Question

Why is it importabt for a company to develop new products ?

Answer 1

Importance of developing new products for the company can be understood from following points:

- Creation of value for customers over old products : New products are developed so that customers replace there old products with new & better products which give more value and satisfaction to customers. Example, companies launch new models of existing cars so that customers purchase this new model & sell or dispose the old model.

- Sustaining competition : In today's competitive scenario it is important for the companies to launch new products otherwise they will be out of market. Competitiors will come up with better products that are cheaper and add more value to customers than company products. Example, mobile network companies needs to continuously launch next generation network to survive competition like from 4G to 5G network.

- Addition of New customers : Companies also add new products to add new customers. It helps to ensure that they have large customer base at there disposal for any other products they launch. Example, Google was traditionally search engine but over the time google entered most of the part of technology market throughout the world like mobile phones, digital payment market, new gadgets like chrome cast, etc.

- Diversification of portfolio : Companies also launch new products to diversify there portfolio of investments. It gives the companies added advantage of utilising there brand name, goodwill to create market for new product within little or no time. It also give added advantage of non dependency on single product line. Example, BMW was initially dealing only in car segment. But now it has also launched it's premium bike segment. Now above discussed advantage will accrue to BMW.  

- Improvising products : Companies improvise there products when there is some new technology that is coming in the market. Consumers always prefer to buy products that has all the latest and advanced features present. Example when mobiles display technology became touch screen, all companies started rolling out the touch screen model of there mobiles. So that there existing client base is not losed.