What is the difference between product innovation and process innovation? How is each used?

Question

What will be an ideal response?

Answer 1

Product innovation refers to efforts to create product designs and applications of technology to develop new products for end users. Product innovations tend to be more common during the earlier stages of an industry's life cycle. Product innovations are also commonly associated with a differentiation strategy. Firms that differentiate by providing customers with new products or services that offer unique features or quality enhancements often engage in product innovation. Process innovation is typically associated with improving the efficiency of an organizational process, especially manufacturing systems and operations. By drawing on new technologies and the accumulated experience of the organization, firms can often improve materials utilization, shorten cycle time, and increase quality. Process innovations are more likely to occur in the later stages of the industry life cycle as companies seek ways to remain viable in markets where demand has flattened out and competition is more intense. They are often associated with overall cost leader strategies because the aim of many process improvements is to lower the costs of operations.