New product development is one of the most important components of product policy and management. Product lines and products are effectively appreciated and positioned. Brand decisions are made wisely. For a higher level of growth, a company has to look beyond its existing products. A progressive company has to consider the development of new products as a cardinal element of its product policy.
Innovation is the essence of all growth. This is especially true in marketing. In an age of technological advances, change is a natural result: change in eating habits, change in expectations and requirements. Any company has to be attentive to these changes that occur in its environment. People are always looking for better products, more comfort, newer fashion, and more value for money.
A business enterprise has to respond to these dynamic requirements of its clientele and these responses take the form of new products and new services. Through such a response, the company gains a great deal of profit. New products also become necessary from a profit standpoint. Products that are already established often have their limitations in improving the profit level of the company. Profits from products decrease as they reach the maturity stage of their life cycle. Therefore, it is necessary for business enterprises to bring in new products to replace the old, declining and losing products.
New products become an integral part of the company’s growth requirements, and in many cases, new profits come to the company only through new products. New products can be broadly classified into two groups: new products that arise from technological innovations and new products that arise from marketing-oriented modifications. The first group involves innovations that lead to inherently new products with a new functional utility behind them. The second group involves mere marketing-oriented innovations in existing products; leads to new versions of existing products.