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Innovation is the key to success in the 21st century. There are lots of reasons for it. Nowadays product life cycles (PLC) are truly getting shorter because of an increased number of competitors from here and abroad and their readiness to copy anything that seems to be taking off.
Secondly, customers have become less brand loyal than they were before due to more options in the market place from the competitors. Now there is no easy way out for the companies and they have to go for innovation of their products or services. This point is perfectly exemplified by Steve Jobs of Apple Computers who knew that electronic firms will rapidly come out with new iPod versions. But he is a Marketing Genius and instead of defending his innovation with expensive advertising, he defended with more innovation. He upgraded the iPod to carry photos as well, while his competitors were only carrying music. Then he moved on to video. This helped him to keep his competitors like Toshiba's iRiver at bay and also his product development keeps the competitors always lagging.

The same marketing magic is being worked by Howard Schultz of Starbucks who continues to add new innovations to the coffee service business.

In this way two things are happening simultaneously - firstly, they are saving some extra bucks on marketing and secondly, by innovation they are increasing the product life cycle by introducing new variants in their existing product line.

Now talking about Innovation, it can be in many ways like in case of Car company "X", they can innovate by introducing models with new variants, new color, new engine - altogether a whole new product but still keeping the core competency alive. Now for a customer, brand takes a back seat when they see new variants in the same price in the same segment but from other brands and they may opt for it. Now if company "X" had already innovated a new product in that category which no other competitor has done, then it could have capitalized on that and added new customers to its base. So we can see that how "Innovation is helping them to Differentiate" from the competitors in the fierce competitive market.

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* Contributed by: -
Sampad Kr. Swain,
Currently pursuing MBA from ICFAI Business School, Hyderabad.