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CHAPTER 2

Review of Related Literature and Studies

Foreign Literature

Ian Goulding (1983) States that the emergence of a

formalized new product development can be attributed to the
needs of companies in the capitalist system for maintaining
a competitive advantage in their operating markets.
Describes the process as one of innovation defined as: ‘the
technical, industrial and commercial steps that lead to the
marketing of new manufactured products'. Belies the
complexity of the function: ‘to describe new product
development as difficult is probably a mammoth
understatement'. Intends to illuminate the theory and
practice of this process. Concludes that a flexible
approach and an open mind are the most important
requirements for successful application.

According to F. Axel Johne and Patricia Snelson

(1988), in today's increasingly competitive climate, more
and more managers have to update themselves on the range of
factors that determine product innovation success. Such
successes can be measured at the project (product) level or
at the program level. Axel Johne and Patricia Snelson have
prepared a review of factors associated with achieving
success in a high proportion of recently developed new
products.
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The authors address practical questions, such as the

following: To what extent can product innovation be
planned? Should development tasks be scheduled sequentially
or in parallel? What is the proper degree of formality in
effective new product decision making? What are the optimal
organizational arrangements?

The article concentrates on recent writings, drawing

chiefly from journal articles published after 1980,
including a large number from the Journal of Product
Innovation Management. Factors contributing to success are
ordered according to the now well‐known McKinsey 7 Ss
framework popularized by Peters and Waterman in their book
In Search of Excellence. Detailed development tasks are
considered according to the schema advanced by Crawford in
his book New Products Management.

Chryssochoidis, George M. (2003), product and process

innovations are prime manifestations of innovativeness by
an organization. Yet surprisingly little is known regarding
how to initiate and maintain the innovative momentum in
organizations with the ultimate target to produce an
increasing number of product innovations and improve
competitiveness. Of major concern have been however, the
sheer volume of contributions on the subject and the
complexity of issues involved. An extensive literature
review has been carried out covering 400 scientific
Journals during a 10-year long period (1991-2001). Over
2500 journal articles have been identified as relevant and
read. Their contribution to the subject of product
innovations (i.e., process innovations are not covered) has
been identified using a multitude of literature mapping
techniques.
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The present article summarizes the contributions of

individual articles depicting the current state-of-the-art
in the area.

Local Literature

According to Castillo (2018) manufacturers and

culinary people have upgraded various familiar products to
keep up with the continually changing needs of customers as
well as to attract more buyers.

According to Navarro (2017) the Philippines’

innovation ranking has risen in the last six years, from
111 in 2009 to 48 at present. This is according to
Department of Science and Technological Services Dr. Rowena
Guevara, who spoke at the recent “Demo Day” for 15 fellows
of the Leaders in Innovation Fellowship at the Asian
Institute of Management in Makati City. Indeed, Demo Day
was proof of innovation in the Philippines, with scientist
presenting solutions to improve lives.

According to Gueco (2017) innovative economies must

design and develop cutting-edge products and processes to
maintain a competitive edge and move toward even higher
value-added activities. Apparently the innovative countries
were also the world’s most competitive economies.
Currently, the Philippines’ GCI ranking is down by 10
notches from 47th among 140 economies in 2015 to 57th among
138 economies. GCI ranking is somehow a reflection of the
performance of the country’s innovation system.
““Agricultural innovation typically arises through dynamic
interaction among the multitude of actors involved in
growing, distributing, and consuming or otherwise using
agricultural products. For innovation to occur,
interactions among these diverse stakeholders need to be
open and to draw upon the most appropriate available
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knowledge. Aside from a strong capacity in R&D, the ability

to innovate is often related to collective action,
coordination, the exchange of knowledge among diverse
actors, the incentives and resources available to form
partnership and develop businesses and conditions that make
it possible for farmers or entrepreneurs to use innovation
(World Bank 2012)

Foreign Studies

According to Baregheh et al. (2009), Naidoo (2010),

the food market has high levels of competition and
saturation, which requires companies to keep developing new
strategies in order to improve, sustain their market share,
or even survive.

According to Gourville (2006), Gresham et al. (2006),

one strategy used to gain the competitive advantage is
product innovation aimed at satisfying consumers’ needs,
and targeting niche markets with specific needs. While
product innovation is important in terms of business
strategies and growth, success rates for newly launched
products are relatively low, with failure rates between 40-
90%.

According to Lunsford and Burnett (1992), considered a

series of potential barriers to the adoption of novel
products among older consumers and suggested there are a
number of incompatibility limitations with these products.
Psychologically, older consumers often fail to see clear
benefits, resonate with a brand image or a product that is
inconsistent with the older consumers’ self-image.
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Local Studies

According to Connie Bayudan-Dacuycuy and Lora Kryz C.

Baje (2018), innovation is the synergistic use of
resources, technology, capital, and information to achieve
growth at different levels of the economy. Many studies
abroad have already supported the hypothesis that
innovation leads to a good firm performance and long-term
economic growth. In the Philippines, some studies already
analyze the effects of simple innovations on firm
performance. However, emerging literature shows that
complex innovation strategies have bigger impacts than
simple ones. In line with this strand of research, this
paper analyzes the effects of simple and complex
innovations on labor productivity and employment growth.
Results show that there is no single best innovation
strategy that a firm must undertake. However, if firms are
constrained by their budget, a simple innovation will help
in improving labor productivity and to some extent,
employment growth. Firms that do not face cost issues can
benefit more from adopting a complex innovation strategy.
In addition, several specific types of complex innovation
strategies can be adapted depending on whether the firm
aims to increase its employment or to boost its labor
productivity.

According to DCP’s social media site (2015), the

Design Center is mandated to develop and maintain a
creative research and development program on product
design, development, and improvement of Philippine products
and services, including those created by small and medium
enterprises (SMEs). Designers of DCP conduct continuing
research on product and product packaging design trends,
materials and processing technologies. The DCP creates,
develops, promotes and upgrades the design of all
Philippine products and services, including those created
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by SMEs as well as conduct seminars and workshops on

product design and development. Aside from setting up
design exhibitions and publishing design-related materials,
DCP also ensures that Filipino design ideas, products, and
other outputs of creative talents are protected. Said
office also conducts design education throughout the
country to meet the needs of Philippine industries and
promote Philippine design locally and internationally.

Cruz, D.R. (200), This study focused on describing a

segment of the Filipino fast food consumers, their
demographic characteristics and their definition of quality
in the context of products and services offered in the fast
foods. It aimed to determine a possible relationship
between quality and consumer loyalty, and to recommend
strategies to satisfy the quality expectations of Filipino
fast food consumers. Data were gathered using pre-tested
survey questionnaires, which were administered to a random
sample of 400 fast food diners in two fast food outlets of
a multinational chain. One store was situated in a mall in
Mandaluyong and the other was a freestanding unit in Quezon
City [Philippines]. Data were analyzed, using descriptive
statistics and the chi-square tests of independence.
Findings showed that fast food consumers are mostly young
adults and teenagers, college level and graduates and
presently employed within the vicinity of the fast food
stores. Majority were female and single. No significant
relationship was found between the consumers' frequency of
visit in the fast food and the amount spent per visit.
Quality was defined by the consumers based on the following
characteristics of products and services, ranked according
to perceived importance: flavor and taste value for
money/nutrient content, presentation and packaging, variety
and availability, systematic ordering and selling, feeling
of security in the food and environment, prompt delivery
and service, consistency of service, feeling of
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recognition/importance and feeling of security and

accessibility of location. A significant relationship was
found between consumer loyalty and all the above tested
quality characteristics except for flavor and taste.
Although ranked as the most important quality
characteristic, flavor and taste of food served in the fast
foods was shown to have no significant relationship with
the consumers' decision to be loyal to the establishment,
except when it becomes a discriminant factor. When all the
major players are perceived to equally provide all the
consumers' needs, then consumers will go for one or two
fast food establishments with the strongest appeal to their
gustatory sense. Rewarding and encouraging the formation of
loyal consumers is one strategy suggested. The need for
loyal consumers who "advocate" so that other will come,
ensures the continued viability of the business.