Research & Development

Research & Development is all activities that look at identifying new products / services and new ways of producing. Businesses need to be able to turn the ideas into products that can be sold.

Innovation – where new ideas are turned into products

Aims

• To develop new products which have USPs allowing for product differentiation
• Increasing the quality of products to increase customer satisfaction
• To develop more effective ways of producing to decrease costs per unit .
• These can all increase the profitability of the business

If research and development is good then it considers design issues

In addition it needs to look at :

• Customer needs
• Use of product / service
• Competitors products
• Ease of manufacture
• Costs / quality / profit targets

Process

The research and development process:

• 1. Idea generation
• 2. Screening of ideas
• 3. Development of ideas
• 4. Prototype and testing
• 5. Launch

How to Protect Innovations

• If a business is successful with innovation it needs to protect them from competition
• A patent gives the holder sole use of a process / sole manufacture of a product for the next 20 years
• Copyright protects the work of artists / writers and musicians

Research & Development & the PLC

• Research and development happens before the introduction phase of the product life cycle
• Research and development is very expensive so can often cause cash flow problems prior to the launch of products
• After launching a product businesses need to do more research and development to modify the product or bring out a new product to increase demand and profit

Risk

• All research and development contains an element of risk
• Therefore businesses need to ensure that research and development minimizes risk to get required results
• Businesses cannot guarantee the success of innovations however firms can try and encourage and support research and development