• 10 Marks

SCS – July 2023 – L3 – Q3b – Strategy Implementation

Identify and explain four reasons why SavvyTech needs to research, innovate, and develop existing and new products.

Business entities must innovate to survive and grow. The Director of Marketing and Sales, in a meeting, presented a product market annual performance analysis report and highlighted that the sales trend of the ‘Wrist Organiser 3b’, introduced in 2018, reduced by 75% in 2022 and by 50% in 2021.

Required:
As a member of SavvyTech plc management team, identify and explain FOUR (4) reasons why it is necessary to research, innovate and develop existing and new products as an organisation.

  1. Sustaining Competitive Advantage:
    • Innovation helps SavvyTech maintain its competitive edge in the market. As seen with the sales decline of ‘Wrist Organiser 3b’, products can become obsolete without continuous improvement. Investing in research and development (R&D) ensures that SavvyTech can adapt its product offerings to meet changing market demands and fend off competition.
  2. Meeting Changing Consumer Needs:
    • Consumer preferences evolve over time, and to keep customers engaged, SavvyTech must innovate. For instance, the reduction in sales of the Wrist Organiser indicates that the product may no longer meet consumer expectations. By researching and understanding new consumer trends, SavvyTech can update its product line to cater to current demands.
  3. Prolonging Product Life Cycles:
    • Innovation can help extend the lifecycle of existing products. The Wrist Organiser’s decline demonstrates that products go through stages from introduction to eventual decline. By introducing incremental updates or entirely new features, SavvyTech can prolong the product’s relevance in the market, boosting revenue over a longer period.
  4. Exploring New Markets and Revenue Streams:
    • Research and innovation enable SavvyTech to enter new markets and explore additional revenue sources. The declining sales of current products signal a need for diversification. Developing new products, such as the HVSC, allows the company to tap into new industries (e.g., satellite, mobile telecommunications, aviation) and expand beyond its existing customer base.
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