“New products are the lifeblood of a company” (Philip Kotler). Old products simply mature and fade away, so companies must develop new ones to stay successful. To do so, there are two new product development strategies.
New product development strategies pave the way for obtaining new products.
New Product Development Strategies
The two new product development strategies are:
- Own new product development efforts.
The first one of the new product development strategies is Acquisition. Acquisition means buying a whole company, a patent, or a licence to produce another company’s product.
The other strategy refers to the firm’s own new product development efforts. New products developed by the firm can take four forms:
- Original products
- Product improvements
- Product modifications
- New brands.
These forms of new products the firm can develop through its own R&D efforts.
However, new product development strategies are strongly correlated to the type of new product the firm aims to obtain.
Types of new Products
There are 5 Types of new Products:
- New-to-the-world products. These are inventions such as the first automobile or computer. They are very rare: most new products are in fact simply improvements on existing products.
- New category entries. These are products introduced by firms into a product category where the firm had not been doing business up to this time.
- Additions to product lines. These are line extensions in the firm’s current markets such as a new tablet computer introduced by Apple.
- Product improvements. This refers to current products made better in some way. Most new products are, in fact, product improvements.
- This refers to taking a current product and attempting to find a new use for it. The most famous example of this is Arm and Hammer Baking Soda which was repositioned many times as a refrigerator deodorant or carpet cleaner.
Choosing a type of new product and one of the two product development strategies is not sufficient. Companies cannot just hope that they will stumble across good new products. Instead, they should develop a systematic new product development process.