In today’s competitory universe. companies do non vie on monetary value or bringing entirely. Introduction of new merchandises or new merchandise features has become a chief beginning of competitory advantage. The best illustration of this scheme is that of Pepsi Co. For decennaries. Pepsi Cola & A ; Coca Cola battled for domination in the Cola market. nevertheless in 1990’s Pepsi gained market portion. improved profitableness and became World No. 1 drink seller by presenting batch of new merchandises. See: The Pepsi Machine
Similarly. Apple Inc. . has repeatedly outwitted competition by presenting extremist new merchandises: iMac. iPod. iPhone. iTunes. OS X etc.
In high tech universe. companies can trust to last merely if they introduce new merchandises. Old merchandises will quickly go disused & A ; new merchandises becomes the lone beginning of future gross.
New merchandise development provides an chance to alter the competitory landscape. New merchandises can assist company derive new clients. retain bing clients and increase profitableness. In short. new merchandises is the lone beginning of competitory advantage – if executed right. And this puts the topographic point visible radiation on the merchandise director. Product manager’s function in specifying the new merchandise: specifications. characteristics. public presentation. pricing et Al. is critical to derive competitory advantage.
Retain bing client base
Customer’s needs supports altering with clip. In order to retain current clients. concern must invariably accommodate to run into the changing demands. For illustration. if GM were to maintain doing the same theoretical account of the autos as they did in 2000. so today it would be out of concern. Companies need to constantly present new merchandises to maintain the bing clients exited and happy.
Another illustration of merchandise stagnancy & A ; hence losing market portion will be that of Motorola. For a long clip Motorola made & As ; sold merely linear phones – even when the service suppliers had moved to digital webs. Then came Nokia with sleek digital phones & A ; stole the market portion from Motorola in 1998. ( see: HOW MOTOROLA LOST ITS WAY Besides see: Zombie Businesss: How to Learn from Their Mistakes )
The job with most SME ( Small & A ; Medium enterprises is that they fail to maintain up with the market – they have one/few successful merchandises. and the direction concentrates on executing & A ; bettering operating efficiency for a long period – that they forget to update their merchandises. Eventually competition comes up with a better merchandise and throws the incumbent out of concern. For illustration Design Acceleration Inc. Had a great package – “Signalscan” . over a period of clip other rivals emerged – coercing Design Acceleration Inc. to unify with Cadence Design systems.
In India. Nirma a Gujarat based consumer and industrial merchandises company one time dominated the rinsing detergent market with its “Nirma” trade name rinsing Powder. But the company failed to present new merchandises – and depended entirely on the flagship merchandise for gross revenues. Consequently its market portion has plummeted and the trade name has lost its relevancy to most consumers.
Cannibalize yourself
Best manner to retain the current market portion is to assail your bing merchandises with newer & A ; improved merchandises. The new merchandises must be aimed at clients of bing merchandises and at similar merchandises ( from rivals ) . Cannibalizing bing merchandises is a certain manner to retain market portion. stay fresh & A ; current in the market topographic point – and win some market portion from competition ( if they do non offer exciting new merchandises to fit )
Today. cannibalising bing merchandises is a standard pattern at all the foutune-500 houses. The best illustrations can be seen in Computer industry & A ; Auto industry – where companies routinely introduce new merchandises that replace their existing ( & amp ; even best selling ) merchandises.
On the reverse. few houses have resisted this tendency of cannibalising current merchandise lines – and have protected their merchandises from alterations. Cocoa Cola. Dove Soap. Nevea Creame. Budweiser. Chivas Regal. Old Spice after shave etc. Are good illustrations of merchandises that have been protected. These merchandises have non changed – but the selling of these merchandises are ever renewed to maintain these merchandises fresh in people’s heads. Companies try out newer advertizements. new packaging signifiers etc. to shoot a sense of freshness into these “classic” merchandises. However. one must be prudent plenty to present derivative merchandises for each of these “Classic” merchandises to support from competitory merchandises. For illustration. Budweiser introduced “Bud Lite” to protect the chief trade name from “low-carb” rivals.
Leapfrog the competition
In most markets. everyone knows who the competition is – and they know its history. its behaviour. its pricing and use. Knowing the merchandise so good will besides uncover its venerableness. therefore leting competition to present a better merchandise. The same logic can be applied in the contrary. I. e. Introduce a merchandise that is manner in front of what the competition already has in the market.
The new merchandise should be so much advanced that it will take old ages for the competition to catch-up. In the average clip. the new merchandise would hold become the new market leader.
Apple Inc. is the best illustration of this “leapfrogging scheme. Every clip when Apple was written off as dead in computing machine industry. Apple springs a surprise – that takes everyone by storm and builds a strong market place. First it was with iMac – a colorful integrated computing machine which was so advanced that every school child in the US wanted one.
Apple did the same with iPod. Apple was non the first company to present a nomadic MP3 participant – there were several others. but so Apple came up with a new & A ; exciting participant that took the market by storm and shortly became a market leader – and in the procedure displaced even SONY’s Walkman. Today – SONY is still aching from its licking on the nomadic music participant concern – and still does non hold a merchandise that can truly vie with Apple. ( Incedently. SONY besides implemented the leapfrog scheme with its original “walkman” . Trinitron & A ; Playstation )
Apple repeated this scheme with arresting success – with iPhone. By presenting a extremist new merchandise which was old ages in front of the competition. Apple became the market leader in the Smart phone market – in front of Nokia. Palm. & A ; Blackberry.
Leapfroging the competition is non an easy scheme to draw off. It requires deep invention capableness. deep pockets to put in R & A ; D & A ; eventually investors should hold the “guts” to take the hazard.
Meet the latent demand
Customers who use your current merchandise will ever hold newer demands. and frequently wish that the current merchandise could make more than what it does today. This is a latent demand for a newer merchandise – which can be efficaciously be exploited by merchandise betterments. For illustration. when MP3 participants become popular. clients of Nokia wanted to listen to MP3 vocals on their cell phones. Nokia responded consequently – and today MP3 participants is a default characteristic in most of Nokia phones. Similarly. Nokia besides added camera. picture participants. electronic mail. file director and a host of other characteristics to their cell phones via new merchandise debuts. By making so. Nokia was able to retain its dominant place – and even derive market portion for concern phones from Blackberry & A ; PALM with its E-series phones ( E50. E51. E61. E65. E90 etc. )
Raise the saloon
One can raise new barriers to entry through new merchandise development. Companies such as Intel. Cisco. Microsoft. Toyota. Honda etc. . invariably maintain let go ofing new merchandises at regular intervals – so that competition can non catch-up and this besides discourages new entrants into the market. The new merchandises raise the performance/quality criterions with every new release.
This scheme requires companies to hold a well defined merchandise route map and deep technology capableness that allows them to present new merchandises are regular intervals – which keeps raising the performance/quality continuously. so that competition can non maintain up with the gait of technological betterments and lose out.
For illustration in the universe of cars. Toyota has been doing steady betterments to its intercrossed autos so that GM. Ford. & A ; Chrysler can non truly vie with Toyota when it comes to fuel efficiency. Similarly. Intel has raised the public presentation of its “Pentium” & A ; “Centrino” processors through consecutive new merchandises and today AMD is fighting & A ; losing money – as it falls behind engineering development.
Pre-empt competition by raising client outlooks
Companies can do pre-announcement of new merchandises with new characteristics – so that it attracts the clients and in bend make them wait thirstily for the new merchandise to be released – alternatively of purchasing the merchandise that is readily available in the market today. This scheme will assist protect the market portion at times when the competition has a little border in the market topographic point. For illustration. Apple late announced iPhone 3G phone which supports corporate electronic mail. but it was non available instantly – but in the interim period. made people wait thirstily for the new iPhone – alternatively of purchasing a Blackberry.
Similarly. Boeing did a pre-announcement of its “Dreamliner – 777” which had state-of-the-art design. major fuel economic system betterments & A ; promised really long winging scopes. This pre-announcement from Boeing made clients place early orders & A ; delay. Therefore taking away clients from its arch challenger – Airbus Industries.
Raising client outlooks will work merely if the company can present. If company raises outlooks and does non present. so it will see reversal of lucks.
Closing ideas
New merchandise development is a certain manner to retain & A ; addition market portion. Successful merchandise companies have a history of presenting new merchandises at regular intervals ; they have a well defined merchandise route map ; deep technology capableness ; invention and R & A ; D capableness. If you are non presenting new merchandises at regular intervals. so its about certain that your competition can eat your tiffin
