Impact of product development strategies on new product success and its impact on firm's future sustainability

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1 Journal of Business Administration and Management Sciences Research Vol. 2(2), pp , February, 2013 Available online at ISSN Apex Journal International Full Length Research Paper Impact of product development strategies on new product success and its impact on firm's future sustainability Juniad Khalid* and Muhammad Asadullah Department of Management Sciences, Riphah International University, Islamabad, Pakistan. Accepted 23 November, 2012 Today s era is era of competition and globalization everyone 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 hope of sunlight for the business expansion and future sustainability. 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 product success leads to future sustainability. Key words: 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 goods profitable sustainability is very difficult in the competitive market. (Roberts, 1991).Now it s 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 were taken as independent variables from product development strategies to check their impact on future *Corresponding author. Junaidkhalid@live.com. 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 and that success also ensuring Firms future sustainability (Azizi and Izyanti, 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 firm s future sustainability (Meyer and Roberts, 1991).Same like cost leadership and rapid response strategies give your business high profit as well as good repute in the market so these three strategies leads new product towards success and new product success ensures firms future sustainability. Problem statement Product Development Strategies like Product Differentiation, Cost Leadership and Rapid Response strategy may increase the chances new product success

2 Khalid and Asadullah 049 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 - 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 new product success on future sustainability. - 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 sustainability? LITERATURE REVIEW Importance of New product success is realizing by the organizations and they know that their profitability and ultimately their long term survival depend highly on their capabilities to handle and implementation of successful product development strategies. According to Haake et al. (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 organization s innovation and its performance (Read, 2000). Differentiation in products increases the profitability, of the organization which helps company to survive in the tough competition and leads organization towards success. (Anthony Read) product 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 attracts the customers. Product differentiation has a very beneficial impact on new product success this success result economic success of an organization (Roberts and Meyer, 1986). Product differentiation has a critical value for technology based firm and theses firms use multiple strategies for developing and the improvement of the products for the continuous firm growth. Some time product differentiation strategy makes you market leader and trend setter for the other which increases the firm repute. According to Soscia et al. (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 always support NPD projects. Product differentiation strategy also increases the performance of SBU and that is observed in many economies (Homburg et al., 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 product success and ensuring the firms future sustainability (Shaked and Sutton, 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 get competitive advantage on the competitors and also become market leaders and always give tough time to the competitors (Roberts, 1986). From the literature review we found that there is positive relationship between product differentiation strategy with new 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 by 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 the firm get the loyal customers because you firm quickly assess the customer demand and the tries to give best as soon as possible in this scenario many new products come in exist and these product success due quick response to customers which increases sales and the company profit and increasing the firms future sustainability (Haake et al., 2000). Rapid Response strategy 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 Response strategy put a synergic effect on the organization and also provides us techniques to maintain high pressure on competitors (Gresov et al., 1993). Quick

3 050 J. Bus. Admin. Manage. Sci. Res. Independent Variable Mediating Variable Product Differentiation Cost Leadership New Product Success Rapid response Dependent Variable Future Sustainability Figure 1. Logical framework. Response strategy also improves the coordination between marketing and manufacturing operation for the purpose of provide the fast and flexible setup which for the quick market shifts 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 makes adjust the production according to the marketing response for the purpose of delivering styles and meeting the quantities needed to meet the demand. Rapid response also reduces the inventory costs, control the over production and maintain the supply of goods in case of increase prevents from stock out (Richardson, 1996). Rapid Response always caring for the customers due to which customer get superior satisfaction which mean success of new product success and bright ways for firm s future sustainability. Cost leadership is tool through which producer 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 creates synergic effect on efficiency of overall production system and eliminates the 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). These margins put positive impact on firm s future sustainability. Cost reduction, optimal efficiency is the primary objective of every organization and this objective create business value which addressing future sustainability (Larsson, 2008). In many industries of the world cost leadership seems to be a most effective generic which ensures the success of new product and firms long term future sustainability (Zarkesh, 2008). Chinese companies which captures the 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 Differentiation, 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 Research hypothesis H1: There is a significant positive impact of product differentiation strategy on new product success.

4 Khalid and Asadullah 051 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 this research we develop a conceptual 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 hypothesis and then researcher will test all hypothesis 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 response 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 strategy for the success of new product development and researchers given three product development strategies create a synergic affect on the new product success. Now if you are a customer and you want to buy a new product what s your perception from this new product? 1. This product full fills your requirement you get 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 are also reasonable; 5. If some problem occurs during the usage of this product your problem should be solved as soon as possible and you get good after sales services. Can you buy it repeatedly your question is yes in normal circumstance for new product the manager 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 customer and firms also enjoying profits from sales that means firms have ensuring its future sustainability. The new product success is source of firm through which firm survive in this tough competition. Researcher also generates hypotheses on the bases of literature review but not testing these hypotheses in this research paper. Conclusion From this research researcher conclude that product development strategies given in this paper (Product differentiation, Cost leadership and Rapid response strategy) largely affect the new product success product and a new and improved product make its place the market and getting handsome market share and also enjoying the high profit and loyal customers which ultimately ensures the firms future sustainability in this tough competitive environment and this conclusion 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 researcher present conceptual model only and develop hypotheses on the basis of literature review. There is opportunity for the scholars to test this model and hypotheses by analytical research. This research also indicates the researchers to find best strategic fit in different economies in different industries for the new product success and its impact on firm s future sustainability. REFERENCES Amit R (1986). Cost leadership strategy and experience curves, Strategic. Manage. J; 7(3): Azizi Adis A, Izyanti Razli A (2009). Factors Affecting New Product Development in Malaysian Manufacturing Industry International. Bulletin of Business

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