Every company must develop new products which shape the company’s future. As the customers’ tastes and preferences are ever-changing, new product development becomes a necessity for an organization. R&D spurred on by technological innovations/ breakthroughs, are a sine qua non for product development.
Additions to the existing product lines: new products that supplement a company’s existing product line (package sizes, flavors, from window-type to split air-conditioners, and so on).
Improvements and revisions of existing products: new products that provide improved performance or greater perceived value and replace an existing product.
Repositioning: existing products that are targeted to new markets or new market segments, e.g., Rajdoot motorcycle re-positioned as a motorcycle best suited for rural use, milk-transportation, etc.
Cost reductions: new products that provide similar performance at lower cost, e.g., reverse osmosis type water filter.
Challenges in New Product Development
Companies that fail to develop new products are putting themselves at great risk. New technologies are especially threatening. Most established companies focus on incremental innovation.
Categories of New Product
New to the world products: new products that create an entirely new market, e.g., SONY’s Walkman.
New product lines: a new product that allows a company to enter an established market for the first time. For example, an appliance manufacturer who launches microwave ovens for the first time.
New Product Development Process
A venture team is a cross-functional group charged with developing a specific product or business. Some companies may have a high-level management committee comprising of ‘new product’ managers and they work with a given budget, a time frame, and a skunk work setting (skunk works are informal workplaces like garages where entrepreneurial teams work on developing new products.)