Key Idea: Research and development is how a business finds new products and better ways of working. This topic is why it matters, what it costs, how the ideas are protected, and the two kinds of innovation.
Why it matters
- New products keep sales growing as old ones reach maturity.
- Meeting needs customers have not had met, like gluten-free bread.
- It is costly and slow, and many ideas fail.
Protecting ideas
- Patent: the sole right to make and sell an invention for a time.
- Copyright: protects original work such as writing, music and designs.
- Trademark: protects a brand's name or logo.
Kinds of innovation
- Incremental: small improvements, like a resealable packet.
- Disruptive: a new way that changes the market, like Loaf Line's delivery.
- Disruptive ideas often start small and cheap.
The words to know
| Word | Means | Do not confuse with |
|---|---|---|
| Research and development (R&D) | finding new knowledge and turning it into new products or processes | market research |
| Patent | the legal right to be the only one to make and sell an invention for a set time | a trademark |
| Trademark | a legally protected name, logo or symbol of a brand | copyright |
| Incremental innovation | a small improvement to an existing product or process | disruptive innovation |
| Disruptive innovation | a new product or way of working that changes how a market works | any new product |
Say what the R&D or innovation is, then weigh the cost and risk against what the business gains, with the case's figures.
Exam-style question
Define the term patent.
Model answer plan
See the mark-by-mark plan — for / against / judgement, with marking guidance — in study mode.
Important: A new flavour or a better packet is incremental. Disruptive innovation changes who serves the market and how, as Loaf Line's shop-free delivery does.
Tap each card to check yourself.
One advantage of spending on R&D? New products replace ones in decline and can be sold at a higher price before rivals copy them.
One disadvantage of R&D? It is costly and uncertain: Priti's first 20 gluten-free test batches failed.
Patent, copyright or trademark: the Lena's Bakery logo? Trademark. It protects the brand's name or logo.
Give an example of incremental innovation. The resealable cracker packet: a small improvement to an existing product.
Why is Loaf Line a disruptive innovation? It sells bread with no shops at all, by app and doorstep delivery, changing how the market works.
What is an unmet need? Something customers want that no product gives them yet, like gluten-free bread in town.
Exam tips
- Define patents, copyrights and trademarks exactly: they protect different things.
- Weigh R&D's cost and risk against the sales it could bring.
- Incremental improves; disruptive changes how the market works.
- An unmet need is a chance to sell something nobody offers yet.
- Apply every point with a detail from the case.