YARDSTICK INTERNATIONAL COLLEGE

DEPARTMENT OF BUSINESS ADMINISTRATION

THE EFFECT OF INNOVATIVE PRODUCTS ON

SUSTAINABLE FIRMS GROWTH IN THE CASE OF
UNILEVER PLC.

BY
Amanuel Abe
Advisor:
Selamawit Woldesilasse(Ass. prof)

July/ 2023

Addis Ababa Ethiopia

 THE EFFECT OF INNOVATIVE PRODUCTS ON
SUSTAINABLE FIRMS GROWTH IN THE CASE OF
UNILEVER PLC.

A thesis submitted to the School of Postgraduate Studies of

Yardstick International College in Partial Fulfillment of the
Requirement for the Degree of Masters of Business Administration.

BY

Amanuel Abe
 DECLARATION

I, the under signed, declare that this thesis entitled: THE EFFECT OF INNOVATIVE
PRODUCTS ON SUSTAINABLE FIRMS GROWTH IN THE CASE OF UNILEVER PLC.is
my original work. I have undertaken the research work independently with the guidance and
support of the research supervisor/advisor. This study has not been submitted for any degree or
diploma program in this or any other institutions and that all sources of materials used for the
thesis has been duly acknowledged.

Name Signature Date

AMANUEL ABE

This is to certify that the thesis entitled: The effect of innovative products on sustainable firms
growth the case of unilever plc submitted in partial fulfillment of the requirements for the degree
of Masters of Business Administration of the Postgraduate Studies, Yardstick International
College and is a record of original research carried out by Amanuel Abe MBA(2)654/14 under
my supervision, and no part of the thesis has been submitted for any other degree or diploma.
The assistance and help received during the course of this investigation have been duly
acknowledged. Therefore, I recommend it to be accepted as fulfilling the thesis requirements .

Name of Supervisor/Advisor Signature Date

___________________ ____________ _______

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 ACKNOWLEDGMENT
My deepest and heartfelt thank goes to the Almighty God, who follow me in all aspect of my life

First, I would like express my deepest gratitude to my advisor, Selamawit Woldesilassie (Ass.
Prof) for her support, encouragement, invaluable comments advice and guidance at various
stages of my study. Thank you very much!!
I would also like to convey my sincere thanks to my parents, whose unconditional love and
silent prayers encouraged and protect me throughout my life.

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 LIST OF ABBREVIATIONS

R&D = Research and Development

SKU= Stock Keeping Unit
NDP= New Product Development
USD= United States Dollar
PLC= Private Limited Company
ANOVA= Analysis of Variance
SPSS= Statistics Package for Social Science
KMO= Kaiser Mayer Olkin

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Table of Contents page
DECLARATION...........................................................................................................................................ii
ACKNOWLEDGMENT............................................................................................................................iii
LIST OF ABBREVIATIONS....................................................................................................................iv
CHAPTER ONE:.........................................................................................................................................1
INTRODUCTION........................................................................................................................................1
1.1 BACKGROUND OF THE STUDY..................................................................................1
1.2 STATEMENT OF THE PROBLEM.........................................................................................4
1.3Research question.....................................................................................................................8
Research Framework and Hypothesis.............................................................................................8
1.4 Research Hypothesis..................................................................................................................8
1.5 Objective of the study................................................................................................................9
1.5.1General objectives...................................................................................................................9
1.5.2 Specific objectives......................................................................................................................9
1.6 Scope of the study....................................................................................................................10
1.7 Significance of the study.........................................................................................................10
CHAPTER TWO.......................................................................................................................................12
LITERATURES REVIEW.......................................................................................................................12
2. Introduction..............................................................................................................................................12
2.1 DEFINING KEY TERMS AND CONCEPTS........................................................................12
2.2Theoretical Literature...............................................................................................................12
2.2.1 Effects of Innovation................................................................................................................13
2.2.2 Market Growth.........................................................................................................................16
2.2.3 Product differentiation..............................................................................................................19
2.2.4. Customer requirements............................................................................................................22
2.2.5. Sustainable firm’s growthdeterminants in manufacturing companies......................................22
2.3. Empirical literature.................................................................................................................23
2.3.1. International context................................................................................................................23
2.3.2. Local context...........................................................................................................................25
2.4 Conceptual framework.............................................................................................................26
CHAPTER THREE...................................................................................................................................28
Research Methodology..............................................................................................................................28
3.3 Data type and sources............................................................................................................29

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3.5 Methods of data collection....................................................................................................30
3.6 Method of Data Analysis.......................................................................................................30
4.1. Introduction...........................................................................................................................................32
4.2 Response Rate..........................................................................................................................32
4.2. Respondent’s Profile...............................................................................................................33
4.3. Product Innovation Strategies.................................................................................................35
4.4.2 Market growth..........................................................................................................................36
4.4.3 Positioning................................................................................................................................38
4.4.4 Customer Requirement.............................................................................................................39
4.5. Regression Analysis................................................................................................................41
4.5.1 Model Summary.......................................................................................................................41
4.5.2 Analysis of Variance.................................................................................................................42
4.5.3 Regression Coefficients............................................................................................................42
4.6 Reliability and Validity of the Questionnaire..........................................................................44
4.6.1 Reliability.................................................................................................................................44
4.7 Correlation Analysis................................................................................................................45
4.8. Hypothesis Testing.................................................................................................................48
5.1 Summary of findings...............................................................................................................49
5.2. Conclusion of the study..........................................................................................................50
5.3. Recommendations of the study...............................................................................................50
Reference.....................................................................................................................................................53
Appendix I:..................................................................................................................................................56
QUESTIONNAIRE FOR RESPONDENTS............................................................................................56

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 LIST OF TABLES
Table 1: Response Rate.................................................................................................32
Table 2:Distribution of the Respondent’s Gender........................................................33
Table 3: Distribution of the Respondents Age..............................................................33
Table 4: Distribution of the Respondents Length of Service........................................34
Table 5: Distribution of the Respondents Department.................................................34
Table 6: competitive advantages of product innovation...............................................35
Table 7: market growth of product innovation.............................................................36
Table 8: Positioning......................................................................................................37
Table 9: Customer Requirement...................................................................................38
Table 10: overall level of sustainable company growth...............................................38
Table 11: Model Summary...........................................................................................39
Table 12: Analysis of Variance (ANOVA)..................................................................39
Table 13: Regression Coefficients................................................................................40
Table 14: Results of the Reliability Statistics...............................................................42
Table 15: Reliability of All factors...............................................................................42
Table 16:correlation Test: Durbin-Watson test summary (2-tailed)............................43
Table 17: correlation Test: Durbin-Watson test summary (1-tailed)...........................44
Table 18: summary of hypothesis testing......................................................................45

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 LIST OF FIGURES
Figure 1The conceptual framework or model of the study...................................27

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 ABSTRACT

Internally, any organization must develop innovation and creative techniques to find the path to
long-term success; It should be practiced and encouraged. The innovation plan provides a clear
direction of action. And it is defined as focusing on the overall efforts of the organization
towards a specific goal. Organizations seeking to achieve high levels of innovation can use
innovation strategies to gain a competitive edge. As a result, in an ever-uncertain and
competitive world, the need for innovation is clear and critical to business. The purpose of the
study was to examine the impact of product innovation strategies on long-term sustainable
growth in Ethiopia. The fundamental issue is that as the number of product innovation strategies
increases, their value to manufacturing industries is difficult to measure. Although they are
important predictors of firm growth, despite the importance of product innovation initiatives, the
impact of innovation on business success remains a mystery. The study used a descriptive panel

design and interviewed all Unilever employees in Ethiopia. G.C. From 2015, secondary data was
obtained from Unilever's sales and marketing department in the form of annual sales reports. A
semi-structured questionnaire was used to collect primary data from senior management staff.
SPSS Statistics 28 was used to analyze the data, including frequency calculations, descriptive
statistics, and multiple regression analysis. According to the data, competitive advantage and
company growth have a favorable and significant relationship. The correlation between market
and firm growth is found to be positive and significant. The study also found that there is a
positive and significant relationship between product differentiation and Unilever's growth.
According to the research, the relationship between customer needs and firm growth has been
found to be favorable and significant based on the research paper. Manufacturing companies
need to be more efficient and grow faster by introducing product differentiation, new features
and product substitution. Investing more, earning more revenue, generating more profit and
ensuring long-term corporate success, the study found. The report recommends that

manufacturing companies must adapt and implement new production strategies.

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 CHAPTER ONE:
INTRODUCTION

1.1 BACKGROUND OF THE STUDY

In today's corporate climate, innovation has emerged as the primary source of competitive
advantage. Firms that are proactive grasp market possibilities and innovate to gain a competitive
edge, allowing them to maintain market leadership. New goods, manufacturing techniques, new
sources of supplies, new markets, and new ways for firms to conduct operations are all examples
of innovation (Osuga, 2016). In the fast-changing, aggressive, and competitive marketplaces of
the twenty-first century, businesses rely on new ideas to survive and succeed (Nusair& Osman,
2016).

This research paper is to examine the potential of service innovation in eco-innovation practices
and sustainable business performance from both a resource-based perspective and a knowledge-
based perspective. This work is based on the idea that green growth cannot occur without
promoting green innovation (Kunapatarawong and Martínez-Ros, 2016). In addition, the logical
link between the resource-based perspective (Wernerfelt, 1984) and the knowledge-based
perspective (Dess et al., 1995) was adopted in this study to explain the conceptual research
framework. The resource-based view theory (Wernerfelt, 1984) views the organization as a
collection of capabilities and resources that are integrated into specific capabilities and
competencies. One of the common drivers of competitive advantage is innovation, which allows
the integration of resources and capabilities to generate more sophisticated capabilities (Bakar
and Ahmed, 2010). From an asset-based perspective, one of the most important resources of a
company is knowledge (Villasalero, 2017).One of the common drivers of competitive advantage
is innovation, which allows the integration of resources and capabilities to generate more
sophisticated capabilities (Bakar and Ahmed, 2010). From an asset-based perspective, one of the
most important resources of a company is knowledge (Villasalero, 2017).

Eco-innovation practices in companies are related to the innovation of services based on green
knowledge and market requirements (Kandampully (2001)).In Malaysia, eco-innovation is a

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concept embedded in the concept of green technologies. Green technologies have become a key
aspect of Malaysia's green development strategy. In this context, the Malaysian government has
established Green Tech Malaysia, a non-profit agency, as the official national agency responsible
for the development and promotion of green technology.

Environmentally friendly technology. This agency clarifies that such technology includes those
systems, products, and equipment that contribute to the conservation of environmental resources.
Other dimensions of green technologies are that they reduce environmental damage and
greenhouse gas emissions, promote the creation and use of renewable resources, conserve natural
resources and energy, are safe to use, and improve the health and sustainability of all
environmental conditions. Life depends on it (Green tech Malaysia, 2013) Based on Malaysia's
National Environmental Friendly Technology Policy, this aspect should be a driving force to
stimulate the Malaysian economy and promote sustainable development in the country (New
Straits Times, 2013). Under the auspices of Green Tech Malaysia, many organizations have
targeted green technology as a strategy because of the impact these organizations have on the
environment and these companies have begun to identify innovative and more efficient green
production methods. As Malaysia is among the top 30 economies in the world and is at the
forefront of developing economies, it can be considered relevant to this area of research. The
economy will continue to grow over the next decade (PriceWaterhouseCoopers, 2015).

Eco-innovation helps organizations to use eco-saving practices in their production activities and
requires knowledgeable employees to develop, organize, implement, monitor and control cost
savings for the benefit of the business (Song et al., 2012, 2018a; Song and Wang, 2018).
Knowledge building and sharing of common green best practices for eco-efficient production
between a company and its suppliers can help facilitate decision-making. If an organization is
oriented towards green innovation activities, this will provide better ability to solve business
issues, and new ideas related to green innovations will provide better service to customers. In
this study, solutions provided by eco-innovation activities are mostly related to services, which
are intangible in nature. The results of eco-innovation activities can improve service innovation
capabilities. Such capabilities are often derived from innovative ideas designed to solve customer
problems (de Hertog et al., 2010). Therefore, environmental innovation can not only improve a

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company's competitive position based on innovations in knowledge and services it provides, but
can also help an organization become socially and environmentally responsible as a whole.

The major characteristics of innovation are entirely new items, enhanced performance products,
new application products, additional function products, cheaper cost products, restyled products,
repackaged or renamed products. Product innovation allows companies to build new market
segments as well as grow their present market segments and product portfolio; yet, it comes with
higher costs, risks, and management issues. (Davcik N.S., Sharma P. 2017)

The process of developing and implementing new products, as well as activities such as technical
design, R&D, and commercial activities involved in the promotion of a new or enhanced product
is known as product innovation (Lofsten, 2014).

A company's innovation strategy is a plan for encouraging product or service progress, generally
through investing money in research and development efforts. Innovation may be viewed as a
strategy for achieving long-term growth and competitiveness through generating new value,
creating new jobs, addressing social concerns, and increasing employment. Innovation is
primarily concerned with recognizing an unmet need and addressing it via the development of a
product, method, or service (Esen G. 2018).

Product innovation is a novel approach to solving an issue that a large number of consumers
face. There may be no items on the market that solve the issue at all, or there may be existing
products that address it in a different way(Mompo and Redoli, 2009; Gunday, Ulusoy, Kilic,
&Alpkan, L., 2011; Slack, Brandon-Jonas, &Jhonston, 2015).

Unilevermanufacturing plcs is located in Addis Ababa, Ethiopia and is part of the soap, cleaning
compound and toiletry preparation manufacturing industry. Unilever is a leading supplier of
food, home and personal care products in Ethiopia. The company has seven plants located in
Dukem Industrial Zone in Oromia region. Unilever Manufacturing Pvt Ltd was established in
Ethiopia in 2015 and is already supporting a growing network of Ethiopian suppliers, distributors
and dealers. Unilever PLC currently has 250 direct and 2750 indirect or foreign employees. The
company is currently generating $100 million in sales and has continued to strengthen its
domestic manufacturing capacity after supplying soap, detergent powder and bouillons (Unilever
HR Office) to Ethiopia.

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Working to create a brighter future every day, Unilever helps people feel better, look better and
get more out of life. Most popular locally produced brands in the portfolio, Sun silk avocado
shampoo 350ml, Sun silk coconut shampoo 350ml, Sun silk avocado conditioner 350ml, Sun silk
coconut conditioner 350ml, lux soft touch 150g, sunshine powder 5kg. It can be said that this
company is the leading technology company that has introduced eco-innovation technology in
the country. The implications of building such an organization in the country for the country and
the country's economy are not trivial, and as a result, it can be assumed that it has a significant
contribution in terms of earning foreign currency.

After the implementation of the reform and opening policy, Ethiopia's economy is experiencing
rapid growth. However, at the same time, it faces the issues of resource conservation and
environmental protection, which are important aspects of the new industrialization. Therefore,
this study conducts Data Envelopment Analysis (DEA) to evaluate the organizations and
environmental performance of Unilever in Ethiopia. Some existing DEA models account for
undesired outcomes and do not explain the weak causal relationship between undesired and
desired outcomes. Therefore, in this study, the polar theory is proposed in the middle of DEA
modeling. First, drawing on stochastic frontier analysis, Ray stochastic frontier analysis and
DAAA, we will take the Unilever company established in Ethiopia in 2015 as an example and
discuss. Finally, economic growth, environmental efficiency and energy consumption are
analyzed using spatial panel econometrics. Since this study considers industrial waste as an
undesirable consequence, the RSBM results show that the environmental efficiency in the east is
the highest, while the cities in the center are the lowest. Spatial econometric analysis shows that
the coefficients of the total elasticity and the direct and total effects of capital, labor and energy
input variables are constant. In addition, the study provides policy implications and suggestions
for future research.

1.2 STATEMENT OF THE PROBLEM

Lack of consumer awareness: One of the major challenges faced by sustainable firms introducing
innovative products is the lack of awareness among consumers. This makes it difficult to gain
market share, and the cost of educating consumers can be prohibitive. High development costs:
Developing innovative products that are sustainable can be expensive. Sustainable firms may
struggle to balance the need for innovation with the cost of development, which can impact
profitability. Regulatory barriers: Regulations can be a significant barrier to entry for sustainable

4
firms introducing innovative products. Compliance with regulations related to sustainability can
be challenging and require significant investment of time and resources.

Limited access to funding: Sustainable firms may struggle to secure funding for innovative
products due to a lack of understanding or perceived risk among investors. This can limit their
ability to develop and launch new products, which can impact long-term growth. Competition:
The market for sustainable products is becoming increasingly crowded, with many firms
competing for a share of a relatively small market. This can make it difficult for sustainable
firms to stand out and gain traction with consumers. Overall, sustainable firms face a range of
challenges when introducing innovative products, which can impact their ability to achieve long-
term growth. Addressing these challenges requires a strategic approach to product development,
marketing, and funding, as well as a focus on building a strong brand and reputation for
sustainability

Companies create, design, and implement various marketing strategies to secure a sustainable
competitive advantage for the organization. This strategy can help the company to dominate in
the current market. One of these strategies is innovation. If the company implements this
approach in a cost-effective and efficient manner, it can maintain its market position. Product
innovation increases market share, sales revenue, sales growth and profit targets through market
performance (Hultink and Robben, 1999; Song and Parry, 1999).

As global competition heats up, technological progress accelerates, and product life cycles
shorten, innovation is becoming a significant feature in the process of corporate excellence and
key competitive strategy. Product innovation is the focal point of differentiation methods used by
corporations. This not only helps the company grow its market share, sales and profits, but also
makes it difficult for competitors to imitate. As a result, product innovation and organizational
performance have a favorable association.

Innovation products help to gain competitive advantages. According to Tidd et al. (2006),
innovation helps companies gain competitive advantage in several ways. Important aspects of
innovation are closing the link between market performance and new product development,
maintaining market share and increasing profitability, contributing to growth, ability to replace
old products, shorter production time and faster new product development. Customer loyalty is

5
maintained by providing solutions to product issues and introducing new ways to utilize newly
available resources. Product innovation is a key driver of productivity and economic growth.

Client loyalty will be maintained by providing solutions to production issues and introducing
new ways to use the newly available resources. Product innovation is a key driver of productivity
and economic progress.

Market growth and differentiation becomes easier when we introduce innovative products to the
market. This strategy is mainly proposed to use creativity as leverage and prevent imitation. The
main purpose of driving this additional innovative product in the market is to protect the
company's core product from the onslaught of the competitors' newly launched products
(Richard JA, 2009). When a competitor introduces a new product, the management team should
be on top of it and should be aware of some counterattack tactics. This strategic approach is
maintained by new products that tend to replace the competitor's new product. Through
innovation, the firm effectively destroys a set of competitive advantages (Richard J.A., 2008).

Product innovation is a distinguishing feature that differentiates a product from others on the
market (Bisbe and Otley, 2004). In today's highly competitive business world, innovation has
emerged as the most important aspect that companies pursue in their pursuit of excellence and
also in product differentiation.

The organization's life cycle is an important issue for the organization's managers. Managers are
highly responsible for the continuity of the organization's existence; If a company's survival
depends on a single product, its survival in the market will eventually be affected. In most
markets, competition is fierce and ever-changing. As a result, it's critical for a company to invent
new products—as well as update existing ones—to keep pace with changing customer needs and
competitor actions. Without an active new product development process, the company decided to
milk it.

The current products will be out of business intentionally or unintentionally. Increasing the
product portfolio will increase the company's supply in the current market, so this strategy allows
the companies to be in different options (Esen G. 2018). Planning for new products is not
something that can be taken lightly. It is necessary to do this to survive in today's dynamic
market place (Kotler P. & Armstrong G. 2012; Esen G. 2018).

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The life cycle of the firm is a crucial issue for the firm’s managers. Managers are responsible for
the continuity of the organization's existence on a large scale; if an organization's life depends on
only one product, its existence on the market will be affected in the long run. In most markets,
competition is fierce and ever-changing. As a result, it is critical for a company to continue
inventing new products – as well as updating existing ones – in order to match changing client
wants and competitors' actions. Without an active new product development process, the
company has decided to milk its current products and go out of business, whether intentionally or
subconsciously. Increasing the product portfolio will increase the firm’s availability in the
current market, thus, this strategy will allow the firms to be found in the different forms of
alternatives (Esen G. 2018). Planning for new products is not something that can be taken
lightly. It is necessary to do so in order to survive in today's volatile marketplace (Kotler P. &
Armstrong G. 2012; Esen G. 2018).

Adding value to customer requirements is another crucial factor for a company to be preferred by
customers over existing companies at an earlier stage. The market in Ethiopia may not be an easy
place due to the social demographics of the society and the standard of living of the citizens. The
lifestyle and standard of society is not the same as other countries. Therefore, the introduction of
new products into the existing market requires more effort and efficient research and
development planning. A company that needs to grow its market or become better internally or
survive in a competitive market needs to focus on basic marketing principles and innovative
strategies. This innovation strategy allows the company to address gaps or gaps that currently
challenge the company's market share. Societies are currently under strong traditional, cultural
and religious influence. These factors are the main limitations that should be well analyzed and
managed wisely.

The researcher in Unilever company to study the effect of innovative products on continuous
company growth and to achieve that, the main objective of the innovation strategy is to meet
their goals, the expansion of the company at the required level, lead the competitive
environment, and how much they improve their performance to retain the existing customer and
the new target consumers that were not reached by their innovative products. How well did you
solve a need?.

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1.3Research question
To address the problems discussed above, this research paper will focus on the following
research questions

1. What effect does product innovation has on the firm’s competitive advantage?

2. What effect does product innovation has on the firm’s market growth?

3. What effect does product innovation has on the firm’s when entering to new market?

4. What effect does product innovation has on the firm’s customer requirement?

Research Framework and Hypothesis

1.4 Research Hypothesis

Technological innovation increases competitiveness by improving product quality and

productivity. Consumer satisfaction then increases when the quality of the product meets
consumer expectations and sales increase due to increased demand. Therefore, this process can
be a driving force for business performance improvement. In other words, companies can gain
competitiveness in their industry and increase profits, the ultimate goal of many companies,
through technological innovation activities. This competitive advantage contributes to expanding
their market share, improving sales and ultimately improving corporate performance. For this
reason, product innovation has a positive effect on the company's performance, it allows for new
product R&D, new quality improvement of products and the desire to continuously release new
products on the market to gain a competitive advantage. In other words, the ability to
continuously develop expensive products is difficult for competitors to repeat and cannot be
easily replaced, which can lead to competitive advantage over time. This competitive advantage
allows the market and its customers to recognize the technical advantages of the products,
thereby increasing market share and increasing profitability for the company. Therefore, it can be
assumed that product innovation has a positive effect on the performance of the organization by
creating new procedures related to product development and improving quality and
innovation.Product innovation has positive and significant effect on firm’s competitive
advantage.

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 Ⅰ Technological innovation activities for product innovation in Unilever manufacturing
organization improve company performance. Product innovation has positive and significant
effect on firm’s product differentiation.

I. Technological innovation activities for product innovation in small and medium

enterprises in Unilever manufacturing organization improve the company's revenue
performance. Product innovation has positive and significant effect on firm’s new
target groups.
II. The establishment and effectiveness of the Unilever manufacturing organization in
small and medium-sized companies for product innovation technology innovation
activities improve the company's workforce productivity performance.
III. Technological innovation activities for product innovation in large companies
improve the company's revenue performance.
IV. Technological innovation activities for product innovation in large companies
improve the productivity performance of the company's workforce.
V. Product innovation has positive and significant effect on a firm’s customer
requirement.

1.5 Objective of the study

1.5.1General objectives

The overall goal of the study is to examine product innovation in sustainable corporate growth at
Unilever Pvt. Focusing on gaining a high market share and as a result becoming one of the most
competitive corporations in the sector. In addition, it is an organization that operates globally to
provide foreign currency for our country, Ethiopia.

1.5.2 Specific objectives

The specific objectives of this study are to increase the competitiveness of the company's
products in the market, to be an influencer by producing and promoting the products it produces
in the country. The aim is to examine the impact of product innovation on the organization when
entering the market.

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1.6 Scope of the study

Unilever operates in practically all of Ethiopia's zones, regions, and states. The Addis Ababa
market is Unilever's biggest potential market. Dukem, in the Oromia area, is where the
company's plant is located. The company creates daily consumable products that are divided into
four categories: skincare, food, hair, and oral. The company has a total of 27 SKU brands that are
manufactured in Ethiopia, with eleven of those being innovative goods.

The sampling will consist marketing and sales teams, the management team and some staffs and
the customers of Unilever as well as the competitors which they are currently found in Addis
Ababa.

Among many products produced under the company, the research study focus on the eleven
innovative locally produced brands of Sun silk avocado shampoo 350ml, Sun silk coconut
shampoo 350ml, Sun silk avocado conditioner 350ml, Sun silk coconut conditioner 350ml, sun
silk coconut shampoo15ml, sun silk coconut conditioner 15ml, lifebuoy total 150g, lifebuoy
lemon 150g, lux soft caress 150g, lux soft touch 150g, sunlight powder 5kg.

The scope of the study covers the innovation strategy of Unilever Company and the competitive
advantages of the innovation. The other aspects of marketing strategy will not be included in this
study

1.7 Significance of the study

This research will be useful in helping firm managers and owners have a better grasp of how to
gain a sustainable competitive advantage and improve their innovation strategy. It will also play
a key part in reviewing and evaluating innovative goods to be offered to customers, as well as
activating existing market demand and incorporating key features into the innovation elements
on customer relations. It will also provide some key suggestions for how the Unilever Company's
plan could be implemented.
As a result, the study will have clear practical implications because it highlights the potential for
implementing extensive innovation strategies in order to provide worthy services and generate

10
more and better competitive advantages over their competitors in order to increase and attract
more customers. It will also make some fundamental and useful recommendations based on the
current and practical experiences of Unilever management in the field of applying innovation
strategy to their marketing activities. The study also provides valuable information for businesses
that are just getting started as well as those that are already established, allowing them to gain a
competitive edge and enter the market more quickly.

In a nutshell, this study will demonstrate the strengths and weaknesses of the Unilever Company
according to their standards and management, followed by an explanation of the innovation
strategy approaches that will suggest the competitive advantage determination. Finally, this
research will serve as a stepping stone for people interested in additional research in the
industrial sector.

1.8 Organization of the thesis

This proposal is divided into three sections. The background of the study, statement of the
problem, objectives of the investigation, research questions or hypotheses of the study, scope of
the study, and significance of the study are all included in the first chapter. The second chapter is
devoted to a review of the relevant literature. The third section covers the study's methodology,
which includes the research area, research design and strategy, data type and source, study
population and sample, data gathering methods, and data analysis methods.

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 CHAPTER TWO
LITERATURES REVIEW

2. Introduction

In this part of the study, the most relevant and appropriate literatures have been reviewed so as to
link the theoretical and empirical studies made on innovation and innovation strategy,
particularly on the role of marketing strategies, which enable the researcher to analyze the results
obtained from the data collected, for the study and to link with the practices of the company
under study.

2.1 DEFINING KEY TERMS AND CONCEPTS

This research paper is based on Unilever Manufacturing plc located in Addis Ababa, Ethiopia
and is part of the soap, cleaning compound and toiletry manufacturing industry. Unilever is a
leading supplier of food, home and personal care products in Ethiopia. The company has seven
plants located in Dukem Industrial Zone in Oromia region. This company also asks certain
questions, such as: What are the implications of the product's effects on the market? What kind
of innovation does the company do? It is a research paper that discusses the key
questions.2.2Theoretical Literature

2.2Theoretical Literature
Product Innovation

The basis of literature-based innovation definitions is the concept of anything being new;
innovation is defined as: the commercial manifestation or release of a new product, processor
system... In contrast, invention is merely a brilliant concept for a new product, process, or
system. Similarly, when defining innovation, they use the term "change," however they also use
the word "new." They emphasize the importance of innovation in gaining or maintaining a

competitive advantage, A process by which businesses master and implement the design and
manufacture of new goods and services, regardless of whether they are new to their domestic or
international competition (United Nation, 2002).

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Currently, innovation activities are mainly carried out at the corporate level and are focused on
securing competitive advantages. They are often continuous and complementary. Customer
satisfaction measures can be applied to both the product and the organization as a whole, but
from an integrated product perspective, customers may perceive them in the same way.

Types of Innovation

Product Innovation: changes in the things (products/services) which an organization is focus on

determining how a system can be integrated within an organization and the necessity for
interaction with the process

Types of Product Innovation

1. Modified version of an existing product range

2. New model in the existing product range
3. New product outside the existing range but in a similar field of technology
4. Totally new product in a new field of technology.

2.2.1 Effects of Innovation

The basis of literature-based innovation definitions is the concept of anything being new;
innovation is defined as: the commercial manifestation or release of a new product, processor
system... In contrast, invention is merely a brilliant concept for a new product, process, or
system. Similarly, when defining innovation, they use the term "change," however they also use
the word "new." They emphasize the importance of innovation in gaining or maintaining a
competitive advantage. The term "novelty" is also used in the literature to describe the wide
range of incremental changes that businesses in both developed and developing countries make
to improve their competitive advantages through improvements in product design, technical
performance, and product quality, as well as changes in organizational structures, management
style, marketing and maintenance routines, and other knowledge-intensive elements (United
Nation, 2002)

Nowadays, innovative activities are primarily carried out at the corporate level and are focused at
retaining competitive advantages. They are usually continuous and incremental. Customer
satisfaction measurements may apply to both the product and the organization as a whole, but
given the combined product, customers are likely to perceive them in the same way.

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2.2.1.1 Competitive strategy

A competitive advantage is a good performance that a company may get based on the utilization
of resources and the potential for creating new abilities (Porter, 1985). New things are not
required simply because they are new. They are required because they meet the needs of both the
client and the company. The organization's requirement will be expressed in its strategy, and its
mission statement may include statements such as striving to be a technological leader or a
significant inventor. However, much new product development is not focused on ground-
breaking discoveries, which is partly due to the fact that many companies are followers rather
than leaders in their field. For different companies, new products play different functions at
different times. They can be used for a variety of purposes, depending on what the strategic
imperative is.

One of the components of the marketing concept is competitiveness (Domingos, Tatiana, 2008).
The marketing notion necessitates more than just being able to meet client wants; it also
necessitates exceeding competitors' expectations. Customers select vendors who provide the best
value. If a company lacks a competitive advantage, it will either lose market share or be forced to
reduce pricing and profit margins in order to keep it. Competitive advantage is defined as the
value that a company can develop to set itself apart from its competitors (Dubé&Renaghan,
1999).

Firms can use innovations as a strategic tool to solve challenges and gain a long-term
competitive advantage (Kuratko et al., 2015). On a short-term or long-term basis, competitive
strategy may influence new product planning. In the short term, a defensive stance may imply
that product varieties are required to shore up a losing market share, which is possibly due to a
competitor's active new product activities. Filling up product lines with varied product sizes or
extra features, for example, could be used as a reactive strategy to prevent a new entrant to the
market by not leaving unattended tiny market niches that could be exploited as an entry point by
the new competition. Minor product adjustments could also be used to keep distributors loyal by
allowing them to carry the entire product line and thus be less likely to stock competing
products. For similar reasons, imitation products may be released, mimicking competitors. In
these cases, where the new product is a modest modification, regardless of how new the

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advertising claims it to be, the complete, traditional new product development (NPD) procedure
is unlikely to be used. There may be little or no research done, and market testing may be limited
to defining acceptable pricing levels or deciding between several advertising slogans.

For the organization, new goods can also serve as a learning tool. The development of a ground-
breaking new product platform may be uncertain at first, with multiple alternative concepts for
new platforms being studied at the same time. Uncertainty surrounds such endeavors because the
new platform may necessitate the creation of costly new competences by the Product strategy,
while the nature and magnitude of the market opportunity remain deceptive. In technical,
operational, and marketing domains, the company may need to gain new knowledge and
abilities. The leaders will be distinguished by their ability to find and acquire these new talents
and information (Paul T. 2017).

The competitive environment

It can bring possibilities and opportunities, such as a breakthrough in enabling technology or a

new level of customer wealth that allows them to spend more for products in a specific category.
External factors can also provide dangers and challenges, such as when a competitor introduces
substantial product advancement, or when a competitor limits access to supplies or distributors
by acquiring enterprises involved in those activities. Because of the potential importance of
external events and conditions, close research of the current market position, as well as guesses
about how it could progress, some sort of environmental monitoring, in a strategic sense, has
become a significant exercise in strategy search, Assessments of the current condition can be
expanded to include predictions about future surroundings, which may necessitate a long-term
perspective (Paul T. 2017).

Strategic innovation becomes critical for adjusting to change in a world that is changing swiftly
and in unanticipated ways. According to Kariuki (2014), strategic innovation is a critical
component for long-term corporate success, and innovative organizations outperform non-
innovative businesses. The competitive environment in which businesses operate now is vastly
different from the competitive environment in which the concept of strategy was born years ago.

The key innovation climates are challenge and involvement, which helps to sense the problem,
freedom, trust, and openness, in adequate time, and essential conflict and debate. (Barbara Smith,

15
Joicey Hurth, Lynda Letcher, Evelyn Shaw, Kathy Whaley, Mary Peters, and Glen Dunlap;
Barbara Smith, Joicey Hurth, Lynda Letcher, Evelyn Shaw, Kathy Whaley, Mary Peters, and
Glen Dunlap) Thursday, March 25, 2014)

Competing with other brands

Products are compared to one another since they compete with one another. This influences
buyer behavior and selection criteria. It's worth noting, however, that most buyer behavior
models distinguish between objective and subjective criteria. Objective elements might be
tangible or intangible, but they must be quantifiable and measurable in order to be considered
objective. Subjective elements, on the other hand, are intangible and are influenced by the
decision maker's attitudes, beliefs, experiences, and relationships with the product (Paul T.2017).

Managing brands

To many people, particularly the cynical, the term "brand" conjures up images of a slew of
gimmicks and a barrage of advertising designed to persuade consumers to buy one
manufacturer's goods over another. Others consider brands to be nothing more than products
with brand names or logos. This is partially right, however, a brand is more than just advertising.
Even if a company spends a lot of money on advertising, if the product is defective or of poor
quality, it will have relatively few buyers. In literature, brands are sometimes depicted as a multi-
level pyramid, with basic physical traits at the base, tangible benefits, emotional benefits, brand
personality characteristics at the middle, and the brand's soul or core at the top. Customers
consider a successful brand as having an effective product, a distinct identity, and added values
(Paul T.2017).

2.2.2 Market Growth

Decisions about how and when to enter the market have a significant impact on the success of
the new product. The timing of an innovation market launch can make or break it. Long-term
prospects can be hurt by random positioning with little or no variation, but intelligent positioning
can be very beneficial. Achieving and maintaining a significant market presence with high
market exposure can especially accelerate product introductions and market evolution. This
section dives into these three variables.

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The timing of entry has been given special consideration. Early entry is commonly considered to
be advantageous, and there is evidence that 'pioneers' benefit from 'first mover benefits.' They
have the ability to shape client expectations and how customers evaluate products in the new
field. They can advise consumers on what criteria to use when making decisions, and products
that are later entrants are then appraised using that criteria. Pioneers can set the bar, establish a
distinct quality position, lead the way in technological advancements, and earn vital production
and distribution expertise. The pioneering entrants are often the market leaders in mature
markets. Being too early, on the other hand, can be just as detrimental as being too late. Without
the ambition or means to build the market, a weak, tentative first mover can lose money for years
before being surpassed by a stronger 'fast follower.' Simple nostrums, such as early entry is ideal,
can be dangerous oversimplifications, (according to Green et al. 1995).

The product's performance and the market's evolution are influenced by the scale of entrance.
Market evolution can be sped up by putting in a lot of work and resources, and market exposure
is a big part of it. It's critical to get potential buyers to discuss and thinking about the product.
This could entail establishing a strong market presence' through pieces in the press, blogs,
advertising, participation in trade shows, and a prominent presence in distribution channels.

Launch and continuing improvement

From a business standpoint, an innovation isn't a success until it has carved out a niche for itself
in the market. That depends on how it's introduced, how well it's received by customers, and how
much time and effort is put into improving it. The prior discussion of market entry revealed some
significant aspects pertinent to the launch strategy, but launching a product does not represent the
conclusion of a phase: it marks the start of a new one. Customers, distributors, and competitors
must all be closely monitored in order for the next plan to be informed.

With the product on the market, critical estimations or assumptions about customer attitudes and
behavior that were developed during development can be validated or refuted. It may also
disclose difficulties or opportunities that were not anticipated. What do customers know about
the product currently, and has understanding of its benefits spread as expected? Is there still a
problem? Are they utilizing the product in the intended manner? Have customers encountered
any issues while utilizing the product that were not previously apparent? Do they use it as much
as you'd expect and on a regular basis? Are there any potential customers who are hesitant to

17
adopt the product because they perceive it to be risky, or who are delaying their acceptance in
expectation of future technological advancements? Is there a sufficient number of those to cause
a problem? Do buyers recognize the promised benefits, and are they as essential to them as
originally hoped? Are the advantages now regarded as fascinating but unimportant? Are there
any issues with the product that customers have brought up? Unraveling these questions and
effectively dealing with their ramifications will determine how the product's prospects evolve.

To be effective, an innovation must be well-established in the market and gain client acceptance,
if not praise, as well as plans to secure, deepen, and broaden its market position after launch.
Marketing plays an essential role in identifying and addressing client wants, and these efforts
feed into the new product development process. According to studies by Christensen (2003) and
Hamel and Prahalad (1994), listening to your customers can hinder technological innovation and
harm long-term corporate success.

Ironically, organizations may be needed to explore innovations that are not demanded by their
current clients in order to succeed in industries characterized by technological transformation.
'Disruptive innovations' and ‘sustaining innovations,' according to Christensen (2003).(Radical
or incremental innovations). Existing customers were drawn to sustaining innovations since they
improved on existing offerings.

A market-driven orientation, according to the resource-based view of innovation, does not

provide a secure foundation for formulating innovation strategies for dynamic and volatile
markets; rather, a firm's own resources provide a much more stable context in which to develop
its innovation activity and shape its markets according to its own view (Conner and Prahalad,
1996; Eisenhardt and Martin, 2000; Grant, 1996; Penrose, 1959; Prahalad and Hamel, 1990;
Wernerfelt, 1984, 1995).

We can only uncover creative prospects if we first understand what the customer wants. Then we
look to see if there's any technology that can help us take advantage of the opportunities that are
available. It is pretty simple to be inventive; the difficult part is ensuring that your ideas are
commercially feasible (Murray, 2003).

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2.2.3 Product differentiation

In general, competitors' product differences could be based on price, with a value-for-money

proposition, or greater quality, which could include better materials, better performance,
additional features, uncommon availability, or better service. Levitt's concept of product
augmentation offers a beneficial perspective on product differentiation (Levitt, 1986). He
suggests that there are four levels on which products can be considered:

1. The core product comprises the essential basics needed to compete in a product market; a
car needs wheels, transmission, engine and a rudimentary chassis.
2. The expected product adds in what customers have become accustomed to as normal in the
product market; for a car this would be a reasonably comfortable interior and a range of
accessories.
3. The augmented product offers features, services or benefits that go beyond normal
expectations.
4. The potential product would include all the features and services that could be envisaged as
beneficial to customers.

2.2.3.1 Product positioning

Process innovation would include changes in the context in which products/services are
introduced. Repositioning the perception of an established product or process in a specific user
context can also lead to innovation (Han Bakker, KeesBoersma, 2006).

The perceptions customers have about a product are referred to as product positioning. It's a
relative term that explains how customers perceive the product's position in the market in
comparison to competitors. It is based on an understanding of how customers differentiate
between different items and takes into account the criteria that customers use to make decisions
or choices between products in the market under investigation. These are referred to as the
customer's evaluative criteria, and they can include customer judgments about who the product is
intended for, when, where, and how it is utilized, as well as components of the brand's
"personality" ( Paul t. 2017).

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The first step in conducting a positioning study is to identify a relevant collection of products.
Customers must see them as viable options in order for them to be considered for inclusion. Then
a list of determinant qualities is formed, which is a list of the most essential or prominent
attributes for buyers while deciding between alternatives. Customers' perceptions and
preferences are then gathered using this methodology. This could be done using a structured
questionnaire or a survey. Respondents would be asked to rate each product on a scale of one to
ten on each attribute. They could also be asked what level of each attribute they like.The result
can be represented in a diagram (also known as a brand map or a perceptual map) that shows the
locations of each product in relation to the features (dimensions) and the preferred level (the
ideal point). This is easiest to comprehend when the analysis is limited to two dimensions
(Moore and Pessemier, 1993. & Mohr et al. 2010).

Brand strategy

The organization's competitive intentions are spearheaded by brand strategy. It introduces the
firm or product to the market and demonstrates how it intends to compete. It entails deciding
between having no brand name at all, allowing the product to be sold as a commodity, and
attempting to build a unique brand name with unique associations and expectations. The brand
name is essentially a summary; it might represent a lot more. It can represent the sum of people's
knowledge about the product, as well as its utility, quality, and availability. It may be surrounded
by negative or positive associations regarding how it should be used, where it should be used,
and when it should be used. It can be meaningful and full of imagery that reflects the types of
individuals who utilize the brand. (2017, Paul T.)

Given the importance of brands, it's astonishing that so many businesses make casual branding
mistakes. Many companies, according to Helen Rubenstein (1996), are unaware of how their
departments influence brand delivery.

Brand extension

A brand extension is the use of an existing brand name to a new product in the same or a related
area. The brand name could also be used to a different product category. When a new or unusual
size is introduced, the original brand name is given a prefix (e.g. Giant, Jumbo, Fun) or, for some
technical products, a new alphanumeric code. The extension might have a modified design and

20
there could be added phrases to the brand name indicating who it is meant for, such as men or
women, operating within the same product sector but seeking to attract a new market segment.

Brands and blind product test

There has been a lot of research on whether consumers can distinguish brands they buy regularly
based on their fundamental characteristics alone (taste or smell). Subjects are unable to recognize
their typical brand of smokes, peanut butter, cola, or beer, according to the findings (Riezebos,
2003).

Customers establish preferences based on their perceptions of attributes, and branding is based
on random utility theory. Customers then make decisions based on their preferences, choosing
the product with the highest predicted value or usefulness. The brand manager and the company
must decide how much money they want to put into their brand in order to grow it. All
components of the marketing mix will be affected by such factors, which will, in turn, affect
buyer perception. Buyers will then weigh in on the benefits and ideals being pushed and make
decisions (Paul T. 2017).

2.2.3.2 Product Portfolio

Another set of strategic concerns is the product portfolio as a whole. Analyzing the company's
entire product line as a portfolio, similar to an investment portfolio, can provide new
perspectives. The share–growth matrix, often known as the Boston Matrix, pioneered this
approach by plotting product positions against market share and market growth as dimensions.
The four quadrants were contrasted using a typology that had high and low values for each of the
two dimensions (Paul Trott, 2017).

A portfolio matrix can help you decide which goods to add to your portfolio and which to
discard. It evaluates products based on relative market share and market growth. Relative market
share is particularly significant for commercial businesses, as having a greater market share than
competitors gives them an advantage. Businesses profit more from high-growth markets than
from low-growth markets, such as increased customers and market share (Esen G. 2018).

High share/high growth products, for example, can be compared to low share/low growth
products. If no strategy changes, future prospects can be studied by comparing where products
are currently positioned and available, as well as comparing some desirable locations. Such
21
analyzes may indicate some strategic concerns. Portfolio concentrations in one quadrant may be
considered unbalanced, and a lack of inventory in the two highest growth quadrants may be
considered unhealthy.

2.2.4. Customer requirements

The company's market positioning is its main product strategy, which describes how it tries to
differentiate and distance itself from its competitors. In order to succeed in the market, it is self-
evident that buyers of new goods should be considered useful. The benefit should be known,
clear and attractive. This difference should be important to buyers and should be seen by them.
Differentiating in a way that is irrelevant or incomprehensible to consumers is pointless.

Incremental innovation tries to fulfill the needs of present customers or markets at a rate that is
compatible with current technology trends. Market dominant expansion with diversity through
upgrading and expanding current products and services in a short period of time is the strategic
focus of incremental innovation (Taylor and Greve, 2006).

2.2.5. Sustainable firm’s growth determinants in manufacturing companies

The external factors are beyond the control of the organization and they are moderately
determining the effects of innovative products.

2.2.5.1. Firms Age

Loreder & Waelchili (2009) conduct an experiment to determine the relationship between age
and firm execution, viewing the lack of flexibility to innovations as an immediate effect of aging.
These authors argue that, by separating elements such as level of specification and size,
businesses are more likely to face serious difficulties related to their age, which can have either a
beneficial or negative impact. The authors show how aging causes productivity to deteriorate,
resulting in rising expenses and thinner profit margins. They argue that any company that has
been on the stock market for more than 15 years is unable to pay attention to positive results
produced by newer companies.

In his study, IdrisAlhaji (2012) cited (Ariff, Ibrahim, & Othman, 2007) as producing a
comparison report concerning aspects associated with corporate governance reporting in

22
Malaysia. Despite the fact that the results show a strong link between governance and business
size, firm age is strongly linked to governance.

2.2.5.2. Firms Size

Firm size refers to the rate and scope of growth that is best for a particular business, as measured
by the management group or the amount of assets a company has in comparison to others in the
same industry (Kigen, 2014). When opposed to small businesses, larger businesses are thought to
be more willing to create items at a lower cost.This is frequently because the preceding has
gained more knowledge, cumulative expertise, and is willing to stretch their fixed costs over a
larger volume of output.

In his study, Alice Gatete (2015) cited (Omondi&Muturi, 2013) as indicating that enterprises
should expand in a regulated manner with the goal of obtaining an optimum size in order to
benefit from economies of scale that may eventually.

According to Reinhard (1983), a firm's size is positively related to its ability to produce
technologically complex items, resulting in concentration. Because such businesses have less
competition, they are more profitable. As a result, larger companies gain access to the most
lucrative market niches.

2.3. Empirical literature

2.3.1. International context
Faziloglu et al. (2016) investigated the effects of enterprises' innovation activities on productivity
changes in Turkish manufacturing firms in a systematic way, distinguishing between different
types of innovation. The authors did so by using a comprehensive firm-level CIS from 2003 to
2014. Controlling endogeneity and selection bias issues, as well as analyzing counterfactual
scenarios, were addressed using endogenous switching approach. The study found that all types
of innovation activity have a beneficial impact on business performance and productivity when
compared to non-innovating firms. Furthermore, the study's findings demonstrated that different
types of innovation have distinct impacts on company productivity. Furthermore, Mohneet al.
(2018) investigated the relationship between innovation and corporate productivity in Ghana.
The data from a unique innovation survey of 501 manufacturing enterprises in Ghana was

23
analyzed using an updated CDM structural model. According to the findings of the study,
technological advances have a greater impact on firm labor productivity than management
innovations. Furthermore, while formal organizations are not necessarily more productive than
informal firms, the impact of innovation on productivity is stronger for formal firms.

According to (Robert C. 2019) Product innovativeness does have a strong, statistically

significant, dramatic and consistent impact on new product performance. Highly innovative
products, namely new to the world products and innovative new product lines to the firm, fare
well. They do especially well in terms of measures such us success rate, overall success;
domestic and foreign market shares; opening new windows of opportunity and meeting sales and
profit.

Mairesse and Robin (2010) looked at the relationship between innovation and productivity in the
industrial and service industries in France. The study began with an examination of the evolution
of the innovation-productivity relationship in the French manufacturing industry over two time
periods (1998-2000 and 2002-2004), as well as a comparison of this relationship in the
manufacturing and service industries during the same era. A total of 3599 firms were sampled
from service firms with at least 20 employees in the service sample, while a total of 3524 firms
and 4955 firms were sampled from manufacturing enterprises. The data was analyzed using the
CDM model. Product innovation has a considerable positive influence on productivity, but
process innovation has a negligible effect on productivity, according to the empirical findings.

Chux G. (2010) investigated the significant impact of Product development and innovation on an
organization's performance. It is crucial to highlight, however, that product creation, product
innovation, and high levels of performance are not easy to achieve. Product development and
innovation are vital to the survival and competitiveness of progressive businesses. According to
research, product development and innovation initiatives aren't enough to secure that lucrative
market share. Rather, a far more intelligible alignment of elements drives the product
development goal to effective resource utilization. The purpose of the research was to determine
the links between increased market share and product development and innovation. Product
creators, marketers, advertising practitioners, and salespeople in organizations and direct sellers
of goods made up the population from whom samples (respondents) were taken. The data
gathering procedures employed in the study were questionnaires, interviews, and direct

24
observation (when new products are brought to the notice of direct sellers and salespeople).
Direct sellers were observed expressing their delight and/or dissatisfaction with new products.
Through SOPS analysis, the survey findings were interpreted using the Likert model.

According to (Calantone et al., 2002) Firms can benefit from innovation products in terms of
development and expansion into new market areas, as well as gaining a competitive advantage.
Innovation is described as the generation, acceptance, and implementation of new ideas,
processes, products, or superior services. The acquisition, diffusion, and application of new
knowledge, as well as the successful execution of innovative ideas within an organization, are all
part of the innovation process.

2.3.2. Local context

(Mulu G. 2009) on his research conclude the most significant contribution of the effect of
innovativeness on firm growth while controlling for a variety of other potential variables that
could influence firm growth (e.g. size, age, financial constraint). The study discovered
compelling evidence that innovators are more likely than non-innovators to grow. The study
discovered no indication of reverse causation, on the other hand (i.e. from growth to
innovativeness). This backs up the premise that innovations lead to increased business and job
growth. Focusing on innovation and technological aptitude will thus pay off not only in terms of
enhancing business competitiveness, but also in terms of their ability to create additional jobs.

(World Bank, 2016) the study document stats that in Ethiopia, there is a significant disparity in
real sales growth between innovators and non-innovators. The relationship between innovation
and several indicators of yearly company success, such as employment growth, real sales growth,
and labor productivity growth, is examined in this section. Firms that innovate their product line
have yearly real sales growth of roughly 8% on average, compared to an 8% sales drop for firms
that do not innovate their product line. Process innovation follows a similar pattern: firms who
implement new processes in Ethiopia see real sales increase of roughly 9%, compared to a 9%
sales drop in enterprises that do not adopt any new processes. Similarly, a similar pattern
emerges in the three other comparators: firms that have launched new goods or processes have
performed better in terms of sales growth on average than firms that have not. However, in
Kenya, this corresponds to a smaller sales decrease, as both firms with and without innovations

25
experience negative sales growth, though the magnitude of the decline is smaller in the case of
enterprises that have innovated. In Ethiopia, the extent of the sales growth performance disparity
between innovators and non-innovators is significantly larger than in the comparison countries.

Dawit G.M. (2020) concludes in his study that innovation activities are proven to have a
significant role in enhancing firm performance, and recommend firms to have investment on
innovation as well as create an environment that encourages innovative thoughts among
managers and employees.

2.4 Conceptual framework

In his study, Namayi Peter (2018) stated that a conceptual framework can be a short description
connected by a graphical or visual presentation of the investigation's key ideas, as well as the
postulated relationship and linkage among them, citing the work of (Mugenda&Mugenda, 2008).
The conceptual framework presented here demonstrates the link between innovative products
and the success of businesses.

The independent variables, which are product innovations, and the moderating factors, which are
control variables, are included in the conceptual framework to ensure adequate model
specification, avoid skewness issues, and consider alternate reasons for performance variances.
Firm size is determined by the number of employees; firm age is determined by the number of
years the company has been in existence; and export orientation is determined by the geographic
market for the company.

The Dependent variable: sustainable company growth represented by competitive advantage,

market share, differentiation and customer requirement. Based on the above-conceptualized
framework, it is hypothesized that managing, product innovation has a positive effect on
competitive advantage. The framework also hypothesizes that firms’ age and firm’s size will
have a moderating effect on the relationship between product innovation and sustainable firm’s
growth.

26
 sustainable

Dependent Variable (y)

Independent variable (x)

Moderating variable (z)

product firms age company growth
innovation firms size -Competitive
advantage
-market growth
-differentiation
-customer
requierment

Figure 2The conceptual framework or model of the study

27
 CHAPTER THREE
Research Methodology
3.1 Research approach

According to Alhamadni et al, (2006) the right research approach should be decided based on the
research aim, nature of the research, problem area, and research questions According to Creswell
(2003), the three primary types of research methodologies are quantitative, qualitative, and
mixed approaches.

The use of a quantitative research approach allows for the exploration and examination of the
meaning that individuals or groups attach to a social or human problem (Creswell, 2003). This
method is especially useful and appropriate for inductive data analysis, or data analysis that
draws conclusions from certain themes. Given the nature of the investigation, a quantitative
research approach is deemed to be acceptable for assessing relationships between variables based
on hypotheses and hypothesis testing utilizing statistical processes.

3.2 Research design

The major goal of this study is to use a cross-sectional research design to explore the effect of
innovation types on firm performance. The study needed examining the effect of the explanatory
variables on the dependent variables; hence an explanatory research design was adopted.
Explanatory research's primary purpose is to determine how events occur and which factors may
influence specific outcomes (Hancock &Algozzine, 2006). Research hypotheses that specify the
nature and direction of the relationships between or among the variables being researched
characterize explanatory studies .Explanatory studies, in contrast to descriptive studies, try to
explain the reasons of the phenomenon rather than simply observing and reporting the situation
(Cooper & Schindler, 2003). The purpose of this sort of research is to find causal relationships
between dependent and independent variables. As a result, this research strategy assists the
researcher in elucidating the causes of the phenomena of the link between innovation and
business success. Furthermore, because the method goes beyond the definitions of variables
provided in widely recognized economic theories, the researcher may be able to apply theory-
based assumptions on how and why variables should be linked.

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3.3 Data type and sources

Data is crucial in the research sector since it gives the most important information required for a
planned study. Furthermore, the quality, reliability, and precision of the data utilized in the
regression analysis determine the correctness and reliability of study conclusions. Data can be
gathered from two sources: primary and secondary sources, and hence can be classed as primary
and secondary data, respectively. The study used a combination of stratified for the segmented
market areas, purposive for employees and basic random sampling techniques for the customer’s
survey, depending on the market structure and customer distribution

3.4 Study population and Sampling

Target Population: The study populations were employees of Unilever Company in, Addis
Ababa the samples were selected. The selected sample of respondents are composed different
parts of target population. In this regard, respondents were Marketing, Finance, Sales, and
Research development.

Sampling Design and Sample Size: Sampling is the process of selecting a number of individuals
for a study in such a way that the individual selected represents the large group from which they
were selected (Mugenda & Mugenda, 2003). Since sampling technique determines the reliability
of generalization and conclusion of the study; the researcher gave utmost attention to the study
design and sample size. Accordingly, systematic sampling was employed to select branches from
various areas in the city. The researcher has also employed stratified sampling method for
employees, Unilever, from different positions namely Marketing, Finance, Sales, and Research
development. This enables to obtain adequate data from different levels and positions of the
organization.

In relation to sample size determination, the researcher has followed scientific procedures and
criteria. Mugenda and Mugenda (2003) states where time and 19 resources allow a big sample
should be taken. This enables findings to be a true representative of the whole population.
According to Kothari (2004) for the target population which is not large in number from 5%-
10% of the total could be enough. Although there are more complex formulae, the general rule of
thumb is that not less than 50 participants for a correlation or regression are required.
Accordingly, 30% of the targeted population was therefore picked for the study. In line with that,
29
among 6 segmented market areas, 30% of the staffs were selected randomly to collect the
information through survey. As per the information obtained from the company, the total
numbers of employees which were more familiar to the system and be able to understand the
matter were 2000. Out of those legible respondents, (117) in which 73 males and 44 females
were selected by employing systematic and random sampling method; though the analysis was
relied on only valid questionnaires Accordingly, from survey, total of 117 respondents were
involved in this study.

3.5 Methods of data collection

A researcher's primary data collected for the aim of a certain study or analysis. Such data is one-
of-a-kind and can be obtained through observation, interviews, or surveys (Kothari, 2004).
Secondary data, on the other hand, refers to information that has already been gathered and
processed by someone else, whether publicly available or not (Kothari, 2004). The type of data
to use is determined by the nature, scope, and aim of the study, as well as the amount of time and
money available and the level of precision required. Each data type has its own set of
applications, and no single data collection method is optimal in every situation (Kothari, 2004).

This study was rely heavily on primary data for its data collecting. Primary data was gathered
using a self-administering questionnaire as the primary data collection methodology. The study
collected data using both qualitative and quantitative methodologies. The researcher is able to
anticipate all respondents. On the basis of the study's objectives, a questionnaire was created.

The primary goal of this research is to look into the effect of innovative products on business
success. Because Ethiopia lacks an innovation survey, this study relies heavily on primary data.
In Addis Ababa, a structured questionnaire was utilized to collect primary data from Unilever
Company employees and consumers. Product innovation strategies and their effects on business
growth are among the data gathered. The basic data gathered from employees and customers was
organized, analyzed, and presented

3.6 Method of Data Analysis

The quantitative information gathered through a structured questionnaire was edited, coded, and
entered into SPSS. For the scales' dependability, Cronbach's alpha values for the dimensions of
both measures were calculated. Factor analysis was used to examine the data. The factor loadings
of each dimension were determined using factor analysis. Following the factor analysis, OLS

30
was used to construct multiple regressions to examine the deterministic effect of the explanatory
variables on the dependent variables.

The study's main variables, competitive advantage, market growth, product differentiation and
customer requirements was determined from the study's research questions. These factors was
converted into structured questions, which is collected via questionnaires.

The study used explanatory statistics, as mentioned at the start of this section. As a result, the
data collected from survey respondents will be utilized to evaluate the success of the product
innovation management system. The findings of the structured questionnaire data will be
processed using the computerized program SPSS (Statistical Package for Social Science)
statistics.

Frequency tables and percentage is used to display the processed information. The qualitative
data be examined using a competition of interviewees' direct words, which is aligned in the form
of case tales.

31
 CHAPTER FOUR
4. Presentation, analysis, discussion and interpretation of results
4.1. Introduction
The data collected from semi-administered surveys are analyzed, presented and interpreted in this chapter.
Before being coded and loaded into SPSS, the collected questionnaires were reviewed for consistency
(version 28).

To evaluate overall data, descriptive statistics such as frequency distribution and percentages were used.
Product innovation strategies were analyzed using means and standard deviations.

The relationship between the independent variable (competitive advantage, market expansion,
differentiation and customer demand) and the dependent variable (company growth) of Unilever
Company on continuous company growth is analyzed using regression analysis. Tables are used to
present the findings.

4.2 Response Rate

A total of 130 semi-structured questionnaires were administered to 6 distributors and company employees
working in Addis Ababa, Ethiopia. The survey received a total of 117 correctly completed questionnaires,
which achieved a 100% response rate. This is enough to allow the researcher to reach an adequate
conclusion because the questionnaires have been fully answered.

Table 19: Response Rate

Source: research data (2023)

32
4.2. Respondent’s Profile
This study included four demographic factors. They are: gender, age, length of service and class. The
following tables show the distribution of sampled individuals based on demographic factors.

Table 20:Distribution of the Respondent’s Gender

Source: field survey (2023)

Table 4.2 shows the demographic and personal information of the respondents by gender and shows that
73 (62.4%) of the respondents are male and 44 (37.6%) are female. This indicates that more male than
female respondents participated in the survey. This shows that there are more men than women working
in the Unilever Company in Addis Ababa, Ethiopia.

Table 21: Distribution of the Respondents Age

Source: field survey (2023)

Table 4.3 shows that 105 (89.7%) were between 20 and 30, 10 (8.5%) between 31 and 40, and 2 (1.7%)
between 41 and 50. This indicates that the majority of respondents to the survey were in their 20s to 30s.

33
Table 22: Distribution of the Respondents Length of Service

Source: field survey (2023)

According to table 4.4, 34 (29.1%) are between one month and one year old, 30 (25.6%) are between one
and two years old, and 3 (2.6%) are between two years old. Three years, 26 (22.2%) served three to four
years and 24 (20.5%) served more than four years.

Table 23: Distribution of the Respondents Department

Source: field survey (2023)

From Table 4.5 the demographic information of respondents by department shows that 99 (84.6%) of
respondents are in sales, 4 (3.4%) are in finance, 11 (9.4%) are in marketing and 3 (2.6%) are in R&D.

34
4.3. Product Innovation Strategies
The respondents were asked to evaluate the success of the product innovation methods implemented by
their manufacturing company. Ratings were made on a Likert scale of 1 to 5, where 1= failed, 2=
somewhat successful, 3= moderately successful, 4= successful, and 5= very successful. The results are as
described.

4.4.1 Competitive advantage of product innovation

The respondents were asked to evaluate the success of their company's product innovation strategy in
terms of competitive advantage. The recorded means were expressed as follows: 1-1.49 = failed; 1.5-2.49
= slightly successful; 2.5-3.49 = moderately successful; 3.5-4.59 = successful; 4.5-5.0 = very successful.
The results are shown in the table.

Table 24: competitive advantages of product innovation

Competitive advantage N Minimum Maximum Mean Std. Deviation

Sales More Than 117 3 5 4.61 .508
Include Unique Feature 117 3 5 4.18 .677
Higher Quality 117 3 5 4.70 .496
Lower Price 117 3 5 4.18 .677
Valid N (list wise) 117
Aggregate mean 3 5 4.41 .589

Source: research findings (SPSS 28)

Unilever Company successfully adopted product innovation strategies for competitive advantages in
Ethiopia, overall mean (M=4.41, SD= 0.589). On the mean (M= 4.70, SD= 0.496), the highest rated
statement in Ethiopia Unilever Company has high quality product innovations, which helps as a
competitive advantage, followed by higher than average sales (M= 4.61, SD= 0.508), and finally unique
features. and low value with mean (M= 4.18, SD= 0.677). The standard deviations recorded indicate that
the respondents' attitudes differ.

35
The provided information suggests that Unilever Company in Ethiopia has effectively utilized product
innovation strategies to gain a competitive advantage. The high mean ratings for statements such as
"Unilever Company has high-quality product innovations" and "higher than average sales" indicate
positive perceptions among the respondents.

4.4.2 Market growth

The respondents were asked to evaluate the market growth success of their company's implementation of
product innovation strategies. The recorded methods were explained as follows: 1-1.49 = failed; 1.5-2.49
= slightly successful; 2.5-3.49 = moderately successful; 3.5-4.59 = successful; 4.5-5.0 = Very successful.
The results are shown in the table.

Table 25: market growth of product innovation

Market Growth N Mean Std. Deviation

Market share against competition 117 4.47 .624
Ability to recruit new customers 117 4.30 .633
Address existing need 117 4.37 .581
Carter various demographic market 117 3.97 .713
Suitable for ecommerce 117 4.04 .724
Keeping up with the new trends 117 4.16 .601
Valid N (list wise) 117
Aggregate mean 4.21 .646

Source: research findings (SPSS 28)

The provided numbers and responses from the respondents can have several implications for Unilever
Company in Ethiopia and their product innovation strategies. Here are some potential implications based
on the information provided:

1. Market Share with Competitors: The high mean rating (M=4.47) suggests that respondents perceive
Unilever as having a significant market share compared to its competitors. This implies that Unilever has
been successful in capturing a substantial portion of the market, which can indicate strong brand
recognition, customer loyalty, and effective competitive positioning.

36
2. Meeting Existing Consumer Demand: The positive mean rating (M=4.37) indicates that respondents
believe Unilever has been successful in meeting the needs and demands of its current customers. This
implies that Unilever has a good understanding of its target market and has developed products that align
with consumer preferences. Meeting consumer demand is crucial for maintaining customer satisfaction
and loyalty.

3. Ability to Acquire New Customers: The mean rating (M=4.30) suggests that respondents perceive
Unilever's strategies as effective in acquiring new customers. This implies that Unilever has implemented
successful marketing and sales approaches to attract new consumers to their products. Acquiring new
customers is vital for business growth and expanding market share.

4. Adapting to New Trends: The relatively lower mean rating (M=4.16) indicates that respondents
perceive Unilever's ability to adapt to new trends as moderately successful. This suggests that there might
be room for improvement in terms of staying ahead of market trends and quickly adjusting product
offerings to match changing consumer preferences. Adapting to new trends is essential for remaining
competitive in dynamic markets.

5. Suitability for E-commerce: The mean rating (M=4.04) suggests that respondents perceive Unilever's
suitability for e-commerce as moderately successful. This implies that while Unilever may have an online
presence, there could be opportunities for further improvement in optimizing their e-commerce strategies.
Given the growing importance of e-commerce, enhancing their online capabilities can help Unilever
reach a wider customer base and improve convenience for consumers.

6. Targeting Different Demographic Markets: The lowest mean rating (M=3.97) indicates that
respondents perceive Unilever's targeting of different demographic markets as less successful compared
to other statements. This suggests that there may be challenges or room for improvement in effectively
reaching and catering to diverse consumer segments. Expanding into different demographic markets
requires understanding their unique needs and preferences.

Overall, the responses and ratings from the respondents provide valuable insights into Unilever's strengths
and areas that require attention in their product innovation strategies. Unilever can leverage the positive
perceptions regarding market share and meeting existing consumer demand while focusing on enhancing
their adaptability to new trends, e-commerce suitability, and targeting of different demographic markets
to further strengthen their competitive position and drive market growth.

37
4.4.3 Positioning
The study also tried to find out the performance of Unilever in Ethiopia on product innovation
techniques for positioning. The researcher used the means and standard deviations of the
responses to analyze the data. Here's how the data was interpreted: 1-1.49 = failed; 1.5-2.49 =
slightly successful; 2.5- 3.49 = moderately successful; 3.5-4.59 = successful; 4.5-5.0 = Very
successful. The results are shown in the table.

Table 26: Positioning

Positioning N Mean Std. Deviation

Perceived by customers easily 117 4.43 .546
Differentiate easily 117 4.59 .528
Attractive packaging 117 4.54 .650
Maintain brand loyalty 117 4.35 .723
Valid N (list wise) 117
Aggregate mean 4.46 0.611

Source: research findings (SPSS 28)

According to the findings, Unilever Company in Ethiopia has successfully adopted product innovation
strategies to position their products in the market. The overall mean rating of 4.46 suggests that, on
average, the respondents perceive Unilever's product innovation efforts positively. The standard deviation
of 0.611 indicates some variations in the respondents' views, implying that there may be differing
opinions among them.

The highest-rated statement, with a mean rating of 4.59, is that Unilever's product innovation is easy to
identify by consumers. This finding implies that the respondents believe Unilever's innovative products
are distinct and easily recognizable in the market. This can be a significant advantage for Unilever as it
indicates that their product innovations have strong differentiating factors or unique features that set them
apart from competitors. When consumers can easily identify and distinguish their products, it can lead to
increased brand recognition, customer preference, and potentially higher sales.

The statement regarding attractive packaging received the second-highest mean rating of 4.54, suggesting
that respondents perceive Unilever's products as having visually appealing packaging. This finding

38
indicates that Unilever has successfully designed packaging that catches the attention of consumers and
enhances the overall product experience. Eye-catching and well-designed packaging can attract
customers, create a positive first impression, and contribute to the overall perception of product quality
and value.

The next highest-rated statement is that Unilever's products are perceived simply by clients, with a mean
rating of 4.43. This suggests that respondents perceive Unilever's product innovations as easily
understood and straightforward for consumers. It implies that Unilever has effectively communicated the
benefits and value of their products to customers, making it easy for them to comprehend and appreciate
the offerings. Simplifying the perception of products can contribute to consumer trust, ease of decision-
making, and ultimately drive purchase intent.

On the other hand, maintaining brand loyalty received the lowest mean rating of 4.35. This implies that
respondents have relatively lower perceptions of Unilever's success in fostering brand loyalty among
consumers. It suggests that Unilever may need to focus on strengthening their efforts to cultivate long-
term relationships with customers and encourage repeat purchases. Building brand loyalty is crucial for
sustaining a competitive advantage and driving customer retention.

Overall, the findings suggest that Unilever Company in Ethiopia has successfully implemented product
innovation strategies, with positive perceptions in terms of product differentiation, attractive packaging,
and consumer understanding. However, there may be room for improvement in terms of fostering brand
loyalty. The variations in respondent views, as indicated by the standard deviations, highlight the
importance of further analyzing and understanding the diverse perspectives of customers to tailor future
product innovation strategies and marketing efforts effectively.

4.4.4 Customer Requirement

The study also tried to find out the success of Unilever company in Ethiopia by applying product
innovation strategies for positioning. The researcher used the means and standard deviations of
the responses to analyze the data. The recorded means were interpreted as follows: 1-1.49 =
failed; 1.5-2.49 = slightly successful; 2.5- 3.49 = moderately successful; 3.5-4.59 = successful;
4.5-5.0 = Very successful. The results are shown in the table.

39
Table 27: Customer Requirement

Customer Requirement N Mean Std. Deviation

Affordable 11 4.64 .516
7
Availability 11 4.50 .567
7
Multipurpose 11 3.74 .621
7
Convenience 11 4.08 .604
7
True to the product claim 11 4.59 .589
7
Added value 11 3.80 .722
7
Satisfy core need 11 4.60 .573
7
Valid N (list wise) 11
7
Aggregate mean 4.27 0.598

Source: research findings (SPSS 28)

According to the study, Unilever Company in Ethiopia indicated product innovation strategies (M= 4.27,
SD= 0.598) to successfully meet customer needs. The statement that was rated highest by Unilever
Company of Ethiopia was on its innovative products with reasonable price (M= 4.64, SD= 0.516)
followed by satisfaction of customer needs on average (M= 4.60, SD= 0.573). Then it is true for product
claims on average (M= 4.59, SD= 0.589) this availability followed by average (M= 4.50, SD= 0.567) for
ease of use on average (M= 4.08, SD= 0.604) this added value followed by quantity on average (M =
3.80, SD= 0.722) followed by the multipurpose purpose of innovative products to meet customer needs
was recorded as a minimum (M). = 3.74, SD= 0.621) and applied in the average range which is a measure
of success. And the registered standard deviations show that the opinions of the respondents were
different.

40
Table 28: overall level of sustainable company growth

Sustainable Company Frequen Percent Valid Cumulative

Growth cy Percent Percent
Valid moderately 13 11.1 11.1 11.1
successful
Successful 51 43.6 43.6 54.7
very successful 53 45.3 45.3 100.0
Total 117 100.0 100.0

Source: research findings (SPSS 28)

4.5. Regression Analysis

Regression analysis was used to explain the relationship between product innovation outcomes and
company growth in Ethiopia.

4.5.1 Model Summary

Table 29: Model Summary

Model Summary

Mo R R Adjusted Std. Error of the Estimate

del Square R Square

1 .154a .024 -.011 .675

a. Predictors: (Constant), customer requirement, market growth, positioning, competitive
advantage.

Source: research findings (SPSS 28)

To test the goodness of fit of the model, the coefficient of determination (R Square) is used. R Square, in
other words, evaluates how much variation in the dependent variable is explained by the independent
variable. The value of R square is between 0 and 1, 1 indicates that there is a perfect fit and 0 indicates
that there is no relationship between the dependent and independent variables. According to R2, the four
independent variables analyzed account for 2.4% of the variability in our dependent variable. As a result,
additional factors affecting the company's growth are not investigated in this study.

41
4.5.2 Analysis of Variance
Analysis of variance (ANOVA) was done to confirm the goodness of the regression model.

Table 30: Analysis of Variance (ANOVA)

ANOVAa
Model Sum of Df Mean F Sig.
Squares Square
1 Regression 1.239 4 .310 .679 .608b
Residual 51.086 112 .456
Total 52.325 116

A. Dependent variable: company growth

B. Predictors: (constant), customer importance, market growth, positioning, competitive advantage.

4.5.3 Regression Coefficients

A multiple regression was conducted to determine whether the effect of innovation product
variables (competitor advantage, market growth, product differentiation, and customer demand)
significantly predicted firm growth. Multiple linear regressions require that the independent
variables in the analysis be normally distributed.

At the 95 percent confidence level, the regression coefficient confirmed that competitive
advantage, market growth, product differentiation and customer demand had a positive effect
together on the company growth of Unilever Plc in Ethiopia.

42
Table 31: Regression Coefficients

Coefficients
Model Unstandardized Standardized T Sig.
Coefficients Coefficients
B Std. Error Beta
1 (Constant) 4.009 .774 5.181 <.001
Competitive advantage .067 .151 .051 .444 .658
Market growth .082 .125 .077 .662 .510
Positioning .098 .138 .079 .709 .480
Customer requirement -.167 .144 -.129 -1.165 .247
A. Dependent variable: company growth

Source: SPSS v 28

A multiple regression analysis was conducted to determine the impact of product innovation
strategies on the sustainable development of Unilever companies in Ethiopia. According to the
SPSS table above, the equation becomes (Y = β0 + β1X1 + β2X2 + β3X3 + β4X4 + β5X5+ε):

Y= 4.009+ 0.067X1 + 0.082X2 + 0.098X3 - 167X4 + ε

Where: Y - company growth (dependent variable)

X1-X4 - independent variables

X1- Competitive advantage

X2 - market growth

X3- product placement

X4- customer demand

According to the established regression equation, considering all factors constant at zero, the
growth rate will be 4.009. The findings of the analyzed data also take all other independent
variables at zero, the increase in competitive advantage leads to an increase of 0.067 in the
company. Growth, one unit increase in market share leads to 0.082 increase in company growth,

43
one unit increase in product position leads to 0.098 increase in company growth, one unit
increase in customer requirements leads to -167 company growth.

4.6 Reliability and Validity of the Questionnaire

4.6.1 Reliability
Reliability refers to the way and extent to which similar answers can be obtained using the same
instruments more than once. Simply put, if our research is concerned with high-level reliability, it
assumes that other researchers should be able to generate similar results using similar research methods in
the same setting, and that "reliability problems can be found in a variety of ways." We have been able to
conduct a successful and complete research using this type of method for our research paper.

Another important sound measurement test is the reliability test. If a measurement instrument produces
consistent results, it is considered reliable (Kothari, 2004). Reliability assesses the consistency of a
measure or, in other words, the extent to which an instrument evaluates the same measure every time it is
used in the same setting with the same subjects.

Internal consistency reliability using Cronbach's alpha is used by the researcher to assess the
reliability of the constructs. Internal consistency reliability is a measure of consistency between
different items with the same concept (Cramer D. & Howit D. 2004). The most widely used test
of internal consistency for a scale item is Cranach's coefficient. Cronbach's alpha coefficients
should be between 0.70 and 1.00. (Sun, Chou, Stacy, Unger & Gallaher, 2007) Cronbach's alpha
for this study ranged from .826 to .948, which exceeds the minimum standard to demonstrate
data set reliability. Table 4.14 summarizes the scales used to determine the objectives covered by
the questionnaire.

Table 32: Results of the Reliability Statistics

Reliability Statistics
Cronbach's Cranach’s Alpha Based on N of Items
Alpha Standardized Items
.878 .878 22

Source: SPSS version 28 outputs

44
Table 33: Reliability of All factors

Q Factors Cronbach’s Alpha No of Items

1 Competitive Advantages 0.667 4
2 Market Growth 0.808 6
3 Positioning 0.814 5
4 Customer Requirment 0.653 7

Source: Own survey from SPSS result

Accuracy

In research, validity is a characteristic of research that determines how close sample parameters are to
population characteristics. Therefore, validity means the way in which the measured values or findings
reflect the true or original values. By measuring the validity of the study, the researcher can ensure that
the study is comprehensive, reliable and valid. Validity, reliability and validity are three research
characteristics that make research valid. Measurement of validity can be done using statistical techniques
Our research process follows this scientific method.

The extent to which a test measures exactly what we want to measure is called validity. The most
important criterion is validity, which indicates how well an instrument measures what it claims to
measure (Kothari, 2004). Accuracy is more important than reliability because there is no point in using an
instrument if it does not measure exactly what it is designed to measure, even if it is measured
consistently. According to Kothari (2004), a reliable instrument contributes to its validity, but a reliable
instrument is not necessarily valid.

The 22 elements in the four product innovation outcomes (competitive advantage, market growth, product
positioning, and customer demand) were subjected to factor analysis to confirm the quality of the data
instrument. PCA was performed using SPSS v28 to quantify the main effects associated with the 22
items. The validity of the constructs was assessed using Bartlett's test of supersedes and the Kaiser-
Meyer-Olkin (KMO) measure of sampling adequacy of the individual variable.

4.7 Correlation Analysis

Correlation analysis, or correlation analysis, is one way we put value on a relationship. When we create
matching settings; A number between -1 and 1 is a measure of what value it has; "0" means no
relationship between the variables. 1 or 1 means that there is a perfect negative or positive correlation
(negative or positive correlation here shows us what kind of relationship it is, and it is the part where it is

45
done using the type of graph that shows the relationship. Therefore, we have been able to carry out this
part of the research paper accordingly.

The strength or degree of relationship between variables was measured using correlation analysis. The
relationship between product innovation strategies and company growth was investigated by Pearson
product-moment correlation analysis. Competitive advantages, market growth, product positioning and
customer requirements were the variables.

The correlations shown in the table below are low, very low, weak, very weak and moderate. The
bidirectional relationship between competitive advantage, market growth, product positioning, customer
demand and overall company growth is shown in the table below.

Table 34:correlation Test: Durbin-Watson test summary (2-tailed)

Correlations
competitive market positioning customer_re company
advantage growth quirment growth
** **
competitive Pearson Correlation 1 .534 .114 .246 .069
advantage Sig. (2-tailed) <.001 .222 .007 .460
N 117 117 117 117 117
market Pearson Correlation .534** 1 .291** .154 .107
growth Sig. (2-tailed) <.001 .001 .098 .251
N 117 117 117 117 117
positioning Pearson Correlation .114 .291** 1 .487** .045
Sig. (2-tailed) .222 .001 <.001 .632
N 117 117 117 117 117
customer_r Pearson Correlation .246** .154 .487** 1 -.066
equirment Sig. (2-tailed) .007 .098 <.001 .482
N 117 117 117 117 117
company Pearson Correlation .069 .107 .045 -.066 1
growth Sig. (2-tailed) .460 .251 .632 .482
N 117 117 117 117 117

Correlation is significant at the 0.01 level (2-tailed).

46
Table 35: correlation Test: Durbin-Watson test summary (1-tailed)

Correlations
competitive market positioni customer_re company
advantage growth ng quirment growth
competitive_adva Pearson 1 .534** .114 .246** .069
ntage Correlation
Sig. (2-tailed) <.001 .222 .007 .460
N 117 117 117 117 117
market_growth Pearson .534** 1 .291** .154 .107
Correlation
Sig. (2-tailed) <.001 .001 .098 .251
N 117 117 117 117 117
Positioning Pearson .114 .291** 1 .487** .045
Correlation
Sig. (2-tailed) .222 .001 <.001 .632
N 117 117 117 117 117
customer_requirm Pearson .246** .154 .487** 1 -.066
ent Correlation
Sig. (2-tailed) .007 .098 <.001 .482
N 117 117 117 117 117
company growth Pearson .069 .107 .045 -.066 1
Correlation
Sig. (2-tailed) .460 .251 .632 .482
N 117 117 117 117 117

Correlation is significant at the 0.01 level (2-tailed).

47
4.8. Hypothesis Testing
Table 36: summary of hypothesis testing

Hypothesis Results Beta Sig

value level
Hypothesis 1 Product innovation has positive and significant effect Accepted .051 .658
on firms competitive advantage
Hypothesis 2 Product innovation has positive and significant effect Accepted .077 .510
on firms market growth
Hypothesis 3 Product innovation has positive and significant effect Accepted .079 .480
on firms product differentiation
Hypothesis 4 Product innovation has negative and significant effect Partially -.129 .247
on firms customer requirment Accepted

48
 CHAPTER FIVE

5. SUMMARY, CONCLUSION AND RECOMMENDATION

This chapter summarizes the findings of the study, conclusions drawn from the data, and
limitations encountered or found during the course of the research. In addition, the chapter
provides suggestions and recommendations for future research aimed at improving organizational
performance in the presence of innovative strategies.

5.1 Summary of findings

The major findings from this research on Unilever Company in Ethiopia's product innovation strategies
are as follows:

1. Overall, Unilever Company has successfully implemented product innovation strategies for market
growth (M=4.21, SD=0.646).

2. Unilever Company in Ethiopia is perceived to have market share with competitors (M=4.47,
SD=0.624).

3. Meeting existing consumer demand is a strength of Unilever's product innovation (M=4.37,

SD=0.581).

4. Unilever has been effective in acquiring new customers (M=4.30, SD=0.633).

5. Unilever's product innovations are seen as easy to identify by consumers (M=4.59, SD=0.528).

6. Attractive packaging is another positive aspect of Unilever's product innovation (M=4.54, SD=0.650).

7. Unilever's ability to adapt to new trends received a moderately positive rating (M=4.16, SD=0.601).

8. Unilever's suitability for e-commerce had an above-average rating (M=4.04, SD=0.724).

9. Unilever's efforts in targeting different demographic markets received a relatively lower rating
(M=3.97, SD=0.713).

10. Respondents' opinions varied, as indicated by the recorded standard deviations.

These findings highlight the successful implementation of product innovation strategies by Unilever in
Ethiopia, with strengths in market share, meeting consumer demand, acquiring new customers, and being
easily identifiable to consumers. Recommendations can be made to further capitalize on these strengths
and address areas such as targeting diverse demographics and enhancing adaptability to new trends.

49
5.2. Conclusion of the study
The conclusion is the part of the research paper that ties everything together logically. As the
final section of a research paper, the conclusion provides a clear interpretation of the results of
our study in a way that highlights the importance of our study. A conclusion should be broader
and more comprehensive than a single finding and similarly different findings can be combined
into one conclusion and no doubt our research paper is built on this basis.

The research further analyzed the effect of product innovation strategies on the company growth
of Unilever Company in Ethiopia with the following conclusion.

The results of the research indicated that, depending on the product type, the introduction of new
ingredients into products and product centers, high-quality and low-cost innovative products
contribute to the growth of the company. Product innovation has a positive and statistically
significant effect on the competitive advantage of Unilever company growth in Ethiopia.

The research concludes that product innovation strategies such as addressing existing needs and
the ability to recruit new customers have contributed to the company's growth.

Product innovation such as product positioning, creating differentiation and increasing visibility
can significantly increase a company's growth.

It is believed that the research will not only satisfy the needs of the customers but also enhance
the growth of the company.

5.3. Recommendations of the study

Recommendations in research are considered an important part of the analysis phase. Based on
the findings of the study, several recommendations can be made to enhance the product
innovation strategies of Unilever Company in Ethiopia:

1. Strengthen Brand Loyalty: Given the relatively lower rating for maintaining brand loyalty, it is
recommended for Unilever to focus on strategies that foster long-term customer relationships.
This can include implementing loyalty programs, personalized marketing campaigns, and
delivering consistent product quality and customer service. Building strong brand loyalty can
lead to repeat purchases, positive word-of-mouth, and sustained competitive advantage.

50
2. Emphasize Unique Features: While Unilever received positive ratings for easy identification
and attractive packaging, there is room to further emphasize unique product features. Unilever
should invest in research and development to develop innovative features that differentiate their
products from competitors. Communicating and promoting these unique features effectively
through marketing efforts can help Unilever capture consumer attention and increase perceived
product value.

3. Adapt to Changing Trends: Although the rating for adapting to new trends was relatively high,
it is important for Unilever to stay proactive and agile in responding to emerging market trends.
This involves continuously monitoring consumer preferences, technological advancements, and
industry developments. By staying ahead of the curve and quickly adapting their product
innovation strategies, Unilever can maintain a competitive edge in the market.

4. Enhance E-commerce Capabilities: While Unilever received a moderate rating for suitability
for e-commerce, it is recommended to invest in strengthening their online presence and
optimizing e-commerce capabilities. This includes user-friendly websites, mobile apps, and
seamless online shopping experiences. Unilever should also leverage digital marketing strategies,
such as targeted advertising and social media engagement, to reach and engage with a wider
audience in the digital space.

5. Target Diverse Demographic Markets: To improve the rating for targeting different
demographic markets, Unilever should conduct market research to understand the unique needs,
preferences, and behaviors of various consumer segments. This will enable them to tailor their
product innovation strategies and marketing approaches to specific target groups effectively. By
understanding and addressing the specific requirements of diverse demographics, Unilever can
expand their customer base and increase market penetration.

6. Continuous Monitoring and Improvement: It is crucial for Unilever to establish a system for
continuous monitoring and evaluation of their product innovation strategies. This involves
gathering feedback from consumers, tracking market trends, and regularly assessing the
performance of their product offerings. By collecting and analyzing data on an ongoing basis,
Unilever can identify areas for improvement, make informed decisions, and adapt their strategies
accordingly.

51
These recommendations aim to support Unilever Company in enhancing their product innovation
strategies, maintaining competitiveness, and driving market growth in Ethiopia. Implementing
these recommendations requires a holistic approach, involving collaboration between different
departments, ongoing market research, and a customer-centric mindset.

52
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 Appendix I:
QUESTIONNAIRE FOR RESPONDENTS
PART I: GENERAL INFORMATION
Please tick the most appropriate information about yourself.
1. Gender:
Male [ ] Female [ ]
2. Age:
20 - 30 [ ]
31 - 40 [ ]
41 - 50 [ ]
Above 51 [ ]
3. Years of working for the company:
1month -1 years [ ]
1-2 years [ ]
2-3 years [ ]
3-4 years [ ]
Over 4 years [ ]
4. What is your department:
Sales [ ] Finance [ ] Marketing [ ] R&D [ ]

Others please specify __________________________________

PART II: INNOVATION PRODUCT STRATEGIES
Please mark the appropriate scale which has a value 1-5 on the box of each tables for the
below questions A-D.
And each scale has a value as follows:
1= Not successful; 2= A little successful; 3= moderately successful; 4 = successful; 5= Very
successful

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A. competitive advantage (Lux 150gm, Sun silk 700ml)
#Q Variables on competitive 1 2 3 4 5
advantage measures
1 Sells more than competition
2 Include unique features
3 Higher quality than rivalry
4 Lower price than rivalry

B. market growth
#Q Variables on market growth measures 1 2 3 4 5

5 Market share against competition

6 Ability to recruit new buying customers
7 Address existing customer need
8 Cater to various demographic market
9 Suitable for Ecommerce
10 keeping up with the new trends

C. positioning
#Q Variables on positioning measures 1 2 3 4 5
11 Perceived by customer easily
12 Differentiate easily by customer
13 Attractive packaging approach
14 Increase visibility
15 Maintain Brand loyalty

D. customer requirement

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#Q Variables on customer requirement 1 2 3 4 5
measures
16 Affordable
17 Availability
18 Multipurpose or flexible approach
19 Convenience to use
20 True to the product claim
21 Added value
22 Satisfy core need

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