Differences between product innovation and process innovation
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A product innovation is the introduction of a good or service that is new or significantly improved with respect to its characteristics or intended uses. These include significant improvements in technical specifications, components and materials, incorporated software, user friendliness or other functional characteristics. Product innovations include both new products and new uses for existing products:
New products. These are goods and services that differ significantly in their characteristics or intended uses from products previously produced by the firm. The first microprocessors and digital cameras are examples of new products using new technologies. The first portable MP3 player, which combined existing software standards with miniaturised hard-drive technology, was a new product combining existing technologies.
New uses for products. The development of a new use for a product with only minor changes to its technical specifications is a product innovation. An example is the introduction of a new detergent using an existing chemical composition that was previously used as an intermediary for coating production only.
A process innovation is the implementation of a new or significantly improved production or delivery method. This includes significant changes in techniques, equipment and/or software. Process innovations can be intended to decrease unit costs of production or delivery, to increase quality or to produce or deliver new or significantly improved products. Process innovations can be distinguished by production methods or delivery methods, or both:
Production methods. These methods involve the techniques, equipment and software used to produce goods or services. Examples of new production methods are the implementation of new automation equipment on a production line or the implementation of computer-assisted design for product development.
Delivery methods. These concern the logistics of the firm and encompass equipment, software and techniques to source inputs, allocate supplies within the firm or deliver final products. An example of a new delivery method is the introduction of a bar-coded or active RFID (radio frequency identification) goods tracking system.
New products. These are goods and services that differ significantly in their characteristics or intended uses from products previously produced by the firm. The first microprocessors and digital cameras are examples of new products using new technologies. The first portable MP3 player, which combined existing software standards with miniaturised hard-drive technology, was a new product combining existing technologies.
New uses for products. The development of a new use for a product with only minor changes to its technical specifications is a product innovation. An example is the introduction of a new detergent using an existing chemical composition that was previously used as an intermediary for coating production only.
A process innovation is the implementation of a new or significantly improved production or delivery method. This includes significant changes in techniques, equipment and/or software. Process innovations can be intended to decrease unit costs of production or delivery, to increase quality or to produce or deliver new or significantly improved products. Process innovations can be distinguished by production methods or delivery methods, or both:
Production methods. These methods involve the techniques, equipment and software used to produce goods or services. Examples of new production methods are the implementation of new automation equipment on a production line or the implementation of computer-assisted design for product development.
Delivery methods. These concern the logistics of the firm and encompass equipment, software and techniques to source inputs, allocate supplies within the firm or deliver final products. An example of a new delivery method is the introduction of a bar-coded or active RFID (radio frequency identification) goods tracking system.
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A product innovation is the introduction of a good or service that is new or has significantly improved characteristics or intended uses; a process innovation refers to the implementation of a new or significantly improved production or delivery method.
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