The market has been growing exponentially, and thus, new product development becomes an important activity to keep generating more revenue. Therefore, companies have constantly been changing and updating their products. New products are being developed and introduced in the market. This is a complicated step and requires a massive amount of innovation. Reports suggest that companies leading their industries attribute about half of their revenues to products developed in the most recent five years. A new product can have five categories.
New Product Type/Category
- New-to-the-world products – These are new inventions or say, exactly new products. These products create a whole new market Example: laser printer.
- New to the firm product (adding a new product line) – These are new product lines where new products or services are added to a firm’s current markets. Example: A company sells detergent powder. Now, it adds a liquid detergent; this is an addition of a new product line.
- Adding to the existing product line – New category in the existing product line. For example, a company selling soda can add a new flavor and trade under the same brand name. It helps gain more profits, customer loyalty, and brand visibility.
- Product improvements are another type of new product where the existing product has been modified and upgraded—for example, selling a protein drink as a better alternative than the previous one or by selling a new product by revising it again and again.
- Repositionings – This is used to target products to new markets or for new uses. For example, Marlboro cigarettes were used to be marketed for women earlier and then were repositioned for men.
A new product can be obtained/designed internally or externally. Companies often use internal R&D to develop new products. Companies bear all the costs and risks associated with it. The company overlooks all the aspects of this new product, i.e. market study, development, implementation, sales strategy, and all.
Companies also use external sources to obtain new products. This can be done either by buying out the new product, getting rights to sell and market the product, or could be done by acquiring the company and its products. It could be a partnership, strategic alliance, acquisition, or collaboration.
Once a company makes a decision to launch a new product, the next step is New product planning.
It will also require a new product launch strategy.
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