New product development and innovation - Marketing Management

We have raised the importance of new product development and innovation, but now reiterate some of the arguments that serve to illustrate the importance of innovation in corporate and marketing strategy.

The pace of technological, market, social and economic change is accelerating. One of the most important implications of this accelerating change for marketing management is the shortening of product life cycles. Successful products stay successful for shorter periods of time. The pace of change is quickening as epitomized by aggressive competitive behaviour. Successful new products are often quickly copied or improved upon by competitors.

In many markets there is competition to speed innovation and new product development. Motor industry sources report that Honda is confronting its competitors by increasing the speed at which it can bring a new product to market. This not only allows Honda to respond to changes in market demand more rapidly, but it enables it to undermine both cash resources and confidence of its competitors by product proliferation. Amongst the best in the car industry, product development times needed to design and launch a new Honda model have reduced from an average of five to six years in the early 1990s to just over 30 months.

Life After Death

Many tend to think of innovation and new product development solely in the context of tangible, manufactured products. These days there is probably more innovation and new product development in service products. A good example is in the area of services available to the bereaved and their relatives.

Let’s face it, death is inevitable. One would have thought that every possible service that could possibly be offered to the bereaved and their loved ones would have been thought of years ago. Not a bit of it! New products for the bereaved and their loved ones are constantly being developed. Here are a few:

  • You can now be deep frozen at death with a view to possibly returning to life at some point in the future when medical science is more developed.
  • If you want to light up people’s lives after death, your ashes can now be launched into space.
  • Alternatively, if you want to light up a loved one’s life here on earth, for a fee your ashes can now be converted into a diamond.
  • So your loved ones don’t forget you, ‘Eternal Space’ lets loved ones create a customized online grave website which the bereaved can visit when they like.
  • ‘Legacy Locker’ is a service which enables the pre-deceased to arrange to send messages and important information such as internet passwords and online account information to predetermined beneficiaries in the event of sudden death.

Innovation and new product development are essential to long-term competitive success. There is risk associated with new product development, and a high proportion of new products fail in the marketplace. With so many interpretations as to what constitutes a ‘new’ product and also what constitutes ‘failure’, estimates of new product failure rates vary. Taking estimates of new product failure rates we can say they are at least 20 per cent for industrial product companies and 40 per cent for consumer products. Often these estimates are far exceeded. When combined with the high costs and investments of developing and launching new products, this makes this area of marketing risky. Thus it is important that the process is managed effectively. Before we examine the steps in developing and launching new products we need to set the planning framework for innovation and establish the range of innovation activities in which a company can participate. Finally, we need to assess and draw upon a considerable body of research and evidence as to critical factors in managing innovation, which have largely been derived from studies into successful and unsuccessful innovation.

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