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Impact Of Product Development Strategies On New Product Success And Its Impact ON Firm's Future Sustainability

MUHAMMAD ASADULLAH asadmpa@gmail.com

JUNIAD KHALID Junaidkhalid@live.com

Supervisor Dr. Humayun Naeem Assistant Professor

DEPARTMENT OF MANAGEMENT SCIENCES RIPHAH INTERNATIONAL UNIVERSITY, ISLAMABAD

Abstract
T o d a y s e r a i s e r a o f c o m p e t i t i o n a n d g l o b a l i z a t i o n e v e r yo n e wants to win this race and due to tough competition even sometimes survival in markets becomes difficult in this situation. Future

sustainability of firms is the criteria which ensure the firm survival. For future sustainability many approaches are consider but we focusing on New product Development strategies because New product is new h o p e o f s u n l i g h t f o r t h e b u s i n e s s e x p a n s i o n a n d f u t u r e s u s t a i n a b i l i t y. In this research we are going to present a Philosophical and conceptual model to throw light on the role of product development strategies for future sustainability of an organization and we also support this model by previous researchers opinion. In this model we have three

independent Variables which influence new product success and new p r o d u c t s u c c e s s l e a d s t o f u t u r e s u s t a i n a b i l i t y.

Keywords: Competition, New Product Development, Strategies, Future Sustainability Introduction


In the current day environment of competition where consumers have too many choices for one product , where people have access to product and services not only the local goods they can buy also imported goods due to globalization in this tough competition survival of the organization becomes difficult and future sustainability is big question mark for the firm in this scenario developing of the new products causes the corporate growth and future sustainability of firm sustainability is very difficult in the go ods profitable

competitive market . (Roberts,

1991).Now its time for the scholars to work on future sustainability of the organization and its relation with new product development strategies. There are many product development strategies but in the given paper, we took our independent variables from the product development strategies to check their relation with future sustainability of the organization. Product

Differentiation, Cost Leadership and Rapid Response we re taken as independent variables from product development strategies to check their impact on future sustainability of an organization and taking new product development success as mediating variable. A new product is an asset by the company in the future if sets its place in the market as successful, so it is critical that any new product should be launched according to a plan a n d t h a t s u c c e s s a l s o e n s u r i n g F i r m s f u t u r e s u s t a i n a b i l i t y. ( A z i z i a n d Iz yanti, 2009).For adopting new product development strategies company should conduct a detailed environmental scanning. Mostly differentiation strategy has a positive impact on product success and hence results in economic success of an organization which leads towards firms future sustainability (Meyer and Roberts, 1991).Same like cost leadership and r a p i d r e s p o n s e s t r a t e g i e s g i v e yo u r b u s i n e s s h i g h p r o f i t a s w e l l a s g o o d repute in the market so these three strategies leads new product towards s u c c e s s a n d n e w p r o d u c t s u c c e s s e n s u r e s f i r m s f u t u r e s u s t a i n a b i l i t y. Problem Statement Product Development Strategies like Product Differentiation, Cost Leadership and Rapid Response strategy may increase the chances new product success and new product success how much ensures the firms future sustainability. Significance Of Study This research provides the importance of three different

product development strategies and if manager use these three strategies for new product development causes new product success in the market and then managers also get the idea how new product success ensures the firms future sustainability. This research also contributes to highlight the importance strategic fit for new product development .

Research Objective o The main theme behind conduction of this research is

evaluation of impact of Product Differentiation, Cost Leadership and Rapid Response strategy on new product success and impact of n e w p r o d u c t s u c c e s s o n f u t u r e s u s t a i n a b i l i t y. o Our main focus is to development conceptual model

rather than theory testing Research Question Is Product Differentiation, Cost Leadership and Rapid Response strategies have positive impact on new product success and how much new product success ensures the future sustainabi lit y?

Literature Review
Importance of New product success is realizing by the

organizations and they kwon that their profitability and ultimately their long term survival depend highly on their capabilities to handle and implementation of successf ul product development strategies.

(Kandemir, Clantone and Garcia, 2006 ). According to. (Haake, Moore and Oliver, 2000). Product innovation is recognized as a key

determinant of sustainable business success and for the innovations product differentiation strategy is most suitable. It has been found though in few identified studies that there is a positive relationship between organizations innovation and its performance. (Read , 2000) Differentiation in products increases the p r o f i t a b i l i t y, of the

organization which helps company to survive in the tough competition and leads organization towards success. (Anthony Read) produ ct

differentiation is the source of organizational sustainability which helps (Strandberg, 2007) many researchers agree on that strategies are largely affect the future sustainability of an organization Product differentiation is a charming light which att racts the customers. Product differentiation has a very beneficial impact on new product success this success result economic success of an

o r g a n i z a t i o n ( R o b e r t s a n d M e ye r , 1 9 8 6 ) . P r o d u c t d i f f e r e n t i a t i o n h a s a

critical value for technology based firm and t heses firms use multiple strategies for developing and the improvement of the products for the continuous firm growth. Some time product differentiation strategy m a k e s yo u m a r k e t l e a d e r a n d t r e n d s e t t e r f o r t h e o t h e r w h i c h i n c r e a s e s the firm repute. According to (Soscia, Girolamo & Busacca, 2009) the success of new product depends on benefit perceived by consumer by using of innovative product if the consumer receive a required benefit or according to perception and this is possible when organizational environment encourages new product development projects and product differentiation strategy a l w a ys support NPD projects. Product

differentiation strategy also increases the performance of SBU and that is observed in many economies (Homburg, C., Krohmer, H, &

Workman, P Jr., 1999). Now the new generation has been developed continuous change in the product and especially mew generation also looking for new and new generation which is possible through product differentiation which also leads towards product new p roduct success a n d e n s u r i n g t h e f i r m s f u t u r e s u s t a i n a b i l i t y. ( S h a k e d a n d S u t t o n , 1987). It has been observed that CEOs who adopt product

differentiation strategy and focusing on the new product development keeping in view customer need and market trends ge t competitive advantage on the competitors and also become market leaders and a l w a ys g i v e t o u g h t i m e t o t h e c o m p e t i t o r s . ( R o b e r t s , 1 9 8 6 ) f r o m t h e literature review we found that there is positive relationship between product differentiation strategy with n ew product success and future sustainability of the firm. Rapid response product strategy is creating competitive

advantage in the market in 21th century due to quick actions taken by the management given b y the customers (Richardson, 1996). In last century firm too much focus on the cost leadership and product

differentiation strategy but the rapid response is also the area where t h e f i r m g e t t h e l o y a l c u s t o m e r s b e c a u s e yo u f i r m q u i c k l y a s s e s s t h e customer demand and the tries to give best as soon as poss ible in this scenario many new products come in exist and these product success

due

quick

response

to

customers

which

increases

sales

and

the

c o m p a n y p r o f i t a n d i n c r e a s i n g t h e f i r m s f u t u r e s u s t a i n a b i l i t y( H a a k e , Moore and Oliver, 2000). Rapid Response strat egy ensure the promises with customer and conduct responsible business which enhance the trust of customer and filling the gap of customer trust and maintains the target market confidence on the firm. (Strandberg, 2007). For the adoption of rapid response strategy firms must have to correct the all process and especially focus on better supply chain management. Rapid R e s p o n s e s t r a t e g y p u t a s yn e r g i c e f f e c t o n t h e o r g a n i z a t i o n a n d a l s o provide us techniques Haveman the to maintain and Oliva, high pressure on

competitors(Gresov, strategy also

1993).Quick between

Response and

improves

coordination

marketing

manufacturing operation for the purpose of provide the fast and flexible setup which for the quick market shifts( Hammond,

1990).Rapid Response improves the condition of less coordinated firms and well coordinated firm become as a superior competitive advantage. Rapid response makes the all organizational structure efficient and flexible and the production department make adjust the production according to the marketing response for the purpose of delivering s t yl e s a n d m e e t i n g t h e q u a n t i t i e s n e e d e d t o m e e t t h e d e m a n d . R a p i d response also reduces the inventory costs, control the over production and maintain the supply of goods in case of increase prevents from s t o c k o u t ( R i c h a r d s o n , 1 9 9 6 ) . R a p i d R e s p o n s e a l w a ys c a r i n g f o r t h e customers due to which customer get superior satisfaction which mean s u c c e s s o f n e w p r o d u c t s u c c e s s a n d b r i g h t w a ys f o r f i r m s f u t u r e s u s t a i n a b i l i t y. Cost leadership is tool through which p roducer reduce its cost of production and increase the profits and make cost as competitive advantage(Amit,1986) and quality product with low cost increase the chances of new product success .Cost leadership c r e a t e s s yn e r g i c

e f f e c t o n e f f i c i e n c y o f o v e r a l l p r o d u c t i o n s ys t e m a n d e l i m i n a t e s t h e unnecessary process (White, 1986) cost leadership helps to achieve

firm economic goal that shows superior economic performance in terms

of low expenditure and high margins (Camison and Villar-Lopez,2010). T h e s e m a r g i n s p u t p o s i t i v e i m p a c t o n f i r m s f u t u r e s u s t a i n a b i l i t y. C o s t reduction ,optimal efficiency is the primary objective of every

organization and this objective create business value which addressing f u t u r e s u s t a i n a b i l i t y( L a r s s o n , 2 0 0 8 ) . i n m a n y i n d u s t r i e s o f t h e w o r l d cost leadership seems to be a most effective generic which ensures the success the of new product and firms long term future

s u s t a i n a b i l i t y. ( Z a r k e s h , 2 0 0 8 ) . C h i n e s e c o m p a n i e s w h i c h c a p t u r e s t h e world on the basis of cost leadership is the example for every eye even they never produce new technology and the even some times they produce low quality products but still give tough competitions to all countries. (Shaker, 2010)

Theoretical Framework
This conceptual framework examines the relationship between product development strategies with new product success and then examines the impact of new product success on future sustainability of the firm as show in the figure 1. Product Differen tiation, Cost Leadership and Rapid Response strategies are our independent variables whereas new product success is our mediating variable and future sustainability is our dependent variable Independent Variable Mediating Variable

Product Differentiation

Cost Leadership

New Product Success

Rapid response

Fig 1: Logical Framework

Dependent Variable

Future Sustainability

Research Hypothesis
H1: There is a significant positive impact of product differentiation strategy on new product success

H2: There is a significant positive impact of cost leadership strategy on new product success

H3: There is a significant positive impact of rapid Response strategy on new product success

H4: There is a significant positive impact of new product success on Future sustainability of the firm

Methodology
The research is aimed to develop a philosophical model to develop a theory instead of testing the concepts. This research is exploratory research. In t his research we develop a con ceptual model in which researcher take three product development strategies as independent variable and the NPD success as mediating variable where as firms future sustainability is the dependent variable. Researcher support the model with previous researchers opinion Furthermore for analytical research on the same topic we will be develop a questionnaire which support the h yp o t h e s i s a n d t h e n r e s e a r c h e r w i l l t e s t a l l h yp o t h e s i s

Discussion
In 21 century the business environment becomes too much competitive and the due to this tough competition future sustainability of the firm is big challenge for the managers. To help the mangers many researchers highlight many things for the future sustainability but in this research the researcher focus on product development strategies as the

tools for the firms future sustainability and present a conceptual model

.in

this

model

three

product

development

strategies

(product

differentiation ,cost leadership and rapid response ) taken as the in dependent variable and the new product development success take as a moderating variable and firms future sustainability take as dependent variable. According to the researcher potters generic model describes two product development strategies but due to change in the people knowledge and taste one thing lacks which is rapid response strategy and this strategy create a synergic effect on the new product success along with product differentiation and the cost leadership because rapid respons e

directly deals with the customers and customer services and after sales services and increases the coordination between retail department with manufacturing operations .If we the firm going to start a new product project then manager have to adopt strate gy for the success of new product development and researchers given three product development s t r a t e g i e s c r e a t e a s yn e r g i c a f f e c t o n t h e n e w p r o d u c t s u c c e s s . N o w i f yo u a r e a c u s t o m e r a n d yo u w a n t t o b u y a n e w p r o d u c t w h a t s yo u r p e r c e p t i o n f r o m t h i s n e w p r o d u c t ? 1 . T h i s p r o d u c t f u l l f i l l s yo u r r e q u i r e m e n t yo u g e t perceived benefit from this product 2. Product contain good quality 3.This product has some new feature from existing products in the market.4.the prices of this product is also reasonable. 5. If some problem occurs during t h e u s a g e o f t h i s p r o d u c t yo u r p r o b l e m s h o u l d b e s o l v e d a s s o o n a s p o s s i b l e a n d yo u g e t g o o d a f t e r s a l e s s e r v i c e s . C a n yo u b u y i t r e p e a t e d l y y o u r q u e s t i o n i s ye s i n n o r m a l c i r c u m s t a n c e f o r n e w p r o d u c t t h e m a n a g e r should be adopt three product development strategies must which is given in the model (Figure 1).If the product success in the market it means firms getting business from the market and the firms maintain its

c u s t o m e r a n d f i r m s a l s o e n j o yi n g p r o f i t s f r o m s a l e s t h a t m e a n s f i r m s h a v e e n s u r i n g i t s f u t u r e s u s t a i n a b i l i t y. T h e n e w p r o d u c t s u c c e s s i s s o u r c e o f firm through which firm survive in this tough competition . Researcher a l s o g e n e r a t e s h yp o t h e s e s o n t h e b a s e s o f l i t e r a t u r e r e v i e w b u t n o t t e s t i n g t h e s e h yp o t h e s e s i n t h i s r e s e a r c h p a p e r .

Conclusion
From this research researcher conclude that product development strategies given in this paper (Product differentitiaon, Cost leadership and R a p i d r e s p o n s e s t r a t e g y) l a r g e l y a f f e c t t h e n e w p r o d u c t s u c c e s s p r o d u c t and a new and improved product make its place the market and getting

h a n d s o m e m a r k e t s h a r e a n d a l s o e n j o yi n g t h e h i g h p r o f i t a n d l o ya l customers which ultimately ensures the firms future sustainability in this tough competitive environment and this conclusi on is made on the basis

of previous researcher opinion and results . If the manager adopts these strategies for new product development they may enjoys a new product success and ensuring the firms future sustainability which is the ultimate goal of all organizations.

Future Research
In this research researcher present conceptual model only and d e v e l o p h yp o t h e s e s o n t h e b a s i s o f l i t e r a t u r e r e v i e w . T h e r e i s o p p o r t u n i t y f o r t h e s c h o l a r s t o t e s t t h i s m o d e l a n d h yp o t h e s e s b y a n a l yt i c a l r e s e a r c h . This research also indicates the researchers to find best strategic fit in different economies in different industries for the new product success a n d i t s i m p a c t o n f i r m s f u t u r e s u s t a i n a b i l i t y.

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