PRODUCT INNOVATION AND SALES PERFORMANCE OF UNILEVER NIG. Plc

CHAPTER ONE

INTRODUCTION

1.1      Background of the Study

Business strategy development is concerned with matching customersrequirements (needs, wants, desires, preferences, buying patterns) with thecapabilities of the organization, based on the skills and resources available tothe business organization, leading to the issue of core competence (Holmesand Hooper, 2000). This concept has been defined as 'something that the organization does at least as well as other organizations, or preferably betterthan, any other organization in the market'. According to Webster (2004),

when products are based on such core competencies, they define theorganization’s value proposition in each target market and the organization’sbusiness strategy; thus, the business strategy adopted by an organizationmust be able to give it a competitive edge over other competitors in theindustry.

Product innovation is widely recognised as central to the success of mostcompanies. New products promote company growth, generate increased salesand profits, and are a crucial component in business planning. New productdevelopment is essentially an interdisciplinary activity requiring input from topmanagement, scientific, technical, marketing, finance, sales and other personnel.

Successful product innovation depends on a variety of factors which include thenature and quality of information acquired or known during the new productprocess, the proficiency of process activities, characteristics of the marketplace, thecompatibility of the resource base of the firm with new product projectrequirements, the level and complexity of the technology used, organizational structures of the firm, and the innovativeness of the product itself (Cooper 2004,Crawford 2000).

 

Product innovation, defined as the market introduction of products that is either new to the firm and/or the firms market, and their sales performance has for many years been central to the literature on innovation (Teece, 2006; Laursen, 2012). This focus is understandable since new products is a key mechanism in which firms can achieve new sales, improve their market share(s) and steal business from competitors. However, research has shown that attempts to introduce new products often fail, both in the technological search phase, and in the market introdutiion phase (Van de Ven et al, 2009; Cooper & Kieinschmidt, 2000). The technological and commercial uncertainty surrounding the introduction of new products onto the market is considerable, and June hinder companies from reaping sales from new product introductions, or even hinder them from trying to innovate at all.

Still, some companies manage to introduce new products successfully and reap high economic performance from doing so (Van de Vrande et al, 2003; Clausen, 2013). Understanding why same firms do this better than other firms holds the premise to gain insight into the much debated issue of why firms persistently differ in their performance (Nelson, 2001).Studies have examined different factors and whether or not they promote product innovation and the sales performance of new products, such as marketing, external knowledge sourcing, research and development (R&D) and firm size (e.g. Laursen & Salter, 2006; lausen et al, 2012; zarnitski & Horwarth, 2012). However, most scholars have overlooked the role of non-technological innovation and its possible relationship with technological innovation, induding new product sales performance. This is at odds with early and seminal contributions to innovation theorizing.

Joseph Schumpeter is arguably the most influential theorist about innovation and the role of innovation in economic development {Fagerberg, 2003). Interestingly, his conceptualization of innovation includes market innovation (Schumpeter, 2004). He argued for a broad understanding of innovation which distinguished between the following: “Product innovation” (new good or a new quality of a good), “process innovation” (new method of production), “input innovation” (new source of supply of raw material), “organizational innovation” (new organization of industry) and “market innovation” (opening up of a new market) (Drejer, 2004).

Scholars have recently acknowledged the broad Schumpeterian conceptualization of innovation and are increasingly, focusing on non-technological innovation in itself and its possible relationship with technological innovation (see for instance Sapprasert & Clausen, 2012; Mo! & Birkinshaw, 2009; Damanpour et at, 2009). The purpose of this work is to help remedy this flaw by examining the role of market innovation in the sales performance of new product innovations. We focus on sales performance as sales are a clear signal of market adoption and success. This is in line with a Schumpeterian understanding of product innovation which distinguishes clearly between new products that have an impact on economic and industry evolution and products without such an influence (agerberg, 2003).

1.2   Statement of the Problem

The problem Product innovation and sales Performance is the failure to deal with change. Many organizations do not use the myriad tools, techniques, perspectives, and approaches for being innovative, despite the widespread dissemination of these ideas (Cooper and Kleinschmidt 2006; Majahan and Wind 2002;Dougherty and Heller 2004). The years-long struggle among firms in many industries (autos,communications, airlines, electronics, utilities) to adapt themselves to more innovation indicatesthat becoming and staying innovative is no easy thing. Moreover, studies indicate that theinnovative organization is not less organized and more chaotic as some believe, but rather it isbased on a fundamentally different system of organizing (Burns and Stalker 2001; Jelinek andSchoonhoven 1990; Dougherty and Corse 2006). To become capable of sustained productinnovation June require changing the very approach to managing and organizing, which is a farmore significant adjustment than adding new processes or new performance measurements. Toget beyond this problem, the development of yet another description of the innovativeorganization will not do. It is important to analyze capacities for innovation in such a way thatwe can also understand how to change from non-innovative to innovative.

 

The second problem is a lack of consensus concerning what “organization” and“capacity” are in the first place. This problem arises no doubt because the fields of innovationand technology management cut across many disciplines, from physics to psychology, fromeconomics to sociology, from operations research to accounting. The diversity of views is lesslike blind men touching different parts of an elephant, however, and more like people at anaccident scene who literally see something different. This is, of course, just one perspective, but it address the social and human aspectsof organizing that are an important part of sustained innovation.This work sought to investigate the impact of product innovation and sales performance of Unilver Nig. Plc.

 

1.3   Purpose of the Study

The purpose of this study is to investigatethe product innovation and sales performance of Unilever Nig. Plc while the specific sub-objectives are:

1.     To examine the association between technological innovation and sales performance of Unilever Nig. Plc

2      To examine the association between Administration Innovation and sales performance of Unilever Nig. Plc.

3.     To examine the association between Strategic innovation and sales performance of Unilever Nig. Plc.

1.4   Research Questions

From the above specific objectives, the following research questions are formulated:

1.     To what extent does technological innovation affect sales performance of Unilever Nig. Plc?

2      To what extent does Administration Innovation affect sales performance of Unilever Nig. Plc?

3.     To what extent does Strategic innovation affect sales performance of Unilever Nig. Plc?

1.5   CONCEPTUAL FRAMEWORK OF PRODUCT INNOVATION AND SALES PERFORMANCE

 

Technological Innovation

 

 

Repeat Purchase

SALES PERFORMANCE

PRODUCT INNOVATION

                                                                                                                                                                                                                                               

 

 

Sales Growth

Administration  Innovation

Strategic   Innovation

 

 

 

 

 

 

 

 

 

SOURCE:(Researcher’s Desk 2015).

 

 

 

1.6   Research Hypotheses

The following null hypotheses are formulated from the above specific objectives:

H01:  There is no significant relationship between Technological innovation and Repeat Purchase.

H02:  There is no significant relationship between Technological innovation and Sales Growth.

H03:  There is no significant relationship between Administration Innovation and Repeat Purchase.

H04:  There is no significant relationship between Administration Innovation and Sales Growth.

H05:  There is no significant relationship between Strategic Innovation  and Repeat Purchase

H06:  There is no significant relationship between Strategic Innovation  and Sales Growth.

 

 

 

 

1.7   Scope of the Study

The scope of this study covers Product Innovation and Sales Performance. The geographical scope is Rivers State of Nigeria. The units of analysis covers Unilever Nig. Plc.

1.8   Significance of study

This study will be of benefits and interest not only to Unilever Nigeria Plcin Port Harcourt, but it will be valuable to other service sectors in Nigeria as a whole. The study will also be a source of primary and secondary data to other researchers who wish to conduct studies on related issues. It will again act as mainstream for generating, keeping and maintaining customers. The results of this study will make significant contribution to consumers of Unilever Nigeria Plc, as they are likely to experience improved service and relationship between them and their customer.

 

1.9   Definition of Terms

Product Innovation: the development of new products, changes in design of established products, or use of new materials or components in the manufacture of established products

Technological innovation is the process of combining and reorganizing knowledge to generate new ideas.

Innovation strategy means setting formal plan and establishing organization‟s long-term strategy in order to achieve organization‟s goals and objectives.

Administrative innovation as a process of developing new management system, new administrative process and staff development programs

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