Profiting from Innovation in the Global Market

Introduction

The innovation in business is referred to the introduction of new ideas, creative process or products to develop a positive change in the business activity. It is often regarded as the application made for enhanced solution to improve existing business practices or methods which is important to enhance the efficiency and profitability of the business (Visnjic et al., 2016). In the global market, a business organisation making innovation has different opportunity to make profit from their actions which allows creating a stable future for the company. This is because innovation in the global market allows the company to include creative actions in producing, selling and introducing their products which acts to lower the overall cost and increase turnover (Karno and Purwanto, 2017). For students exploring this topic, seeking marketing dissertation help can provide valuable insights. Thus, in this study, the way a company could bring profits from its innovation in the global market is to be discussed.

Technology development

A business organisation or company profits from its innovation in the global market when they make improved technological productivity within their products through innovation. This is because there is high demand of enhanced technological activities in the global market made by the consumers who feel technological upgradation in the products or services they receive are only able to satisfy them (Maryam and Jehan, 2018). There is wide amount of enhanced technological resources and knowledge available in the global industry for the companies to be internalised in their business in making improved technological changes for effective production of products or delivery of services. It eventually leads the company to deliver enhanced services to the consumers which in turn affects to raise their annual revenue and profits out of increased purchase made by customers (Roos, 2017). For example, TeliaSonera which is a Telecommunication Company was the first global operator who commercially launched 4G technology in late 2009 within the city of Oslo, Sweden and Stockholm. Before the introduction of 4G, it was seen that 3G technology was widely used in the global market. However, as soon as the technical knowledge and resources for 4G were shared globally, it was seen that it was subsequently introduced by mainly companies and countries to allow their consumers have better experience in viewing videos and content on the smartphones (teliacompany.com, 2010). In 2015, the British Telecom Group which works globally internalised the information regarding 4G from the global market and developed along with introduced 4G services as innovation actions for their consumers to enhance their experience (theguardian.com, 2015). The enhanced technological productivity led BT to gain improved economic profit in the market. This is evident as in the subsequent years after 2015, the profit of BT was raised to 24,082£ million in 2017 which was all time high (BT, 2017). Thus, working globally by business enterprise to introduce technological upgradation makes them have the opportunity to develop overall profit in business.

Reduced cost of operation

The company making innovation in the global market is able to achieve profits for it when they are able to lower or stabilise the cost of operation of their business such as labour cost, production cost and others during the innovation. This is because innovation in the global market by companies without controlling to lower or stabilising cost of production leads to create unrealistic price of goods in maintaining profit margin (Fernández and Simpson, 2017). As mentioned by Cheah et al. (2016), unrealistic price of products even they are innovative is avoided to be bought by many consumers. This is because the unrealistic prince makes the consumers feel waste of money, in turn, avoiding to avail the products that lead the company to lose profit. It is evident as buying of product by the consumers in the market arranges the key economic resource for all companies (Schäufele and Hamm, 2017). For instance, Aldi, which is a global supermarket organisation, is seen over the years since their establishment make various innovative changes in their business model and operation to gain success and profit globally from the market (retail-week.com, 2019). During this, the company while operating and innovation in the global market learned the importance of e-commerce and understood regarding the way they can use the idea along with determined innovative changes in the global business model to lower the overall cost involved in their business to access greater profit. It led the organisation to set their first e-commerce site to sell wine online to potential consumers, in turn, lowering the cost of individual transactions related to selling wine through their physical stores (campaignlive.co.uk, 2019). As mentioned by Yu et al. (2016), e-commerce helps to lower labour cost of the company along with lower production cost related to document preparation, mail preparation, reconciliation, data entry, overtime and others. Thus, global companies such as Aldi by making innovation to sell their products in realistic cost with lower production cost are able to incur increased profit. This is evident as the boss of Aldi in the UK has mentioned that their current venture into e-commerce is going to help them achieve £100m by the end of the year, in turn, boosting the growth and profit gathering by the company (campaignlive.co.uk, 2019).

Improve CSR activities

The company can profit from its innovation in the global market when the innovation results to promote corporate social responsibility (CSR), reduce harm on the environment and ensure saving the depletion of non-renewable resources. This is because such innovative initiatives in the global market make the consumer feel that the company care about the world beyond their organisation and wish to promote a better future for the common people globally. It eventually leads the global consumers to develop emotional support for the brand or company out of feeling of value by the organisation, in turn, making them develop attachment and making increased purchase from the specific company (Brown et al., 2018). For instance, one of the global organisations such as Lego Group which is toy production company operating in the global market was seen to make innovation to create sale of the first biodegradable toys of their own in 2018. It is evident as the toys made from sugarcane residues that were previously plastic were first initiated to be sold in 2018 (lego, 2019). This biodegradable supportive innovation by Lego in the global market led them to gain increased financial profit. It is evident as in 2019 it as reported that their global sales increased by 5%. Moreover, their net profit increased to DKK 8.3 billion in 2019 and DKK 8.1 billion in 2018 compared to DKK 7.8 billion in 2017 which was before the introduction of the innovation that supports CSR activity in the company (lego 2019, lego 2017).

In another instance, it was seen that Tesla which is an automobile and clean energy company having its operations globally with introduction of the electric vehicles as innovation in the global market achieved increased profit. It is evident as they introduced their first all-electric car Model S in 2012 and after the introduction of the car it in the subsequent year the company expressed a huge profit. The company reported that reach profitability $15 million in the first quarter of 2013 which was all time high since the past 10 years for the company (ir.tesla.com, 2013). As mentioned by Chu et al. (2018), electric cars are environment-friendly vehicles which support betterment of the environment. This is because the electric cars do not use fuels such as petrol and others, in turn, acting to avoid air pollution created by the burning of the fuels in non-electric cars. Thus, it indicates that innovations by company in the global market which support environmental-friendly approach allow them to incur increased profit as increase in sales and purchase is attained. Moreover, innovation made within global companies that support CSR activities also leads to boost the morale of the employees. This is because employees feel they are working for the innovative idea of the company that support improvement of society which in turn makes them show enhanced effort at work ensuring greater productivity which leads to support increased gain of profit by the company (Almeida and Coelho, 2019).

Product Uniqueness

The company can profit from its innovation in the global market when the innovative product or service is unique. This is because in global market various global brands and organisation compete who provides similar products creating a high competitive market. Thus, having improved or high profit in highly competitive market without unique product through innovation is difficult as infinite number of firms is producing homogenous products (Kahn, 2018). The creation of presence of a unique innovative product by a company in global market which meets the unmet wishes and demands of the consumers makes it stands alone from the infinite global marketers providing similar products. This, in turn, helps the company operating in the global market through innovation attract attention of consumers globally as there are no other product which meets their needs holistically (Najib et al., 2020). Thus, it leads the company to achieve profit through innovation as consumers wish to buy from them out of increased satisfaction of the uniqueness compared to other existing products provided by companies in the global market.

High Demand

The company can incur profit from its innovation in the global market if the nature of product or service they are innovating to be presented as unique is in high demand in the market. This is because innovating the products which are less in demand within the global market even with its uniqueness are not cared to be purchased by the consumers in bulk or in adequate amount. It is evident as they consider that purchasing such products even after its uniqueness is waste of money (Srinivas, 2018). As argued by Gissey et al. (2018), lack of adequate purchase of products as targeted by the company in the market leads to incur loss. Thus, the company can gain profit through innovation in the global market when they target to innovate products that are in high demand. For instance, most of the global companies are seen to make innovation in smartphones instead of landline phones in the current era to achieve increased profit. This is because there is high demand in the use of mobile phones compared to fixed landline globally. It is evident as the purchase of mobile phones globally is 106 per 100 people where the purchase of landline phones has reduced to 12 per 100 people (data.worldbank.org, 2018).

Advertisement

A company or business organisation can profit from its innovation while operating globally when they are able to effectively advertise the innovative aspects in their products or services in the global market. This is because enhanced advertisement of innovativeness in the product by certain company leads to create visibility of the product and help in attracting consumers to consider purchasing the product. Moreover, global advertisement of uniqueness of product compared to other existing products leads to grow word-of-mouth which eventually causes more consumers to get attracted in buying the product. This, in turn, contributes to raise the sales of products of the company in global market and achieve improved profit with the increased sales (De Mooij, 2018). As commented by Clow (2016positive and dynamic advertisement of innovative product in the global market supports repeat business and assist to incur more profit. This is because satisfaction from the purchase of advertised innovative products of the global consumers makes them loyal to the organisation. It leads the consumers to choose the specific company over others in making any future purchases (De Mooij, 2018). Thus, it indicates that advertisement of innovative product is essential for the company in the global market to be able to gain profit as it support continuous business and makes the business developed through innovation be on the top of the mind of the consumers.

Global Economy

A stable global economy can allow the company to gain profit from their innovation in the global market. This is because a stable economy indicates that the consumers have effective economic stability and are enjoying better living standards to be able to have peace of mind in focussing on consumption of products or services by analysing and understanding their innovativeness (Popkova, 2018). As mentioned by Kirikkaleli and Ozun (2019), people in an unstable economy are often found to lack enough finances to support enhanced living. This leads the consumers to avoid focus on the innovative aspect of products or services and avail goods and service that are efficient to meet their basic needs. For instance, in 2020, the global economy is found to be dwindling as a result of the COVID-19 pandemic which led to closure of many financial intuitions over the globe. It has led to create economic crisis and fall in GDP in all the countries over the world (Ojha and Shubha, 2020). Apple Inc in the end of 2019 launched one of their innovative product that is seventh-generation iPad which provide increased efficiency and satisfaction of use among consumers (Apple, 2019). However, irrespective of the presentation of the innovative products, Apple Inc faced loss of 19% in their stocks during the first quarter of March which is record-high indicating huge loss irrespective of innovation (CNBC, 2020). This has mainly occurred as a result of reduced purchase of their innovative products in the current condition of the pandemic situation.

Management

A company can gain profit from its innovation in the global market if they have successful management and business policy. This is because presence of hindered or poor management in the company leads them to face undirected and lack of systematic working principles to institutionalise the innovation in the products and services (Gherghina et al., 2020). Moreover, unsuccessful management leads the companies working in global market develop wrong expansion plans for their innovation which leads them in making unrelated business and target wrong consumers to present the innovation, in turn, making the company lose opportunity of making profit from the innovation (Gherghina et al., 2020). For example, Tesco which is one of the multinational supermarket institution, was seen to have lack of effective management in making innovation which led it to be unable to reached to potential consumers. This is evident from the failure of their garden centre business which affected them to face monetary loss and eventually sell out the business in 217 million pounds (reuters.com, 2016).

Economies of Scale

The companies working in the global market are often found to have high fixed costs for maintaining economies of scale. During innovation by these companies in the global market, they are to ensure effective management of economies of scale so that adequate profit can be gained (De Roest et al., 2018). It means that during innovation the companies are to ensure they can produce increased amount of the innovative product to meet the fixed high cost determined by the company in calculating their profit. This is because otherwise the cost of the innovative product to be too high to be able to be purchased by the consumers, in turn, creating lack of sales for the company making them unable to gain profit and instead experience loss (De Roest et al., 2018).

Production Unit

A business organisation can make profit from their innovation in the global market if the number of product unit for the innovative product or service is high and spread around the global markets where the company operates. As mentioned by Hannibal and Knight (2018), increased production unit creates an opportunity for increased production of goods within less time. This is because the production load is shared among the units allows the products to be delivered in time. As argued by Salas-Velasco (2018), lack of increased production unit for global companies around the markets in different countries for producing innovative product creates extensive workload. This is because bulk product of the innovation has to be made at a single source. Thus, increased production unit of a company working in global ensures high number of innovated product or services to be made within less time. Moreover, the presence of the production units in each of the global market location helps the company to save increased number of finances to be implemented in exporting the developed innovative product in the market. Thus, high production of innovative products with less investment towards its export to reach different global market would cause a company making innovation in the global market to easily gather adequate profit through the innovation from the market. For instance, Apple Inc is seen to have separate production unit in India to produce their innovative iPhone 11. This is evident as Apple Inc produces the product at the Foxconn Plant in Chennai, India (economictimes.indiatimes.com, 2019). Moreover, in China, Apple Inc has another production unit that produces their innovative iPhone 11 to be supplied and delivered in the country (abcnews.go.com, 2019). This indicates that global companies such as Apple Inc are following the high production unit management in different countries of their business establishment. It is to ensure the innovative products are built effectively within limited time and lower cost to be delivered in unhindered way at each location helping them to gather enhanced profit by cutting down cost of export of developed goods and resources in the global market.

Brand Image

The business organisation involved in innovation in the global market is able to gain profit from the innovation if they have an effective and reputed brand image in the market. As mentioned by Lada (2018), strong and reputed brand image leads the company has effective customer recognition. This means that the specific brand of the company are easily detected and recognised by huge amount of customers in the market making the business spend less effort in communicating their information about the brand. Thus, with strong brand recognition of the company making innovation in the global market, they could easily attract huge amount of consumers to get interested in listening to their innovation and influence people to buy the product. It leads the company to develop increased profit out of immediate and enhanced sale of their innovation in the global market. As argued by Li et al. (2019), lack of strong brand recognition and reputation leads the company in the global market face increased competitive edge and hardship in introducing new innovative products. This is because they are considered at par with many similar companies which make consumers unable to differentiate the company’s product from others. Therefore, by creating a strong brand image, the company would have a better competitive edge in the market to create easy introduction and differentiation of their innovative product to enhance sales and avail profit from it. A strong brand image and recognition also lead companies who are making innovation in the global market to avail profit as people purchase their products without doubt out of credibility (Tariq et al., 2017). This leads the companies to avail enhanced sale without doubt and suspicion from consumers in the global market creating a platform for high sales to avail enhanced profit.

Product Life

An organisation through its innovation in the global market can avail profit if their innovated product or service has a long life with diminished complication than before. This because purchasing innovative product which has lesser self-life compared to the previous product make consumer consider waste of finances. It is evident as consumers try to buy innovative products which apart from meeting their needs provide greater service and show self-life than the similar products before to incur value for money (Zou et al., 2016). Therefore, apart from adding new features for making the product innovative the company require to ensure they focus on the self-life of the product. This is because without enhanced self-life the consumers would create bad word-of-mouth regarding the innovative products making the company face lower sales and unable to incur effective profit from the global market, in turn, making them face financial loss.

Market Share

The company making innovation in the global market can profit from it when they have a greater market share. This is because increased market share indicates that a company has increased reach to many consumers and has a huge presence in the market compared to other firms. It leads the company to have efficient availability of increased loyal consumers and clients for them in the global market which makes the company ensure their innovative products would be purchased in bulk allowing them to gather increased finances to reach profitable position through introduction of the innovative product (Edeling and Himme, 2018). For example, Apple Inc has a large market share in the Smartphone industry at global level. It led them easily to sell nearly 12 million units of their innovative iPhone11 in the first production. This increased purchased lead Apple Inc to avail enhanced profit since its launch making them consider production of iPhone11 to be increased by 1.6 million units to gain further profit (wccftech.com, 2019, Apple, 2019).

Conclusion

The above discussion informs that companies making innovation in the global market can achieve profit through the action if they include effective technology in accomplishing the innovation. This is because such action leads to enhanced productivity in the company in turn supporting them to gain profit. Moreover, the cost of operation is to be reduced along with CSR and environment-friendly activities are to be supported by the company through their innovation in the global market as only through these actions the company can gain profit through innovation. In addition, improved advertisement to reach global market, enhanced exchange rates, increased market share, production unit and stable global economy could make company from its innovation in the global market to gain profit.

References

Almeida, M.D.G.M.C. and Coelho, A.F.M., 2019. The antecedents of corporate reputation and image and their impacts on employee commitment and performance: The moderating role of CSR. Corporate Reputation Review, 22(1), pp.10-25.

Apple 2019, Apple introduces new version of the most popular iPad starting at INR 29,900, Available at:

Brown, J.A., Clark, C. and Buono, A.F., 2018. The United Nations global compact: Engaging implicit and explicit CSR for global governance. Journal of Business Ethics, 147(4), pp.721-734.

Cheah, I., Phau, I., Kea, G. and Huang, Y.A., 2016. Modelling effects of consumer animosity: Consumers' willingness to buy foreign and hybrid products. Journal of Retailing and Consumer Services, 30, pp.184-192.

Chu, W., Baumann, C., Hamin, H. and Hoadley, S., 2018. Adoption of Environment-Friendly Cars: Direct vis-à-vis Mediated Effects of Government Incentives and Consumers' Environmental Concern across Global Car Markets. Journal of Global Marketing, 31(4), pp.282-291.

Clow, K.E., 2016. Integrated advertising, promotion, and marketing communications. Pearson Education India.

De Mooij, M., 2018. Global marketing and advertising: Understanding cultural paradoxes. SAGE Publications Limited.

De Roest, K., Ferrari, P. and Knickel, K., 2018. Specialisation and economies of scale or diversification and economies of scope? Assessing different agricultural development pathways. Journal of Rural Studies, 59, pp.222-231.

Fernández, E. and Simpson, J., 2017. Product quality or market regulation? Explaining the slow growth of Europe's wine cooperatives, 1880–1980. The Economic History Review, 70(1), pp.122-142.

Gherghina, Ș.C., Botezatu, M.A., Hosszu, A. and Simionescu, L.N., 2020. Small and Medium-Sized Enterprises (SMEs): The Engine of Economic Growth through Investments and Innovation. Sustainability, 12(1), p.347.

Gissey, G.C., Dodds, P.E. and Radcliffe, J., 2018. Market and regulatory barriers to electrical energy storage innovation. Renewable and Sustainable Energy Reviews, 82, pp.781-790.

Hannibal, M. and Knight, G., 2018. Additive manufacturing and the global factory: Disruptive technologies and the location of international business. International Business Review, 27(6), pp.1116-1127.

Karno, C.G. and Purwanto, E., 2017. The effect of cooperation and innovation on business performance. Calitatea, 18(158), p.123.

Kirikkaleli, D. and Ozun, A., 2019. Innovation capacity, business sophistication and macroeconomic stability: Empirical evidence from OECD countries. Journal of Business Economics and Management, 20(2), pp.351-367.

Lada, S., 2018. Brand Image Benefit And Satisfaction: Roles of Symbolic, Functional, Social, And Experiential Benefits. Labuan e-Journal of Muamalat and Society (LJMS), pp.178-188.

Schäufele, I. and Hamm, U., 2017. Consumers’ perceptions, preferences and willingness-to-pay for wine with sustainability characteristics: A review. Journal of Cleaner production, 147, pp.379-394.

Srinivas, S., 2018. Evolutionary Demand, Innovation and Development1. Development with Global Value Chains: Upgrading and Innovation in Asia, p.349.

Tariq, M., Abbas, T., Abrar, M. and Iqbal, A., 2017. EWOM and brand awareness impact on consumer purchase intention: mediating role of brand image. Pakistan Administrative Review, 1(1), pp.84-102.

Yu, Y., Wang, X., Zhong, R.Y. and Huang, G.Q., 2016. E-commerce logistics in supply chain management: Practice perspective. Procedia Cirp, 52, pp.179-185.

Zou, B., Guo, F. and Guo, J., 2016. Absorptive capacity, technological innovation, and product life cycle: a system dynamics model. SpringerPlus, 5(1), p.1662.

Dig deeper into Principles of Marketing Report with our selection of articles.