It’s the development and introduction of new products that keeps any company competitive. After all, something had to go in the box we designed before we slapped that cool label on it. New products are new opportunities to generate new and exciting sources of new and exciting volumes of revenue.
Commerce is our goal. To that end, there are four strategies for product development:
This strategy involves increasing sales in your existing markets. Your focus should be on convincing non-users and the competition’s customers to switch to your product. You also want to convince existing customers to use more of your product more often.
This is when you expand sales of current products into new markets.
For example, Arm and Hammer markets baking soda as a deodorizer and a toothpaste, as well as for baking.
This strategy involves introducing a new product into an established market. For example, automotive manufacturers introduce new models, or redesigned models year after year.
This is the fun one, where we introduce new products to new markets. It is widely regarded as being the most risky, since often we are trying to convince consumers that they have a need for the new product.
For example, General Electric manufactures, among other things, ovens. They now also sell microwave ovens. In launching the microwave oven, they had to convince a demographic that already has an oven to buy an additional microwave oven.
Because each company has it’s own way of doing things, product development happens in a variety of ways. Some organizations prefer to form a committee that includes representatives from each of the engineering, manufacturing, marketing, and finance departments. Other companies establish a department dedicated to new product development. This option means the hiring of a dedicated staff with experience in research, development, marketing and finance.
The most common method used in the development of new products is the hiring of a Product Manager. It is this person who establishes the objectives and determines the best strategy for the development of new products.
Whichever organizational decisions your company makes, the development process for new products goes through 6 stages.
This is where all of that market research comes in handy.
Apply the SWOT analysis to your proposed ideas
Conduct feasibility study
Look internally. Do you have the resources? Does the product fit in with your core competencies and mission statement?
Spend the money. Build the mousetrap.
To test market or not to test market? Test marketing involves a limited release of a new product. Usually to a limited geographic area.
For Example, Diet Coke (which used to be Tab!) was initially marketed on the east coast. A year later, it was being sold nationally.
This is full-scale production and distribution.