Final answer:
The process of creating new products that customers desire is called innovation, which is crucial for a firm's success in the market and can lead to temporary competitive advantages and above-normal profits.
Step-by-step explanation:
The process of creating new products that customers want is called innovation. Innovation involves incrementally or radically modifying an existing product, system, or process to improve it. Market competition can be a significant incentive for discovering new technology because it allows a firm to potentially earn higher profits by producing products more cheaply or creating products with desirable characteristics that consumers seek.
As stated by Gregory Lee, CEO of Samsung, the 'Relentless pursuit of new innovation is the key principle of our business and enables consumers to discover a world of possibilities with technology.' An innovative firm understands that it can maintain a temporary edge over competitors, thereby earning above-normal profits until the competition catches up. Therefore, innovation is vital for a firm's success in the market.