Research Log #2

Date: 22 September 2017

Name: Robert Huang
EQ: How can one create a successful business?

Three Points to Prove: #1: Innovation is key for a successful business.

#2: Marketing is central to a business’s success.
#3: A business strategy/plan is important for business.
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Point that this Source/Information Proves: # 1: Innovation is key for a successful business.

Excerpts (These should provide insight into the designated Point to Prove):

“In 1958, Xerox reported that 60 percent of its growth was derived from the sixty-four new
products introduced during the previous seven years.^ Campbell Soup almost doubled its sales
from 1950-1958 with a roster of ninety-one products, up sixty-five products from 1945.** A
survey undertaken by Printers' Ink reveals that an average of 43 percent of 1957 sales of all
respondents were from products introduced since 1948.^ Thus, it is not surprising that innovation
commands a significant share of the time, attention, personnel, and resources of the successful
corporation.”

“A leading market research manager concludes that only 1 percent of all new product ideas on
which development is undertaken attain success.^ Yet we hear a great deal about those few
products that succeed and very little about the vast majority that fail.”

“although innovation of new products is risky, the alternative is even worse: steady erosion of
market position and profits.”

"The honeymoon cycle of a new product is becoming shorter and shorter. We introduced the G.E.
automatic toothbrush just two years ago [In 1962]. There are now fiftytwo competitors."^ And
the chairman of the board of Du Pont stated, "Lead time is gone. There is no company so
outstanding technically today that it can expect a long lead time in a new discovery."

“Reliance on new products to achieve company objectives is especially dramatic in high-growth

companies. A study by the Stanford Research Institute of the 210 fastest-growing companies over
ten years revealed that more than 50 percent of the sales of high-growth companies came from
new products, as compared to 10 percent of the sales of low-growth companies from this source.
^^ In another study, firms in a variety of industries anticipated that about three-fourths of their
expected growth in sales during the next four years would come from products first introduced in
that period.”

“Kraushar reports, "I have discussed personally the matter of innovation with over 200 consumer
goods companies in the period 1966-68 and not one challenged the need for new products.”
“According to Printers' Ink, 43 percent of gross sales in 1957 came from new products not
available two years previously. It was estimated that by 1966 the figure had reached 56 percent.
^^ A study of 742 firms revealed that 70 percent of them anticipated adding a total of 1,236 new
products between January 1 and June 30, 1965.”

“The expectations of the market add further impetus to the need for new products. As one
marketer put it: "The market has come to expect a stream of new products. If you don't satisfy
this expectation, someone else will."”

“The core of his notion has it that a new product is not a physical entity per se but is the buyer's
perception of the product.”

Analysis (How does this source support the Point to Prove?):

This article talks about innovation and its relationship with a successful business. Many
businesses credit innovation and the creation of new products to their success. Many big
companies rely on the output of new products to keep afloat. Companies like Xerox credit their
growth to the introduction of new products.
Although innovation has a direct correlation in the success of a business, it does not
always work. A small portion of new products and ideas are successful. Most innovations are a
failure and are dependent on the consumers.
Even though there is a high rate of failure in innovating, it is still crucial. The need to
innovate is depended on the product life cycle and the profit gap. The cycles of the product life
cycle are introduction, growth, maturity, and decline or innovation stage. The profits are low at
first in the introduction stage because of the cost of the research and price is high. The sales
increase during the growth stage because of the demand for the product. In the maturity stage,
sales are beginning to level off because of the other competitions. In the decline and innovation
stage, the sales and profits will drop drastically because of its decrease in demand. Business can
choose to innovate at this stage to bring the sales back up. The product cycle can be seen in the
iPhone series that Apple puts out. As an iPhone becomes out of date and old, Apple introduces a
new model to bring revenue back up. The need for new product also increases as the actual and
target profit levels increase. This is called the profit gap. The introduction of new products
creates a lead time for other businesses. But this gap gets shorter as new competition and
technology rises.
There are many of ways for a company to innovate. These methods include making a
completely new product, improving the performance of a product, creating a new application for
a product, creating more functions of a product, offering a product in a new market, lowering the
cost of a product, downgrading a product, upgrading a product, and restyling a product. There
must be five characteristics for a product to be called new and six main types of a new product.
is necessary to be able to define what innovation is so we can implicate it. A new product is
essentially a product in which a company applies money and change to it. The newness of a
product is also depended on the consumer. If a consumer perceives a product as new even though
it’s not, it is still new.

Work Cited (correct MLA format):

Sands, Saul and Kenneth M. Warwick. "Successful Business Innovation. A Survey of Current

Professional Views." California Management Review, vol. 20, no. 2, Winter77, pp. 5-16.

EBSCOhost, search.ebscohost.com/login.aspx?

direct=true&db=bth&AN=6412271&site=ehost-live.

I am assuming that this is a reputable and reliable article because it is from EBSCO.