New Product

Types of new Product

There are basically three types of new product

1. Product introduced to replace existing product in the market
2. The product is totally new entry in the market
3. The product is come to support existing product

Situation where old product serve as new product

1. Existing Product introduced to a new Market
2. Packaging was changed
3. Brand name was changed

Sources of development of new product

1. Get a license for production from international firm
2. Buy a production unit
3. Develop a new product internally
4. Enter into franchise arrangement
5. Agreement with research institute for research and development of product.

1.Take a License for new product: -

This is normally an international arrangement where a local producer takes a license from the international producer to produce the product in his name. The product launch under this arraignment is a total new entry as normally international producer grant licence to one party.The arrangement is normally knows as patent rights. Under this arrangement where the produce receives the reality for the production made by the local producer. This arrangement is beneficial for both license grantor and license acquirer as the license provider earn more profit without investment and license acquirer has a brand name which is very easy to market. 

2.Production unit acquisition

This is another type of product entry some companies believe that it would be difficult to take market share from the existing producer. Therefore they offer a huge price to buy the already production unit. This acquisition is part of long term planning because existing producer charge heavy price for the goodwill. In some cases it is cheaper option as compared to establish new unit when the existing unit is suffering losses due to poor management or inefficient processes.

3.Internal Development of new product

The other option is to start process of developing a new product internally. The great disadvantage of this methodology is this involves a high research and development cost. The second disadvantages are that company is not aware of the possible response of the market. If the product fails in the market then it will not only result in huge loses but also damage the image of the company. This is the reason that company are rarely go for the total new product line instead they try to add features in existing product.

4.Franchise arrangement

This is a bit different from license arrangement .under this arrangement you are selling the product of the licencor and charging fee for your investment. This kind of arrangement is very popular in services industry like telecom services etc.

5.Research and development institute

under this arrangement you hire a professional research body to develop a new product. The company gives the basic idea about the product and target market and research institute develop a suitable product.