Know-How Exchange : Student Questions

Bikal,
Sham is right on target. Why companies introduce new products is as basic as asking why companies breathe. For anyone who has real world experience, we have to reread the question to make sure we read it right! We just have to look to the basics of marketing as a whole to answer this:

MARKET
A company introduces new products to meet new customer needs - either because those needs changed or because the company wants to reach new customers - i.e. a different segment. Also, government regulations can play a role in the market of creating an opportunity for the company or a threat, so the company introduces new products

COMPETITION
A company introduces new products in reaction to a real or perceived change in the competitive landscape - a new entrant, a competitor introducing a new product, and so forth.

COMPANY
The company itself can change and this causes a enables a new product offering. For instance, the company develops a new technology or acquires another company. Suddenly, the company can satisfy more needs better or the same needs more cost effectively and this spawns a new product.

MARKETING
I've introduced new products as a marketing tool - to show the company is action oriented, vital, alive. New products give rise to press releases and excitement in the market place and internally, thus promoting the company. This tactic has to be used wisely because there is risk of cannibalizing your own products or in causing more support costs than pay back.

In sum, introducing a new product is an economic decision with a goal of increasing revenue and/or profits for the company for any and all of the reasons basic to the situational analysis of the market place.

Wayde

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