The notion of launching new products does seem a million-dollar idea but not every idea sees the light of a new day. From conceiving the idea for new product development to executing marketing strategy for its reach, a lot goes behind the closed curtains. We often mistake the need for product development for new markets, when in fact product development is required in pre-existing markets. The need for product development stems from the following reasons,
- Aim to provide new value
- Existing products are showing a declining trend and the company’s reputation is at risk
- Need for innovation
- A surge in the competitor’s market share
Definition of product development encompasses,
- Developing new or original products
- Modifying or improving the existing products
How Integral is KYC policy?
Know your customer/consumer policy always helps in different aspects of a business. Knowing the social milieu likes and dislikes, buying patterns, affordability, and status quo of your customer helps a great deal in product development, innovation, and advertising. Knowing your customer does not however eliminate the associated risk of product failure. But the chances of success increase with less probability of failure.
Risks Always Accompany Innovation
Whilst the process for product development itself is quite tedious and long but lets put that aside and focus on forthcoming risks and returns associated with the product development first.
Money Game: undeniably and undoubtedly new product development is an expensive matter which requires millions. The cost of technology solutions to the cost of human involvement, the affair of product development suits only those businesses which talk money and can afford the loss in case of product failure. On average pharmaceutical companies spend around $150–200 million on developing a new product.
Wait and Watch Policy: product development is not for faint-hearted or impatient people because it may take as long as up to 10–15 years on the product development cycle. It takes time and effort for the tree to start reaping fruits. Depending on the market conditions and environmental factors the process could take longer than 10–15 years. For instance, pharma companies or the biotech industry takes from 5–10 years in the production of a vaccine. The trials and phases at each step are crucial and may take years to prove the efficacy of a vaccine.
It is a Gamble: you never know what is on the other side of the coin so you are never certain regarding the returns. There could be unexpected and unforeseeable problems that could render your product a total failure. For instance, if upon the manufacturing of the Corona Virus vaccine, the virus mutates or changes the strain, it could disrupt the entire effort done all along to curb the spread of the disease or to develop immunity. Some factors are man-made including changed expectations of the customers whilst others are natural like the virus mutation. Success is never guaranteed or certain in case of product development. According to a study, almost 33% of the products developed fail dramatically at the launch. History is littered with incidences that support this claim where products fail in the introductory phase without touching the breakeven point.
Nike’s Success Story
Nike is one of those businesses, which despite the pandemic and immense competition from the local vendors and manufacturers has performed nicely. Something is working right in their business. Either they have cracked the code for innovation or product development or great marketing strategies. They have been consistent in providing unmatched value and innovation to their clients around the world. Nike leads by example in the industry with its new product development and innovation. The athletic equipment it comes up with is appreciated by athletes around the world who were frustrated with repetitive design and monotony.