Product innovation & Importance of product innovation IMPORTANCE OF PRODUCT INNOVATION The main purpose of business is to satisfy customers and to make profit fundamentally; a company fulfills this purpose through its products. New product planning and development are very important for an organization’s success. The new products must satisfy customers need as well as must be profitable for the firm. Requirement for growth:- Sooner or later, many products brands become outdated. Their sales volumes and market shares drop because of changing desires or superior competing products. Examples of outdated products:- ⇒ Once successful products that are now become outdated include fountain pen, audio cassettes. ⇒ Now many dated products are becoming successful rapidly for example, white cloud bathroom tissue, computers, etc. Thus the guideline for management is innovating or die. Introduction a new product at the right time can help sustain a firm. In fact, companies that are leaders in terms of profitability and sales growth obtain 39% of their revenues from new products. Some firms that were successful innovators for long periods like Nike, Procter and Gamble, haven’t maintained a steady flow of new products in recent years. Some of their competitors have been more successful. Business profitability and success depends on innovation. IF we innovate well, we will ultimately win. High Failure Rates:- For many years, “the rule of thumb” has been that about 80% of new product fail. New products higher failure rate is due to no change in existing products or new products are not being different that existing products. For example, Vaseline after shave lotion, Pepsi A.M, and Farrah Shampoo. A new product is also fail if it does not deliver on its promise. Further, a product can be failed if it is perceived as offering poor value in relation to its price. Other factors that can undermine new products include poor positioning and lack of marketing support. Firms that are inattentive to their new products can face higher failures. Firms and organizations that effectively manage product innovation can get higher advantage, higher sales and profits and solid foundation for the future.