The Philosophy of New Products

New products are the lifeblood of your company and one of the primary drivers of new growth. The decisions you make have profound impacts on the profitability of the company as well as potential impacts to your career. Given the current economy, many companies have stopped developing new products and/or services. Be aware, if you fit this profile. You want to make sure that when the recession starts to end you are prepared to catch the wave and grab the new business. If you don't have any new products and/or services you may miss out on a golden opportunity. The risk of failure of new products is quite high:

• Six out of seven ideas for new products never become commercial successes

• Three out of four prototyped new products never become commercial successes

• Two out of three launched new products never become a commercial success

However, new products that survive generally become very successful in generating high returns for your company. Companies that proactively embrace the philosophy of new products are often rewarded in turn: 15% of sales and 22-30% of profits come from new products. Definition of New Products Successful companies spend a considerable amount of resources defining, developing and launching new products. Generally speaking, the definition of a new product is:

• The product is part of a new product line versus an existing product line

• The product’s technology is new to the company versus using existing company technology

• The product is targeted at a new market versus an existing market

Targeting Markets for New Products 70% of new products are targeted at existing markets, as opposed to new markets. Existing markets have plenty of product choices, numerous competitors and knowledgeable customers. Many companies believe there is a lower risk entering an established market. This is not the case, as existing markets are extremely competitive. Most of the failures of new products can be directly attributed to a poor understanding of the marketplace. So what do you need to know in order to plan profitable products? Market Analysis

• What is the market opportunity?

• How is the market segmented?

• What are your target markets?

Product Strategy

• Does the product fit with the company objectives?

• What is the product roadmap?

• What are the customer requirements?

• What impact will the new product have on existing products?

Competitive Landscape

• Who are your real competitors and what are their products?

• What are the key differentiators?

Three Key Factors for New Products If you focus on market analysis, product strategy and competitive landscape you are well on your way to successfully introducing new products into the market and increasing your revenues and profits. Don't forget, your markets may well change as the business and economic climate continue to change.