Target Costing as a Strategic Tool to Commercialize the Product and Service Innovation

What is the issue?
Innovation is an important key to success in today's competitive marketplace. Firms therefore have strived hard to innovate and stay ahead. However, they have to face the brutal fact that firms often fail to obtain the commercial success of innovation.
Why is it important?
With keen international competition and accelerating pace of technology change, the ability to introduce innovations into the market and capture the profits generated by an innovation is of strategic importance. It can put a firm at a competitive advantage and build a firm’s sustainable financial benefits.
What can be done?
The implementation of target costing will increase the odds of commercial success of an innovation. It aims at fulfilling the economic potential of an innovation by focusing on the market and customers during the design and price setting stages. This price will, on one hand, impose the cost-reduction target in the organization. On the other hand, it can be a driving force for improving the cost-effective design and internal operations.