CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Innovation leads to a process of change in organizations and its market offerings, and is a key weapon that marketing strategists use to win customers and markets, through the development of sustainable competitive advantage. In the words of Peter F Drucker (1954) ‘there is only one valid definition of business purpose: to create a customer’ and ‘the business enterprise has two and only two basic functions: marketing and innovation’. Innovations use assets and competencies (skill and knowledge in both technical systems and management systems) of the organization along with innovation processes to bring about new or different market offerings, which when successful in the market bring in immense value to the firm. Innovations also lead to the creation of assets called intellectual property; intellectual property rights called IPRs include copyrights, patents, trademarks, trade secrets and industrial designs.

Product innovation according to Gunday, Kandah, & Ranch, (2011) is broadly seen as an essential component of competitiveness, embedded in the organizational structure, processes, products, operations, and services within a firm. Product innovation is one of the fundamental instruments of growth strategies to enter new markets, to increase the existing market share and to provide the company with a competitive edge. However, developed and developing economies around the world have come to realize the value of manufacturing firm; they are seen to be characterized by dynamism, innovations, efficiency, competition, technological development (Ibidunni, Iyiola and Ibidunni, 2014).

According to Kamakia (2014), Product innovation is the introduction of a goods or service that is new or significantly improved regarding its characteristics or intended uses; including significant improvements in technical specifications, components and materials, incorporated software, user friendliness or other functional characteristics. Bakar and Ahmad (2010) added that the capability in product and business innovation is crucial for a firm to exploit new opportunities and to gain competitive advantage. Product innovation is inevitable if businesses are to remain relevant and sustainable (Bakar and Ahmad, 2010). Product innovation allows firms to not only develop new market segments but also expand its current market segments and product portfolios; however, it is also associated with higher costs as well as higher risks and management challenges (Davcik & Sharma, 2017).

Regionally, the effects of product innovation are felt by the manufacturing companies in Africa, they are introducing new models along with novel approaches to business process, all aimed at increasing firms’ services penetration and production, expanding market share, driving profits and cutting costs. Some manufacturing companies have been going through a period of growth as result of product innovations. As opposed to importation of new technologies from the western world in the past, Africa now has tried to be more innovative by motivating employees to be more innovative as well as provide an enabling environment for product innovation. As a result of these, some companies in Africa have grown to global level. However, those companies in Africa which continue to depend on imports continue to face challenges in the market and eventually shrink (Moodley, 2012). From the foregoing therefore, the study is determined to examine the relationship between product innovation strategies and survival of manufacturing firms in Nigeria with reference to Pabod Breweries Limited, Port Harcourt as case study.

1.2 Statement of the Problem

The lack of product innovation strategies is caused by among others lack of sufficient funds and lack of expertise which are important ingredients to successful product innovation. Another challenge to this is the changing customer needs and the existing regulations which hinder development of certain products. Some manufacturing firms also lack research and development departments in their management team.

Most manufacturing firms enter the market with high expectation; the result is not always what they expect. Some products do not survive to see the growth stage, while others do not really grow as per their expectations. Most manufacturing firms have been struggling to survive in the market and they have been reported to be downsizing in an effort to remain afloat (Noonan, 2012). These manufacturing firms in most cases end up scaling down their employees, being unable to sustain themselves and therefore closedown.

For this reason, this study aims at examining the relationship between product innovation and the survival of manufacturing firms in Nigeria, with an aim of establishing the best product innovation strategies that the manufacturing firms (Pabod breweries) should employ in order to grow and lastly establish the ability of good product innovation strategies to facilitate growth of these firms to their potentials.

1.3 Objectives of the Study

          The main objective of the study is to examine the relationship between product innovation and survival of manufacturing firms in Nigeria. The specific objectives are as follows;

1.       To examine the relationship between product style and the survival of manufacturing firms.

2.       To examine the relationship between product packaging and the survival of manufacturing firms.

3.       To examine the relationship between product technology and the survival of manufacturing firms.

1.4 Research Questions

1.       Does product style influence the survival of manufacturing firms?

2.       Does product packaging influence the survival of manufacturing firms?

3.       Does product technology influence the survival of manufacturing firms?

1.5 Research Hypotheses

H01: There is no significant relationship between product style and the survival of manufacturing firms.

H02: There is no significant relationship between product packaging and the survival of manufacturing firms?

H03: There is no significant relationship between product technology and the survival of manufacturing firms?

1.6 Significance of the Study

The relevance of this study, this time, is as crucial as the study will help to highlight benefits the companies in this industry will derive. The information collected will expose the management of the companies in product innovation, and know the quantity to produce in order to avoid losses.

This study will afford a successful and thorough examination of current practices of product innovation in Nigerian Breweries, as well as expose influential and critical factors and processes that determine the success of product innovation.

Furthermore, it will highlight the socio-economic impact to product innovation in manufacturing firms in Nigeria and as well provide recommendations for enhancing the proficiency of the process with the view to increasing the growth and success of manufacturing firms.

Finally, it will provide a guide to operations of manufacturing companies and government policy makers on the proper frame to adopt towards product innovation of manufacturing companies with the view of enhancing growth and success.

1.7 Scope of the Study

The study is delimited under the following heading: content scope, geographical scope and unit of analysis.

Content Scope: The content scope of this study involves an investigation to ascertain the relationship between product innovation strategy and survival of manufacturing firms. The dependent variable is survival measured by sales volume, market share and sales growth. While independent variable is product innovation strategy measured by product style, product packaging and product technology.

Geographical Scope: This study is delimited to Port Harcourt with reference to Pabod Breweries Limited, Oginigba, Port Harcourt, Rivers State.

Unit of Analysis: The unit of analysis in this research involves both senior and junior staffs of Pabod Breweries Limited, Port Harcourt at the time of the study.

1.8 Limitations of the Study

The study was limited by the following:

The level of frankness in response to questions by the respondents is quite doubtful.

Finance: Accessing fund for the research work was difficult and this to a great extent limited the quality of research activity.

Time: The time allocated to the research work was not sufficient to give room for further intensive work on the field of study.

Organization Policy: Policies of the organization limited the level of information received. The personnel of the firms were not willing to give information, stating that it was against the organization’s policy.

1.9 Definitions of Terms

In this study, it will be very important to define key terms that will be featuring. They include the following:

Innovation: It’s the process of translating an idea or invention into goods or service that create value or for which customers will pay. To be called an innovation, an idea must be replication asan economical cost must satisfy a specific need.

Product innovation: This is the creation and subsequent introduction if goods and services that is either new or improved version of previous goods and service. In other words it helps to create new product that customers will love and want to follow. They also track how customer responds to their product.

Survival: The act or fact of surviving, especially under adverse or unusual circumstances.

Packaging: It is the science, art and technology of enclosing or protecting products for distribution, storage, sale, and use.

Technology: It refers to methods, systems, and devices which are the result of scientific knowledge being used for practical purposes.