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Product Management

What is Product Innovation

 

According to the certification organization for product and product management BVOP, Product innovation means creating and introducing innovation in the product solutions of the business organization.What is Product Innovation

By definition, product innovation is organized, streamlined, and systematized work on the creation and introduction of new products to achieve favorable results both from the point of view of the business organization and the market. The new product defines a new way to meet its needs. This is a new approach to solving buyers’ problems.

This can be achieved mainly in 2 ways:

  • change in some of the characteristics of already existing products, which is defined as product variation;
  • creation of completely new products with unknown characteristics, which is product diversification;

In interpreting the term new product, the following point of view can be taken:

  • the novelty from the point of view of the manufacturer. In this sense, one
  • product is new when it introduces a previously unknown technical or technological solution. From the point of view of the market, a product is new when it first appears on the relevant market or satisfies fundamentally new needs of buyers.

Depending on the degree of novelty in the characteristics of the product we can talk about:

  • fundamentally new products;
  • advanced (partially new) products;
  • products with insignificant changes in characteristics.

In the process of developing a new product, it is necessary to analyze and evaluate a large number of ideas. In the BVOP product management certification program, for example, product research practices are a mandatory topic during the online exam for obtaining a product manager certificate. Economic, marketing, and production criteria can be used in their evaluation. The economic criteria include:

  • expected profit;
  • production costs;
  • realization costs;
  • risk.

Marketing criteria include:

  • place in the sales structure;
  • life cycle duration;
  • market potential;
  • market stability;
  • market price.

The production criteria include:

  • development time;
  • production potential;
  • resource security;
  • possible price level.

The process of developing a new product includes several more important phases:

Assessment of the goals and tasks facing the company.

Here are solved the big and complex issues for the development of production. Usually, the goals are related to the individual functional areas of activity. Parameters such as market absorption, saturation with certain products, etc. are studied.

Choosing behavior in production and sales.

Efforts here are directed in at least 2 directions: assessment of production capacity and consideration of market considerations. The assessment of the production capacity emphasizes the indicators:

Production equipment, machines, and equipment, used technology, access to the necessary raw materials, etc.

When taking into account market considerations, marketing research is made, which specifies the characteristics of demand. Attention is focused mainly on the quantitative and qualitative parameters of product demand.

Generating ideas for the production of a new product

The goal is to formulate a large number of ideas for a new product or service. In recent years, the use of methods such as brainstorming has become popular for this purpose. This method generates a large number of new ideas regarding product policy. A team of 7-10 people is formed, in front of which a clearly formulated problem is set to solve.

The original approach to the solution is sought. Each participant must share their ideas, even if they sound crazy at first. The leader must not allow ridicule or denial. Finally, a large number of ideas are subjected to a multifaceted evaluation and 2-3 are selected that are most appropriate. A peculiar development of a brain attack is the method of 66 buzzing sessions. With it, the already large team is divided into smaller groups that discuss the problem in parallel and each of them broadcasts the best ideas. A preliminary introduction of the decision-makers is assumed.

The evaluation and selection of ideas are done with the so-called. filtering ideas. A large number of ideas are carefully analyzed and a more synthesized number of ideas is broadcast for further evaluation. Detailed criteria of marketing, production, or technological nature are used.

Creating a new product

When creating a new product, special attention is paid to the technical-economic and functional-consumer characteristics of the product. Research work is crucial. This stage ends with the actual construction of the new product.

Product testing should confirm or refute the initial expectations of the new product. Different aspects of the new product or service can be used in testing. It is possible to do laboratory or market testing of the new product. Upon successful testing, a decision is made to bring the product to market.

Commercialization of the product: transition to serial and mass production and sale. The new product begins its market development. This is the introduction phase of the product life cycle.

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