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From my understanding of the reviewers' comments, it means our proposed solution adds nothing new to the body of knowledge even if we get better results than the state-of-the-art work.
The reviewers believe our work is just an application of existing literature. While many published works do integration + per-existence method to enhance the result, we use pre-processing + per-existence method to do the same. We were rejected, while others were accepted.
Any advice is appreciated.
Lack of Novelty is an ill-defined statement. If you and your co-authors believe the manuscript has good contributions (compared to similar papers in the field) then probably the reviewers are just not expert in the area and thus thought of your work as marginal contribution. I would suggest addressing the reviewers comments to your best and submitting to a new venue.
The question 'Should I...' implies that there is, in fact, some foreseeable change/improvement that you can make. If this is indeed the case, then go ahead and make the change. A submission should be your best version; usually if we ourselves are unsatisfied with our work, it's unlikely that reviewers will be satisfied.
There is the chance that these changes will add only minute improvements. There's also the chance that making changes to your proposed solution requires considerable time, effort and resources. If either of these are true, it may be a good idea to retain the paper as such, add a small future work section and mention these new directions.
If, on the other hand, you believe (as someone in the field who has done due diligence) that the novelty factor of your manuscript is reasonable, then there's a good chance another journal and reviewer may feel similarly and accept it as it is.
