ADM 2320 Lecture 8: Chapter 8
3 May 2018
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Chapter 8
Categories of New Products
• In order of risk & reward ->
o Cost reductions
o Repositioning
o Improvements
o Additions
o New product lines
o New-to-the-world
Understanding Innovations
• Innovation: a product that consumers perceive to be new and different from existing
products
o Importance of developing new products to an organization
▪ Remain competitive
▪ Keep up with new technology
▪ Follow changing consumer preferences
▪ Replace dying products
▪ Diversify its product offering and lower risk
o Using new product development as a meriting strategy can be sustainable
competitive advantage, provided that the company can maintain the pace
o Classify innovations by the amount of learning required of consumers, which will
affect the new product;s rate of adoption
▪ Continuous innovation: modification of an existing products that sets one
brand apart from its competitors
▪ Improvement of an existing product
o Dynamically continuous innovation: change in an existing product that required
a moderate amount of learning or behaviour change
▪ Discontinuous innovation: total new product that create major changes in
the way we live, this requires the most amount of learning on the part of
the consumer
Reasons for New Product Failure
• Continues with new product even with negative research findings
• Marketing size is overestimated
• Product is not well designed
• Incorrectly positioned in the market, not advertised effectively, or overprices
• Fails to gain sufficient distribution coverage or support
• Development costs are higher than expected
• Competitors fight back harder than expected
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