A product is considered new if it completely opens up a new market, replaces an existing product, or significantly expands the market for said existing product. Old products can be considered new when they are introduced to a new market, repackaged, or sold with a different approach.
Some sources of new products include academia, acquisitions, competition, customers, outside investors, and internal product development. Developing and launching new products can be very expensive and risky. In fact, it is usually more risky than market development or market penetration. To make sure that money spent on new product development is not wasted, or to reduce the number of failures in new product launches, is to adopt a new product development process.
This process includes generating ideas, selecting new ideas, developing and testing concepts, business analysis, marketing strategy, and more. Planning and evaluating the success of a new product can be based on how it performs at different stages of the product life cycle – that is, if the company uses this method of controlling the promotion of products. The important steps to consider when launching a new product are adoption, growth, and maturity. However, the company may choose other metrics as well.
For example, metrics such as new product sales revenue, cash flow, and profit margin will indicate the financial performance of the new product. New products, however, tend to suffer early losses due to inadequate demand, research and development costs, high fixed costs, and other factors. This must be taken into account when setting goals and evaluating results.
In addition, market share growth is a positive indicator of success, although this may not be the case for all products or markets. For example, there are some niche products or some new product that needs to open its own market.
Internal forward-looking indicators are indicators that show how processes within a company affect the success of a new product in terms of development and launch. These metrics include adherence to budget and schedule, assessment of new product development, marketing mix, and the occurrence of shortages or surpluses of new products and resources. Going beyond budget or schedule or recurring deficits indicate that something might be wrong with the company, which could lead to a failure in the development and launch of a new product.
Moreover, frequent assessments of the new product development process and the quality of the marketing mix can help improve the skills of the company, as well as identify changes or modifications that can be made to improve the characteristics of the product as well as the performance of the company as a whole.
The following set of indicators shows how a new product launch can affect a company’s business. In addition, indicators of customer perspective include repeat purchases, complaints, and customer awareness of new products. The development and production of new products usually requires new skills that can be learned through training. Employee participation in the development of new products is equally important. In addition, evaluating and analyzing each launch is essential to achieve a company’s expertise in new product launches.