Why develop new products for your business?

Here we will look at some of the reasons why a company may introduce new products into its portfolio.
Every business needs to innovate to stay ahead of the competition. No business can continue to offer the same unchanged product, if they did so, profit would not be maximized and sales would start to fall.

•Consumer needs may change, forcing the company to adapt with these changing needs. If we look at food sectors around the world, consumers are becoming more health conscious, forcing companies to introduce low sugar and fat versions of their existing brands. Coca Cola Zero is a classic example.
•The product maybe at the end of its life cycle, so the company may introduce new and improved updated versions. Microsoft has done this by moving from the Xbox to the Xbox 360.
•The product might be at the maturity stage of its life cycle and might just need to be re-modified to stimulate an increase in sales. Sony PlayStation have done this with the original PlayStation by offering a smaller version called PSOne, and a slim version of the PlayStation 2.
•There maybe environmental changes which the company may want to capitalise on. Music companies are now selling more music via downloads then through traditional shops, originally being forced to change the way they deliver their product by Napster.
•Competitors may force change. New products maybe introduced because of competitors

The marketing concept

The concept of marketing has changed and evolved over time. Whilst in today’s business world, the customer is at the forefront, not all businesses in the past followed this concept. Their thinking, orientation or ideology put other factors rather then the customer first. Let us examine these below.

Production Oriented: The focus of the business is not the needs of the custobmer, but of reducing costs by mass production. By reaching economies of scale the business will maximize profits by reducing costs.

Product Orientation: The company believes that they have a superior product, based on quality and features, and because of this they feel their customers will like it also.

Sales Orientation: The focus here is to make the product, and then try to sell it to the target market. However, the problem could be that consumers do not like what is being sold to them.

Market Orientation: Puts the customer at the heart of the business. The organization tries to understand the needs of the customers by using appropriate research methods, Appropriate processes are developed to make sure information from customers is fed back into the heart of the organisation. In essence all activities in the organisation are based around the customer. The customer is truly king!

In today’s competitive world putting the customer at the heart of the operation is strategically important. Whilst some organizations in certain industries may follow anything other then the market orientation concept, those that follow the market orientation concept have a greater chance of being successful.

what is marketing

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The term marketing has changed and evolved over a period of time, today marketing is based around providing continual benefits to the customer, these benefits will be provided and a transactional exchange will take place.

The Chartered Institute of Marketing define marketing as 'The management process responsible for identifying , anticipating and satisfying customer requirements profitably'

If we look at this definition in more detail Marketing is a management responsibility and should not be solely left to junior members of staff. Marketing requires co-ordination, planning, implementation of campaigns and a competent manager(s) with the appropriate skills to ensure success.

Marketing objectives, goals and targets have to be monitored and met, competitor strategies analysed, anticipated and exceeded. Through effective use of market and marketing research an organisation should be able to identify the needs and wants of the customer and try to delivers benefits that will enhance or add to the customers lifestyle, while at the same time ensuring that the satisfaction of these needs results in a healthy turnover for the organisation.

Philip Kotler defines marketing as 'satisfying needs and wants through an exchange process'

Within this exchange transaction customers will only exchange what they value (money) if they feel that their needs are being fully satisfied, clearly the greater the benefit provided the higher transactional value an organisation can charge.