Product development strategy

From CEOpedia | Management online

Product development strategy is a strategy based on developing new products or modifying existing ones and then offering them to the current or new market. Organizations that want to use it must be innovative and creative. However, introducing new products is associated with a high risk and a high price (M. Tajvidi, A. Karami p.1987).

The goal of this strategy is to revitalize the existing market by improving existing products or creating new ones that the market is looking for.

New product development

The product life cycle has become much shorter than before thanks to advances in science and technology and rapid market changes. Enterprises must constantly innovate and conduct research into new products, choose appropriate products using new technologies, cope with customers’ requirements and threats from new competitors.

The new product development strategy (NPD) is an important activity that helps in surviving and making continuous improvements (P. Liu, W. Chena, C. Tsai).

To launch a new product on the market should be made the following steps:

  1. generating ideas;
  2. checking ideas;
  3. concept testing;
  4. business analysis;
  5. product development;
  6. marketing test;
  7. commercialization;
  8. monitoring and evaluation (P. Trott, p. 398).

Environmental turbulence

Managers need guidance on how to deal with restless environments to improve business efficiency. Companies prefer a less centralized and more organic structure in dynamic and uncertain environments.

How environmental turbulence affects strategy planning for new product development (NPD)?

The role of environmental turbulence:

  • market turbulence and technological turbulence precede the NPD program performance;
  • the baseline model is moderated by turbulence.

First, managers must be aware of the possibilities to improve the performance of new products by including NPD personnel in corporate strategic planning, as well as involving corporate planners in NPD activities. Secondly, they should also be aware that turbulent environments increase the need for risky investments (R. Calantone, R. Garcia, C. Dröge).

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Author: Katarzyna Sieczkowska