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Firms urged to develop innovative products
Developing new products can offer opportunities but create potential risk for businesses, a professor at a seminar said on Apr. 20 in HCM City.
"The opportunity for new product innovation is to protect the market you have and protect customers you have. It can enable you to penetrate new markets, find new customers and find new opportunities," said George Abe, Lecturer at the University of California and Los Angeles (UCLA).
Businesses developed new products in response to competitive pricing pressure, said Abe, who is faculty director of the Applied Management Research Program at the UCLA Anderson School of Management.
They should also be developed to respond to a fast-changing market. Many new products failed, however, because businesses did not carefully conduct market researches before launching the products.
"There are two ways to launch and market new products: product first or market first," he said.
The product-first strategy meant that the entrepreneur conceived of the product before the customers were even aware that they needed or wanted the product.
This strategy required highly creative management and "disruptive innovation," he said, adding that it was a high-risk but high-reward strategy.
Many businesses in California had followed this strategy, he said.
Asian businesses usually chose the "market-first" strategy, he said. Businesses observe the market, find a market need, and then build the product to fit the market. This was "sustainable innovation" with fewer risks but also fewer rewards, he said.
"A market-first approach can cause too many products or improvements to be introduced," causing branding confusion for existing products, he said.
If a company wasn't careful in introducing new products, their brand might be negatively affected, he said.
When a company had too many products in their product portfolio, management for a wide range of products becomes increasing complex, he said. Abe also advised local companies to focus more on developing the domestic market first before marketing products to other countries.
"I see many businesses think of going to the US and EU so early," he said, noting that these markets were highly competitive, with many well-trained buyers as well as other challenges.
"With a population of nearly 90 million in Viet Nam, I think a good market is here," he said.
If companies did not have a good portfolio in the local market, they would not have enough "market maturity" to penetrate other markets, Abe said.
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