Types of new product development strategies

Cooper (1998) described the new product development strategy as ' a strategic master plan that guides your business's new product war efforts'. This may be a rather dramatic definition for commercial product development, but it does emphasise four very important points: it is strategic, focusing on particular outcomes; it is an overall master strategy binding product development projects together; it is a guide for the complete product development programme; it is part of the company's business. It is a binding of the product areas into the whole organisation - functional areas, knowledge and skills areas, people. This is why it is important to develop a truly effective product development strategy.

The product development strategy sets out in a master plan, the aim or aims, the projects, the resources and the constraints, so that all involved in new product development are aware of the overall company policy for product development at this time. If the management wants integration of functional areas, more creativity in the company or more efficiency in product development, then the product development strategy can incorporate all of these into the overall aims.

Companies do have different overall product development strategies as shown in Table 2.9. In the food industry, all these strategies can be seen - and companies will say that they are successful for them. Historically there has been a preponderance of the low-budget conservative, which suits a market dominant position. As Cooper (1998) indicated from his studies, this strategy does achieve moderate results; the projects usually have a low failure rate, and the products are profitable - but wonders if the standards of success are high enough. It tends to yield a low percentage of new products in the product mix. It is a 'steady as you go' strategy, which shows no dramatic change.

It is important to consider together the drive from the consumer and the market and the drive from technology change in developing the product strategy (R.L. Earle and Earle, 1999). Balachandra and Friar (1997) suggested that a useful analysis is first to identify the context of the new product - is the

Table 2.9 Some product development strategies

Strategy Description Products

Differentiated strategy

Low-budget conservative

Technology push

Not-in-the-game

High-budget diverse

Technologically sophisticated Strong market orientation High degree of product fit

Simple, mature technologies Ill-defined market needs

Premium priced

Unique features and benefits

Competitive advantage

Me-too

Undifferentiated Lower price

Innovative

Technology oriented

May not fit consumer needs

Low technology Me-too Low risk

Innovative products

High-risk products

May not fit consumer needs

Heavy spending on R&D No direction, focus No synergy New markets New technologies

Low R&D spending Highly synergistic with present production and marketing

Technology oriented Lacks strong market orientation

Lacks market synergy Can be costly

Source: After Cooper, 1998.

Table 2.10 Relative importance of PD factors in different contexts

Contextual variables Level of importance

Contextual variables Level of importance

Table 2.10 Relative importance of PD factors in different contexts

Innovation

Technology

Market

Market

Technology

Organisation

factors

factors

factors

1.

Incremental

Low

Existing

Very

Low

Very

2.

Incremental

Low

New

Very

Low

Very

3.

Incremental

High

Existing

Very

Very

Moderate

4.

Incremental

High

New

Moderate

Very

Moderate

5.

Radical

Low

Existing

Moderate

Moderate

Moderate

6.

Radical

Low

New

Low

Moderate

Moderate

7.

Radical

High

Existing

Moderate

Very

Moderate

8.

Radical

High

New

Low

Very

Very

Source: After Balachandra and Friar, 1997.

Source: After Balachandra and Friar, 1997.

innovation incremental or radical, the market existing or new, the technology level low or high? Using this one can identify the important factors in product development for different mixes of these factors as shown in Table 2.10. These are suggestions by Balachandra and Friar, but it is a useful way to study the product development factors. Ali (1994) also emphasised that in developing a product, it is useful to know for what types of products the company should undertake particular activities. The analysis of environmental and situational factors (firm, project and market characteristics) is a necessary condition for effective planning of new product development.

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