ABSTRACT
The study intended to find out the effect of product innovation and competitive advantage in manufacturing firms in Nairobi County. The study sought to do this through: -establishing the effect of number of products redesigned on the manufacturing firms’ competitiveness in Nairobi County, to establish the relationship between product innovation and the manufacturing firms’ competitive advantage in Nairobi County and to find out the drivers of innovative products and competitive advantage of manufacturing firms in Nairobi County. A descriptive research design was employed. The study’s target population was 378 manufacturing firms in Nairobi County. A sample of 45 manufacturing firms was used in the study. The study used a questionnaire to gather primary data. The study employed descriptive statistics in analyzing data which include measures such as:-means frequencies and percentages. The study found that:-On the effect of number of products redesigned on the competitiveness of manufacturing firms, the study concluded that product redesigning leads to increase in quality and therefore making the product have competitive advantage. It can be concluded from the findings that quality control is the most important component for product differentiation and competitiveness for MSME manufacturing firms. For that the study concluded that the following factors were the main drivers: -quality, cost leadership, product differentiation, innovating new products and improve customer values through lower prices which allows firms to gain competitive advantage. The study also recommends that there is need for continuous improvement of products so as to meet the varying needs of the users’and to maintain a competitive advantage.The main limitation encountered was obtaining information from most MSME due to the nature of the privacy of their data and fear of competitors accessing the data.