Innovation (CH 3) Flashcards
What can research and development lead to?
Leads to innovative and attractive new products for the market. Can also use innovation on the production process
Competitive advantage meaning
Deemed to have better products if customer prefers it over competitors ones
Methods of gaining a competitive advantage
- Price
- Quality
- Cost
- Niche Market
- USP (unique features)
-Lowering average cost can create maximum value for consumer benefiting a firm with:
- Strong brand reputation
- Loyalty
How does R&D help to increase market power?
As it can give a product a USP which differentiates it from rivals products helping to increase brand loyalty and revenue of a firm.
How can Technological innovation improve product and process?
As it can improve the efficiency and productivity, lowering costs of production for a firm. This can improve quality and quantity of Goods/ Services.
What can Technological changes leads to for markets and products?
- New products
- Creation of new markets
- Potentially destroying existing markets
What can product innovation lead to?
Leads to creation of new goods/ services or improvements to existing versions
What can process innovation lead to?
It can lead to changing how something is produced which can reduce the average cost
How can the government provide state funding to firms and producers for R&D?
By providing a subsidy to lower cost of production for producers which encourages them to produce more goods.
Especially merit goods.
State the product life cycle stages
- Development
- Introduction
- Growth
- Maturity
- Decline
What happens for a firm in the development stage?
The firm researches, develops and tests all takes place before production starts
What happens for a firm in the introduction stage?
The firm launches their product onset for sale. This can be high profile heavily promoted event or just releasing stock for sale.
What happens for a firm in the growth stage?
The firms products become known and builds a customer base. Profitability may become possible.
What happens for a firm in the maturity stage?
The firms product is around it’s peak. Economies of scale are most likely as sales are at it’s highest level.
What happens for a firm in the decline stage?
The firms sales fall as preference change/ new products appear. Eventually low sales and falling profitability leads to products withdrawn
