New Product Development

Every company must develop new products. New products development shapes the company’s future. A company can add new products through acquisition or development.
The acquisition route can take three forms:-

the company can buy other companies
it can acquire patents from other companies
it can buy a license or franchise from another company

The development route can take two forms:

the company can develop new products in its own laboratories; or
it can contract with independent researchers or new-product development firms to develop specific new products.

Competition is strong and dynamic in most markets. So it essential for a firm to keep developing new products-as well as modifying its current products-to meet changing customer needs and competitors’ actions.
Booz, Allen and Hamilton have identified six categories of new products:-
1. New-to-the world products
2. New-product lines. New products that allow a company to enter an establishment market for the first time.
3. Additional to existing product lines: New products that supplement a company’s established product lines (package sizes, flavor and so on.)
4. Improvements and revisions of existing products: New products that provide improved performance or greater perceived value and replace existing products.
5. Repositioning existing products that are targeted to new markets or market segmentation.
6. Cost reduction: new products that provide similar performance at lower cost.