With the aftermath of globalization, companies are thinking carefully about the best ways to extend their product and service offering. Thus, the product development strategy is critical to its success. However, many companies are in defensive mode and just want to maintain their position in the market.
However, maintaining a controlling position is a definitive way for companies to stay behind. The innovative thinking that allows the growth of the product / service is a very safe path to sustainable success. In today’s discussion, we will explore the importance of product development for business growth, especially in a competitive market.
Launching new product offerings is not easy. According to market research, approximately 75% of packaged consumer goods and retail products do not earn even $ 7.5 million during the first year. Harvard Business School professor Clayton Christensen, who is the world’s leading authority on disruptive innovation, suggests that the failure rate for new products could reach 95%. Product failure rates are related to the number of products that are launched commercially, but fail.
Geoffrey A. Moore, author of Crossing the Chasm, maintains the challenges of product deployment: “… the least successful product is often arguably superior. Not content with fleeing the stage without some vengeance, this sullen and resentful team struggles among themselves to find a scapegoat. , and who should they light on? With unfailing consistency and precision, every finger points to the vice president of marketing. It’s the fault of marketing! “So developing new products is a risky proposition for senior executives that 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 must. Highly innovative companies are able to quickly identify and seize new market opportunities.”
When taking any action in the development of new products, companies must think strategically about the development of their products. Alexander Chernev, the author of Strategic Marketing Management, further argues that managing growth is the preferred path to profitability compared to just cutting costs.
It describes four key growth management issues, which include: (a) gaining and defending a market position, (b) managing sales growth, (c) developing new products, and (d) managing the product line. Chernev says: “New products and services are the key to sustainable growth; they allow companies to gain and sustain their market position, taking advantage of changes in the market to create superior customer value.”
With that said, new product development means having the ability to take an idea of a product or service and convert it into a tangible offer that customers want. Following are the steps through which more products go to market consumption: (a) generation of ideas, (b) concept development, (c) business analysis, (d) product development, (e) market tests and (f) business implementation.
O Ansoff Matrix it 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 using their existing product offerings in existing markets. With this strategy in mind, organizations seek to increase their market share. In a market development strategy, companies try to expand into new markets as new buyers using their existing offerings. In the product development strategy, companies seek to create new products and services aimed at 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 most risky approach due to the simultaneous realization of new changes (new product, new market). Kotler and Keller still maintain the difficulty of the success of a sustainable product: “It is increasingly difficult to identify successful products that will transform a market, but continuous innovation can force competitors to try to recover.” The concept seems easy. However, it is fraught with problems.
Without a doubt, many companies know that product development is a risky business. While many consumers will proudly proclaim the success of many innovative products like Apple and Google, those same buyers are not aware of the numerous failures to launch products in this country. In our discussion, I demonstrated the importance of product development for business growth, especially in a competitive market. Failures often lead to innovation.
Great American inventor, Thomas Edison, had his own share of failures, but he learned to innovate because of them: “I didn’t fail. I just found 10,000 ways that don’t work.” Likewise, today’s companies can also achieve success if they understand how to strategically deploy their products and services on the market. While there is a huge danger in failure, there is also an opportunity for unforeseen growth. Don’t wait until it’s too late.
© 2017 by DD Green