In analysing the product mix so as to incorporate the innovation and product strategies for product development, one has to be aware of what changes can do to the product mix in the long term. Rash decisions based only on the innovation strategy may affect some of the products or even the whole mix, causing imbalance and an overall loss of market potential and profitability. Some important factors to consider are:

     possible changes of product portfolio with time;

     reactive and proactive strategies;

     market change and technology change from the innovation strategy;

     target revenues and profits from business strategy.

The possible changes can be firstly divided into incremental changes and discontinuous changes. What are the products that need some new packaging, an extension of the flavours in the product line, a relaunch as a newer product, a cost reduction, a new image? Do any of these changes relate to an innovation strategy? Is the innovation strategy to keep with present product platforms but add improvements and variety? If the innovation strategy is to move the product portfolio in a new direction - perhaps to a new market - what new product areas could be introduced? So it is a case of balancing the possible product mix changes with the innovation strategy and also with the long-term balance of the product mix.

It is also important to understand from the business strategy, if the company wants to have reactive or proactive strategies. A reactive product strategy deals with problems as they arise. A proactive strategy is planning ahead to take advantage of opportunities.





The company may have a mixture of these - most of the resources being for proactive strategies but some resources kept for reactive projects in case unidentified problems arise such as new competing products. Each strategy has its place. The question is not which is right or wrong but which is specific to the overall business strategy. Defensive strategies can be imitating competitors' products, always being second and better - allowing the competitor to be on the market first and then introducing a new product. Another common defence strategy is to respond to consumers' requests - some companies base their products on consumers' complaints.

The proactive strategies may be technology-based, with emphasis on producing technically superior products, or marketing-based, building products to satisfy consumer needs. The innovation strategy is integrated with the technology and the marketing strategies and will identify the possible changes that can be made. Product ideas are developed based on these changes. The product designers need to be involved at this stage, creating ideas for the innovation strategies and gradually developing a library of new products. These new product ideas need to be analysed to see that they satisfy the aims of the innovation strategy. But they must also be compatible with the present and predicted product mix and can fit into marketing and production constraints such as production capabilities and quantities, distribution methods and quantities, product and company images.

Think Break 1. Identify some reactive product development strategies that your company     used in the last five years. What changes caused these reactions? 2. Identify some proactive product development strategies that your     company has used in the last five years? What instigated these product     development strategies?