years, a large number of powerful Chinese medicine companies have emerged in Heilongjiang Province, which has a direct relationship with the province's enterprises actively entrusting universities and scientific research institutions to innovate. Ganpikang, Paishi Stone Liquid, Qianlieshuertong, Zhenqi Jiangtang Capsule, Citan Granules, Cerebral Oxygen-containing Tablets, etc. are Zhonglong Pharmaceutical Group, Diwang Pharmaceutical, Jiren Pharmaceutical, Shiyitang Pharmaceutical, Wei Georgia Pharmaceutical, Corning Pharmaceutical and other companies commissioned Heilongjiang University of Traditional Chinese Medicine to develop new drugs. For those small and medium-sized enterprises with insufficient internal scientific research personnel, weak research foundation or poor resource capacity, commissioned innovation is the best way to develop new products.

(IV) Joint Innovation

Joint innovation refers to the combination of resources such as funds and technical forces between enterprises to jointly overcome technical difficulties and share research and development results. For large-scale R & D projects, joint innovation can solve technological breakthroughs that cannot be achieved by a single enterprise. According to reports, more than 10 Japanese companies, including Sony, NEC and other companies will set up a community to jointly invest 20 billion yen to jointly develop a new generation of semiconductor chip production equipment, with the goal of launching jointly developed new equipment to the market in 2003. The move aims to compete with US and European companies that are at the forefront of developing chip production equipment, such as Intel in the United States, International Business Machines Corporation and Infineon Technology in Germany. The Japanese company hopes that through the combination, it can occupy the largest share in the world's $ 25 billion advanced chip production equipment market. In order to improve the research and development capabilities of domestic information application products and cope with international competition, China's information industry, including research institutes and computers, information services, communications, networks, home appliances, microelectronics and software companies, began to unite in June 2003. The digital (3C products) industry alliance of the China Information Industry Chamber of Commerce will be jointly established. The alliance will connect related manufacturers such as hardware and software according to different products to form different development groups. In this way, domestic manufacturers can avoid the situation of single-handed competition in the market, so that the advantages of "production, education and research" are complementary.

Product Innovation External Access

External acquisition refers to the fact that an enterprise does not acquire its own right to use a new technology, new process, or the right to produce and sell a new product without using its own research and development. It has three forms:

(A) innovation and introduction

The introduction of innovation refers to the direct purchase of new technologies or the right to produce and sell new products. In terms of introducing technology, China advocates the principle of "one study, two uses, three reforms, and four innovations", that is, on the basis of learning and application, the imported technology is transformed to make it more suitable for its own production and market conditions. After accumulating enough technical experience, realize technological and product innovation and create independent intellectual property rights. In view of modern people's attitude of seeking individuality and pursuing new changes, European Code enterprises decided in the spring of 2003 to introduce colored laminate flooring that has been popular in Germany, Spain, Denmark, Sweden, and other Western European and Nordic countries to the domestic market. First of all, there are more than a dozen fashionable colors of this type of floor. Consumers can choose one of these colors and use multiple colors to "platter" them. Secondly, such products can strengthen their stability and reduce noise by decibels. ; Again, this type of flooring substrate has high density and can effectively adapt to geothermal heating systems, which not only guarantees heat dissipation, but also does not crack or deform at high temperatures, the water absorption expansion rate is only 2%, and the formaldehyde emission is extremely low. It is not difficult to imagine that the introduction of such new products immediately won the welcome of the market.

(II) Enterprise M & A

Corporate mergers and acquisitions refer to the acquisition or merger of shares in other companies by companies, so that it is logical to obtain ownership, use or control of the company's new technologies and products. When P & G entered the markets of other countries, except for a few countries that adopted new enterprises, most of them adopted acquisition and merger methods. In the 1970s, after entering Canada, the United Kingdom, the Philippines, and Saudi Arabia, Procter & Gamble acquired Japan's Sun House, established P & G Sun, and began producing and selling P & G products in Japan. In the 1980s, it established a joint venture in China and launched it in Germany. Refillable liquid cleaning products; in the 1990s, RAKONA of Czechoslovakia was acquired and quickly expanded to Hungary, Poland and Russia. In the late 1990s, it entered the Americas market, including Mexico. In terms of diversification, Procter & Gamble acquired Norwich Eaton Pharmaceuticals in 1982 and entered the over-the-counter and prescription drug markets and health care. In 1987, it acquired the Blendax product line. In 1989, it acquired Noxell and its famous makeup brand Clarion. Entered the cosmetics and perfume market; acquired Shulton's product line in 1990 to expand the male personal care market; acquired the famous cosmetics brands MaxFactor and Beatrice in 1991 to further expand its cosmetics market internationally; acquired the famous American baby in 1996 Diaper brand BabyFresh strengthened its position in the baby cleaning products market; in 1997, it acquired Tambrands to expand its global business in the field of women's cleaning products. Japan's Mitsubishi Chemical Corporation acquired the largest media product manufacturer in the United States, Wolbotim, and used its technology to launch a fourth-generation storable DVD in early 2003.

(3) Authorization

Licensing refers to a business that obtains a license to produce and sell a product from another company. This method does not involve the change of ownership of technology. Authorization agreements usually specify the scope and duration of the authorization. Beyond that, the licensor still has the right to issue the same authorization to other enterprises. The benefits of external acquisition strategies are that companies do not have to spend huge amounts of money to develop new products, save research and development funds, and gain time to quickly participate in new markets. Secondly, the failure rate of new product development is very high, and many new product concepts are rejected in the laboratory stage. This strategy can avoid the risks of new product development. Thirdly, by merging similar enterprises in the target market, companies can transform competitors into their own power, thereby maintaining their market share. However, companies must always pay attention to the development of science and technology in order to understand the latest international level of science and technology development.