Nine Reasons for Product Development
Copyright © 2007 by S. M. Ikhtiar Alam
This is a very brief abstract of a training module for Product Development Professional
“Product Development” refers to “New Product Development”. What is a new product? We have discussed nine types of products that we develop. All of them are new products in the sense that we change (hub, cross, dilute, adapt to new market needs) and improve existing products, follow the suit (make products similar to others as long as Contestable Market Effect is positive); we also make totally new to the world products (Zero-Based New Products), and/or commercialize something as a product which we already produce ...view middle of the document...
Loom and many textile & spinning mills are now obsolete. Adamjee Jute Mill is a classical example in the world. As a result, these companies adopt newer technology that produces different products. New technology requires development of new products. Second, resources (both raw materials and skilled human resources may become unavailable over time. For instance, leather products, platinum, palladium, natural silk, black pearl, Matura diamond, etc. forced many companies to change their products. In addition, specialized weavers such as Muslin producers were unavailable when British Army cut the fingers of those people who could make muslin in 1780s. As a result, these people had to develop something different. Moreover, prices of resources may increase that may, in turn, increase the cost of production higher than/equal to choke price or close to it. Remember the case of Johnson & Johnson’s New Jersey Plant where collective bargaining failed and workers migrated to Passaic, NJ, and some other parts of New York including Worchester’s pottery industry? This is the case of unavailability of resources. We learn this topic in HRM. In addition, prices of raw materials and wages may increase to a level to make the product unprofitable; the company goes for something new. Toyota’s BMW and sport car’s Dashboards are very expensive as a result of which Toyota had to charge a very high price that reduced demand and ultimately total profit. Or, think of the case of white sandalwood’s painting frames with lapis lazuli’s blue paste color. Both are expensive. So, drop this idea and use cheap wood and chemical color pastes. Pierre Cardin’s famous valentine gift of decorative ladies pen with Matura Diamond is no longer a viable product. Do you know why?
b) Internal: Sometimes a company wants to deliver a promised benefit to its customers but in reality it delivers less then what is promised. A “Product Target Gap” is there. The company must change the product and come up with something new, unless it decided to choose its product as a “Price Advantage Product” and target relatively more bargain seekers. In some cases, product target gap may be 100% as a result of which reverse logistics will be 100% and the company must change its “Dead B-F-T”. The existing B-F-T may also become dead due to new innovation that replaces the existing B-F-T. For instance, digital camera made Polaroid’s instant camera and film obsolete over night. In addition, Kodak’s camera and film became undesirable products and within three years they became obsolete. Digital technology made them obsolete. Some argue that one more reason (10th) for product development is: “Product becomes obsolete due to break-through innovation”. Others argue that this reason is not a new reason, but a reason for death of B-F-T which is under 1 (b). We may also include it under reason number 2 below as 2 (c).
2. (a) Changing Tastes and Preferences of Consumers:
Customers do not want to buy same...