1.1.6 Level of innovation

In product development, there is a variety of 'new products' and it is necessary to define 'newness' at the beginning of the project since the activities, risks, costs and indeed the product development process vary with the type of new product. The designation of a product as new is used to cover a wide range of product changes from major innovations to cost reduction leading to a lower- priced product (Fuller, 1994). Some of these categories are shown in Table 1.1.


Table 1.1 New product categories

New-to-the-world Products are innovations to society. New product lines Products are new to the company. Product line extensions Additions to company's existing product lines. Product improvements Replacement of a present product with an improved version. Product repositioned Products are targeted for a new use or application and usually a new market segment. Product cost reductions Repositioning as a cheaper product, with similar benefits but cheaper costs and therefore lower price.

Source: After Cooper, 1993 and Crawford, 1994.


Generally the major innovation is followed in time by product improvements as product quality increases with production improvements, then perhaps new packaging, followed perhaps by repositioning in another market segment or a relaunch of the product, and finally ending in price reductions.

New product development provides a wide range of product changes, many of which may not be very marked either technologically or to the consumer. Innovation is most dramatically represented in the 'new-to-the-world' product. Even in cost reduction, however, there can be major innovations in processing to achieve the lower costs. In considering new products, it is necessary to look at the total product mix and to decide how this could be changed over time to maximise growth or return on investment or some other company objective. There is a need to develop a product strategy for the future. The innovation strategy defining the overall new directions for the company, and the product strategy defining the product changes and additions, are the bases for the new product development strategy. Both the product strategy and the innovation strategy need to be embedded in the company's business strategy. In this book, we talk about product development and not new product development, as the company always needs to be aware of the effects of new product development to the product mix.

Think Break 1. 'Innovation is a predictable process.' Do you agree or disagree with this     statement? How can a company organise to give 70-80% predictability     to product development but allow 20-30% for the unknown? 2. Take one product family in your company, and identify the generations     in the product platforms, and then the derivative products on each     platform. What have you used as the basis for the family and for each     platform - preservation method, other technology, nutrition and health,     place in the food system or some other general family characteristic? If     you have not used nutrition and health, try building up the platforms on this     basis. 3. Identify the market segments that your company targets for this family of     products, and relate them to the different platforms and, if necessary,     particular products. 4. What building blocks has the company used to form these platforms?