The impact of high product quality on competitive advantage is the creation of a brand name reputation, greater efficiency and, thus, lower costs. This enhanced reputation allows the firm to charge a higher price. At the same time the costs are down so profits are much higher, thus a higher competitive advantage. Quality has become imperative for survival in some firms. Innovation is defined as anything new or novel about a firm's operation or product.
Innovation gives a firm something unique.
When a firm is the pioneer in its industry it can charge a higher price because of a lack of competition. Later, when there is competition, newcomers must deal with the pioneer's reputation. To achieve customer responsiveness a firm must deliver exactly what the customer wants when the customer wants it. A firm must do everything it can to identify and satisfy customer needs. Steps taken to improve quality and efficiency are consistent with the goal of high customer responsiveness.