October 18, 2007

Approaches to new product development - Part II

In continuation to the previous article on "Approaches to new product development - I", below are the other approaches as described from the book "Lateral Marketing" by Philip Kotler and Fernando Trias.

4. Innovation based on design:
Consists of :
Modifications of design in order to communicate different lifestyles.
Effects in the market:
Amplification of targets.
Differentiation by lifestyle.
Watches: In case of Swatch, design is the main source of innovation.Swatch introduces new models every year but the external appearance is a major change.
Design based innovations are those which create a new product by changing its external appearance.
5. Innovation based on Complements:
Consists of :
Adding ingredients or complimenting/adding additional services.
Effects in the market:
Ability to better serve concrete segments or niches.
Increase in the range of products.
Hand soap : Soap with moisturizers, antibacterial soap etc.
Computer Services : A computer service can offer maintenance, ink toner replacement while also being repaired etc.
Innovations based on complements consist of adding complementary ingredients or additional services to the basic product or service.
6. Innovation based on effort reduction:
Consists of :
Reduction of the effort customers make in the purchase process.
Effects in the market:
Conversion of potential buyers into current buyers.
Ability to reach maximum penetration of the product or service.
Perfumes: A firm known for expensive perfumes decided to introduce mass market perfumes in attractive bottles at much lower prices.Through the effort reduction of lower prices, the firm converted an enormous mass of potential buyers into current buyers.
Innovations based on effort reduction consist of modifying your not the product or service, but rather the efforts and risks involved in the purchase.
These innovations consist of continued variations on what the product or service is, but do not intend to modify it's essence.The innovations occur within the category in which they compete, since the methodologies for creating them assume a fixed market.

Related Article:
Approaches to new product development - Part I

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