New products – classification and combating new environmental threats


New products can be broadly classified into two groups:

i) New products arising out of technological innovations
ii) New products arising out of marketing-oriented modifications.

The first group includes intrinsically new products having a new functional utility.

The second group includes products that come out of marketing oriented innovations on existing products. These are essentially new versions of existing products; the newness may be due to some modification in the ingredients used, or some changes in design, the addition of a new feature, a change of package etc. The newness may also be due to repositioning of the existing product or finding new use for the existing product or offering the existing product with new sales appeal to a new market segment.

Stages in new product development:

· Generating new product ideas > Idea screening > Concept testing > Business/Market Analysis > Actual Product Development > Market Test > Commercialization []

Combating Environmental Threats

A business firm faces many threats from the environment. It needs new products to combat these threats.

Threats emanate from different aspects of the environment such as changes in the economic, social and political conditions and technology and supply related conditions. In addition there is the ever present competition acting as another source of threats. Now almost everybody is aware about the positive changes after the liberalized economy and Government of India economic reforms are implemented. Requirements of the environmental protection too pose problems for firms. Legal restrictions again prevent companies from expanding their capacities in their existing product lines. Technological changes make several products obsolete. At times problems of supply of raw materials, utilities etc., also render existing businesses / products risky. For example, scarcity and high cost of oil and electricity forced several companies to take a second look at their existing products and businesses. International economic tends add one more dimension to the scene.

All these threats make some of the current products of the firm vulnerable. It is to reduce the vulnerability of their business as a whole that they seek out new products. In short for many firms new product development becomes necessary for combating environmental threats. New products offer new avenues of growth and thus secure the viability and sustainability of the firm. The risk gets spread over a large number of products, old ones and new ones.