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Syllabus C. Strategy C4. The Internal Resources, Capabilities & Competences Of An Organisation

C4b. New product strategies

New Product Strategies

With the passing of the industrial age, and into a knowledge, technology led one - new products can be created quicker than ever before and reach more people quicker than ever before

The tools for doing so are not only cheap but often free

The effect of this is to lower entry barriers to existing industries and markets

With processes (and products) there is a temptation to keep adding new features, processes and products - often to the detriment of existing ones

New products and processes need to be well planned - with consideration on when to introduce new products, how best to extend the life of mature ones and when to abandon those in decline.

Different Strategies

Leader strategy

This means being at the cutting edge of new innovation and product. It means getting ‘first mover advantage’

Many now believe that first mover advantage is over-estimated

It costs money and has lots of risk attached - Large R&D activity

Follower strategy

Alternatively some wait for others to innovate and then pounce to create something similar once they know there’s a market - although of course a competitor will now have the market share to begin with

It does mean far less R&D - and less risk

A follower might have to license certain technologies from a leader (as is the case with many consumer electronics companies). However, research indicates that this can be a more profitable strategy than being an innovator, especially when the follower is able to learn from the leader's mistakes.