New product development is one of the most important components of product policy and management. Product lines and products are evaluated and positioned effectively. Branding decisions are made wisely. For a higher level of growth, a company must look beyond its existing products. A progressive company must consider the development of new products as a cardinal element of its product policy.
Innovation is the essence of all growth. This is especially true in marketing. In an age of technological advancement, change is a natural result: a change in eating habits, a change in expectations and requirements. Any company must be attentive to these changes that occur in its environment. People are always looking for better products, more comfort, newer fashion, and more value for their money.
A trading company has to respond to these dynamic requirements of its clientele and these responses take the form of new products and new services. Through this response, the company makes a great deal of profit. New products are also necessary from a profit standpoint. Products that are already established often have their limitations to improve the profit level of the company. Product earnings decline as they reach the maturity stage of their life cycle. Therefore, it is necessary for commercial companies to bring in new products to replace old, declining and losing products.
New products become an integral part of the growth requirements of the company, and in many cases, new profits come to the company only through new products. New products can be broadly classified into two groups: new products that arise from technological innovations and new products that arise from marketing-oriented modifications. The first group involves innovations that lead to intrinsically new products with a new functional utility behind them. The second group includes mother marketing-oriented innovations in existing products; leads to new versions of existing products.