New Products

The theory of new products or new services starts with a gap analysis, which looks to the following: (1) usage gap, (2) distribution gap, (3) product gap, and (4) competitive gap. In practice, much organizational development effort is devoted to modification of existing successful products or services by feature modification, quality modification, style modification, and image modification. Potential new products need to be screened against a number of strategic dimensions, including production capabilities, financial performance, investment potential, human factors, materials supply, cannibalism, and time. Market factors, such as matching with existing product lines, price and quality, distribution patterns, and seasonality, also need to be considered. Sources for generating new product ideas include customers and innovative imitation. In the Western approach, the product development process then is supposed to follow a number of formal steps, including gap analysis (for scanning and idea generation), strategic screening, concept testing, product development, product testing, test marketing, and product launch. A test market may take place in a television-viewing area, a test city, or a residential neighborhood. In industrial markets in particular, it may be restricted to test sites. All these approaches pose problems of effectiveness and cost while possibly offering competitors advance warning. It is worth remembering the major caveats mentioned in ► Sect. 9.1, “Introduction.” Brand stability implies that there should be more emphasis on the further development of existing brands than on totally new ones, contrary to conventional teaching. The Japanese approach is to launch many new products without following any of the stages of testing described here.