New Products development is a simple concept. It is the Conversion of customer need to a reality based solution, creating the tangible product or service from the intangible idea, Creation of new wealth. To success in implementing new products development efforts generally require significant resources and the opportunities in the market. Because of the high risk of failure in implementing new products, it is important to know why new products development is important to companies.
Why Product Development is Important
New Products development is the life blood of companies. The new products could be a physical tangible product such as an automobiles, smartphones, or coffee maker machine. It could also be services like IT software, new production process, or a new marketing concept.
All successful new products development actions advice the following:
- New products should provide or offer new value to the existing or new customers.
- It should add some value to Improve society.
- In order to sustain and overcome competitors
- Improve value to acquire new customers
The first and foremost important reason for any new products is to offer new value to the customer. Without this, there is no any other reason for them to invest their money for the new products or services. However, if the new products or service offers exceptional values, then customers will stick to it. This new and maximised value is what keeps your company growing. If there is no any other new value to offer customers, the firm will not exists further and eventually dies. If the value offered is not keep on increasing, then the company is losing its strength in the market as its competitors keep on increasing in their value in the market.
Many new products in the market are simply an incremental innovation over the previous version with only some new features added or slight faster performance than the last one. These products may strengthen the company by offering enough new values to generate additional revenue on sales, but they are hardly beneficial to society. There are some instances where new products will raise society beyond just the immediate satisfaction of the consumer. For example: some innovative new drugs are introduced to treat incurable diseases and automotive safety accessories that save hundreds of lives of the people per year. Neither of these may provide the customer swift satisfaction, but they save life’s and therefore benefits to society.
New products and services are the lifeblood of any firms. Without them, the firm will face its decline stage and either dies or is acquired by some other firm. Society is well served by the continuous existence of these firms from the employment of the people who works there (who are also one of the consumers), and the long lasting support for society in terms of taxation and CSR policies. Firm have little opportunities but they can grow and sustain if they want to move from survival to advancing. The new products and services developed and provided by firms of all sizes gives the mechanism and frame work for this growth and improvement. Decide on what you and your firm are doing to improve?
Key factors or reasons for developing new products:
Change in Market
Today’s market is more dynamic as compared to the past; it keeps on changing due to the wide variety of customer needs. Due to increased literacy rate, globalized market, heavy competition, and availability of a number of substitute products have given tremendous challenges in today’s market. Market fashion and Trends, preference and needs, behaviour and habits are constantly changing and marketer’s finds no other options rather than accepting market changes, by providing positive response in terms of innovation. Thus, consumer behaviour drives the innovation and become the dominant reason.
Change in Technology
Due to continuous technological growth and development, new manufacturing methods are invented. Old technologies and manufacturing methods are replaced by newer ones. A firm spends a huge amount of money for technological research. To cope up with the technological changes, new products are being developed.
Increased competition is one of major reasons leading to go for new products development. Every firm struggles to fulfil and retain consumers by offering exceptional products. To offer more competitive advantage over the other and to satisfy consumer needs more effectively and efficiently, the product innovation seems to be needed.
Diversification of Risk
In most of the cases, existing products may not be sufficient to manage with market needs and wants so firms develops new products just to diversify risk. By providing more varieties, a firm can reduce the degree of failure. Thus results in the need for continuous innovation, because older products are thrown out of existing market.
Reputation and Goodwill
To build image and reputation as a dynamic innovation and creative firm, the new products development is adopted. Company desires to convince the market that it works hard to meet consumer’s expectations. In fact, a company developing new products frequently has more reputation and can easily attract customers.
Utilization of Excess Capacity
To optimally utilize the existing resources is in the form of production capacity and human skills and capabilities; a company may go for creating a new products.
Now and then, new products are created just to reduce seasonal fluctuations in demand. By manufacturing new products, a firm can meet seasonal requirements of customers in the market. Customers are satisfied due to matching products in each of the seasons, and company can get reasonable business.
Growth and Development
Creativity and innovation is an efficient way to attain more market share or sales. Marketers can explore emerging opportunities by innovative products or services. When it is not able to accelerate growth rate by the existing products, a firm prefers to develop new products to widen its market, increase sales, and earn huge profits.