With the aftermath of globalization, companies are thinking carefully about the best ways to expand their product and service offerings. Therefore, your product development strategy is critical to your success. However, many companies are in defensive mode and simply want to maintain their position in the market.
However, staying in a retention position is a definite way for businesses to fall behind. Innovative thinking that enables product / service growth is too sure a way to achieve sustainable success. In today’s discussion, we will explore the importance of product development for business growth, especially in a competitive market.
Launching into new product offerings is not easy. According to market research, approximately 75% of consumer packaged goods and retail products do not earn even $ 7.5 million in their first year. Harvard Business School professor Clayton Christensen, who is the world’s leading authority on disruptive innovation, suggests that the failure rate of new products may actually be as high as 95%. Product failure rates are related to the number of products that are launched commercially but fail.
Geoffrey A. Moore, author of Crossing the abyss, maintains the challenges of product implementation: “… the least successful product is often arguably superior. Not content to sneak off stage without some vengeance, this sullen and resentful team searches among themselves to find a scapegoat, as Who About the Light? With unerring consistency and unerring precision, all fingers point to the VP of Marketing. It’s Marketing’s fault! “So new product development is a risky proposition for the top executives who occupy these critical positions, as well as for the organization as a whole.
Companies that want sustainable growth must develop new products and services frequently and consistently. Philip Kotler and Kevin Keller, authors of Marketing management, “In a rapidly changing economy, continuous innovation is a necessity. Highly innovative companies can quickly identify and seize new market opportunities.”
When taking any action on new product development, companies must think strategically about their product development. Alexander Chernev, author of Strategic marketing management, further argues that managing growth is the preferred route to profitability over simply reducing costs.
He outlines four key issues in managing growth, including: (a) gaining and defending a market position, (b) managing sales growth, (c) developing new products, and (d) managing sales. product line. Chernev argues that “new products and services are the key to sustainable growth; they allow companies to win and maintain their market position by taking advantage of changes in the market to create superior value for the customer.”
That said, new product development means having the ability to take a product or service idea and turn it into a tangible offering that customers want. The following are the steps that most consumer products go through: (a) idea generation, (b) concept development, (c) business analysis, (d) product development, (e) testing market and (f) business deployment.
the Ansoff matrix is a strategic tool for product development, consisting of market penetration, market development, product development, and diversification. In the market penetration strategy, organizations seek to grow by using their existing product offerings in existing markets. With this strategy in mind, organizations try to increase market share. In a market development strategy, companies try to expand into new markets as new buyers using their existing offerings. In product development strategy, companies seek to create new products and services targeting their existing buyers.
In a diversification strategy, an organization tries to increase its market share by introducing new product offerings and, at the same time, entering a new market. Diversification is the riskiest approach due to the simultaneous realization of new changes (new product, new market). Kotler and Keller further keep the difficulty of sustainable product success: “It is increasingly difficult to identify highly successful products that will transform a market, but continued innovation may force competitors to catch up.” The concept sounds simple. However, it is fraught with problems.
To be sure, many companies know that product development is a risky business. Although many consumers will proudly proclaim the success of many innovative products such as Apple and Google, these same buyers are unaware of the many failures in product launches in this country. In our discussion, I demonstrated the importance of product development for the growth of companies, especially in a competitive market. Failures often lead to innovation.
The great American inventor, Thomas Edison, had his own share of failures, but he learned to innovate from them: “I haven’t failed. I just found 10,000 ways that don’t work.” Similarly, today’s businesses can also be successful if they understand how to strategically implement their products and services in the marketplace. Although there is enormous danger in failure, there is also the opportunity for unforeseen growth. Don’t wait until it’s too late.
© 2017 by DD Green