Product Development And Firm Competitiveness

1.0 INTRODUCTION

Background Information to the Study

The level of dynamic global business environment encounter by companies in the 21^st century have forced most companies to consistently embrace product development in order to adapt to the external environment and gain competitive advantage. The global stiff competitive business environment, continuous innovation changes, coupled with volatile market environment leave organizations with no option but to rethink on how to develop new product that will attract customer loyalty and sustain competitive advantage. Karuiki and Kilika (2020) affirm that competition of firms is coupled with the challenges of global innovation and the need to respond to customers’ demands, tastes and preferences. This is because the uniqueness of organization products does not guarantee competitive advantage if the products do not meet customers’ needs and provide value they desire. Furthermore, many innovative ideas do not result in successful new product (Wanjiku, 2018).

Liu, Lin, and Huang (2019) regarded New Product Development as the combination of a series of information processing, through which to transform market opportunities and demands into production knowledge. Hyman and Sierra (2020) considered new product development as the key in businesses and the motive of competitive advantages. In the process of New Product Development, a business does not simply promote new products but has to satisfy customer demands and cope with competitors’ threats. Ejiogu (2022) views that the society expects that all organizations should continuously improve their business performance, and to achieve this, organizations must strive to operate and compete in an expanding and dynamic environment, and new product development is a vital source of competitive advantage. The highly competitive environment and the varying (diversified) customer needs, have forced enterprises to search for and apply new product development processes that could improve their product unique characteristics, quality, and business performance (Ebarefimia, 2018). According to Tu, Lin, Chen and Huang (2023) new product development has become a source of competitive advantage. Therefore, it is the primary responsibility of businesses to create new product ideas and determine which product should eventually be promoted as per conventional product model (Schreier & Fuchs 2021). The success of new product development depend upon the increased customer loyalty and satisfaction rather than financial and by making better new product development internal process (Mendes & Ganga, 2023; Lin & Huang, 2021; Kandemir & Acur, 2020; Kahn, Barczak, Nicholas Ledwith & Perks, 2020).

Retaining and pleasing consumers is the main driver for the market launch of new product. This core goal encourages managers to recognize important new product development success factors for customer satisfaction (Awwad & Akroush, 2016). Managers can treat new product development activities to perceive changes resulting from business environments as opportunities for growth and expansion of their business on the one side and satisfy their customers ‘ needs and demands on the other (Awwad & Akroush, 2016). Chan and Ip (2021) adds that new product development is a competitive tool for a company to compete, distinguish and exceed its rivals. Effective product development rests on a product’s design’s ability to create a positive product experience (Clarke & Fujimoto, 2016) while product innovations performance has been seen as an important driver for firm growth particularly the combination of product and processes innovations significantly improving firm growth (Goedhuys & Veugelers, 2018). The researchers’ further point out that product innovation translates into superior sales growth rates and access to finance. Haeussler, Patzelt and Zahra (2022) concluded that new product development is important for new firm’s successful performance though they also attest that developing new products is costly and time consuming with at times uncertain outcomes.