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