Developing new products or modifying existing products so they appear new, and offering those products to current or new markets is the definition of product development strategy. There is nothing simple about the process. It requires keen attention to competitors and customer needs now and in the future, the ability to finance prototypes and manufacturing processes, and a creative marketing and communications plan.
This strategy is employed when a company's existing
market is saturated, and revenues and profits are stagnant or falling. There is
little or no opportunity for growth. A product development diversification
strategy takes a company outside its existing business and a new product is
developed for a new market. An example of this strategy is a company that has
sold insurance products and decides to develop a financial education program
aimed at college students. The new product is not revolutionary as there are
other companies producing similar products, but it is new to the company
producing it.
Product modification strategies are generally aimed at
existing markets, although a side benefit may be the capturing of new users for
the new product. An example of this strategy is toothpaste. Toothpastes that
promote whitening ability or anti-cavity attributes are built on existing plain
toothpastes that only promise clean teeth.
There are several subsets of product development strategy
1. Technology/Market mix
2. Market width
3. Degree of innovation/Limitation
4. Price/quality ranges
5. Particular Promotional Requirements
6. Inside Vs Outside Facilities
7. Competitive Situations to be sought or
avoided
8. Production Requirements
9. Patent requirements
10. Speeds
11. Pay Back Conditions
12. Risk/failure Factors
13. Minimum sales
14. Need for basic research
15. Product /service Relatedness
16. The knock opportunities