segments. As businesses move away from core markets, uncertainty will
increase. Innovation revolves around the creative use of market infor-
mation, creative segmentation and positioning.
4 Quadrant 4 Market penetration: The uncertainty pertaining to outcomes
and method is low, and there appears to be an immediate opportunity.
The organisation needs to align its assets and competencies in order to
capitalise on this. The problem is often one of speed of response. Here,
innovation relates to flexibility, recognising opportunity and adapta-
tion of product offering.■ Summary
Product development and innovation are strategic activities. Given the
increasing competitiveness of the business world, organisations and their
product offering must evolve to survive. It is vital that management
understand the true nature of their core, actual and augmented products.
It is often the augmentation – enhancing the actual product through add-
itional services – that generates commercial success.
Product development falls into three categories: product improvement/
modification, product imitation and product innovation. It is product
innovation that brings new and novel ideas to the market place.
Regardless of the degree of innovation, an NPD process is required.
Essentially, this is a six stage process covering: (1) idea generation, (2) idea
evaluation, (3) concept development, (4) business evaluation, (5) product
development and (6) product launch. The NPD process can be enhanced
by using factors such as multi-functional teams and customer involve-
ment to instil a market focus and ensure operational problems are
resolved in advance of launch. Additionally, it is important that all prod-
uct development has a strategic direction, with the process integrated into
overall business strategy. To successfully develop products we must
understand the pitfalls of NPD. Such pitfalls relate to factors like: invest-
ment, failing to deliver customer benefit, forecasting errors, internal con-
flict and competitor response.
Innovation is effectively a management process aiming to bring together
creative thought, technical/process development and commercial exploit-
ation. Organisations need the right climate to promote innovation. They
need to encourage teamwork and the on-going exchange of information,
coupled to support and reward systems. In this way, it is possible to innov-
ate across their entire field of business operations. Managers need to con-
sider the risks and returns associated with such activity.■ References
Booz, Allen and Hamiltion, New Product Management for the 1980s, Booz, Allen and
Hamilton Inc., New York, 1982.226 Strategic Marketing: Planning and Control