4.1 Competing in the Market with a New Product

In Chapter 2, we explored how business firms strive to penetrate and expand their market share by enhancing their competitive advantage. To win more customers, firms must meet—and ideally, exceed—customer expectations in terms of price, quality, variety, and timeliness.

These values must be seamlessly integrated into the products or services offered. A firm can achieve success by introducing a novel product that competitors have not yet offered or by significantly enhancing the features of an existing product to deliver superior value to customers.

Profit-seeking firms understand that once they introduce a new product or service, competitors are likely to follow suit, impacting the popularity, pricing, and profitability of their offerings. Therefore, firms must adopt a holistic, long-term perspective to anticipate market dynamics and understand how these changes can affect their costs and profitability. In this chapter, we will first examine the process of developing a new product, followed by an analysis of its lifecycle, and consider the critical aspects of quality, price, and cost in this endeavour.