by Infoshelter

Created on: July 18, 2009   Last Updated: January 22, 2011

Innovation, especially development of new ideas in areas such as technology and the green economy, is considered as the primary way of exit from the economic crisis. That was the conclusion drawn by entrepreneurs from the eight most developed countries in the world, in a recent meeting held by them.

But how, in practice, innovation can be the solution which will lead the economy out of the crisis?

It should be defined that innovation is multi-dimensional, but on economic-entrepreneurial level it refers to the functions of supply and demand, beyond the purely administrative functions that may take place within the company.

Thus, a company can search and find ways to improve its production process, which is part of the supply function, producing more and better quality products, using more efficient and cost-effective procedures.

In this way, and by using new applications of technology, because this is the essential point, the company's (and to a macroeconomic extent, the country's and in turn the global economy's) production possibility frontier will shift, without necessarily the company (or the country or the global economy) having access to new sources of funds. Besides, through this process, more favorable costing of raw materials will be made possible, since a production process with reduced costs will be applied. The results of this procedure will have an impact on the demand side. Lower costing will result in lower pricing, which translates to lower prices for consumers.

Moreover, innovation can be developed in order to activate demand, by finding new ways of marketing products or services, but also through new applications of technology which will facilitate fast and efficient operation of the distribution network, and conduction of transactions.

However, one could observe that the problem of the current economic crisis is not, inherently and mainly, a problem of supply, but a problem of active demand for goods and services. The problem faced by the modern world economy (at least regarding the developed western countries) relates to reduced demand, because, in terms of supply, there is an over-supply of products and services.

Thus, research should be directed to innovations towards the direction of producing better quality, (not just quantity) and cheaper products, for which active demand will exist. Therefore, care must be taken for further research and new ideas in the field of marketing.

In my view, the marketing function throughout a company, will determine its survival. Moreover, this is the reason for the company's existence and operation, to make its products "marketable", otherwise they will remain unsold and accumulate as unwanted stock.

Innovations and ideas that may arise from new research and data in the field of marketing could serve as an outlet to the current economic crisis. However, the basic "innovation", which should be the primary concern of all businesses, is their re-engineering and, orientation of the company's operations towards the implementation of established marketing principles, defined by predominant figures in the scientific field of Marketing, such as Philip Kotler and others.

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