Industrial Marketing

Product Strategy and New Product Development : Chapter 9

Innovation leads to new products and higher profits. It involves generation of new ideas and developing them into useful products. Technology plays an important role in the innovation of products.

The innovation levels in an organization are influenced by management commitment, organizational structure, market orientation, coordination mechanisms, prior success rate, and age of the organization. The attributes of a specific innovation also influence the marketer's adoption of the innovative product or process. Every firm has their own process for developing new products.

However, product development typically starts with idea generation and idea screening, followed by business analysis, product development, product testing, and commercialization. In order to carry out new product development successfully, firms organize themselves in different ways depending upon the size, nature of business, and frequency of new product development.

This may be in the form of appointing product managers or establishing new product departments or new product committees. They may also establish specialized teams who work on different new products at a given time. The adoption of new products depends on factors like perceived risk and advantage, self-confidence of the buyers, type of industry, prior experience in buying such products, investment required, and the switching costs involved.

The diffusion of new products in industrial markets is slow compared to consumer markets due to the huge investments involved in the purchase and group decision making in the organizations. Communication, profitability, and concentration of industries have an influence on the diffusion process.

Chapter 9 : Overview