Products that are innovative set themselves apart in a competitive market. However, product innovation can have drawbacks too if it isn’t thought out and implemented correctly.
What is Product Innovation?
Many companies set out to create an innovative product, but they often fall short of that lofty goal. It’s extremely difficult to turn a novel idea on paper into a real-world product with enough demand to get through the development and introduction stages of the product lifecycle.
And yet product innovation is what drives industries forward.
Product innovation is the act of creating something that is unlike anything else on the market. Innovative products are noticeably different from their competitors in how they function, the way they look or what they offer. When a product is truly innovative it will be clear to consumers and should increase demand for the product. However, the latter is only true if the product serves a real need or purpose for the target market.
Product innovation doesn’t happen in a bubble. A number of outside forces can be a factor, such as emerging technologies or changes in customer needs. Those outside forces often get product developers to think outside of the box, approach problems in new ways and come up with solutions that haven’t been tried. It’s not uncommon for companies to come up with their most innovative products when they are faced with challenges they’ve never had before.
The Three Types of Product Innovation
Many product developers mistakenly believe they need to create something people have never seen before to be considered innovative. In reality, there are three types of product innovation:
Create a Novel Product – Companies that create an entirely new product unlike anything else on the market are product innovators.
Improve an Existing Product – Instead of completely reinventing the wheel, product innovation is possible by simply improving on an existing product. Typically, innovation comes from improving an aspect of performance.
Add a New Feature to an Existing Product – In addition to improving an existing product you can also expand it. Adding a new feature has the potential to transform a product so that it can be used differently or offer unique benefits that aren’t currently available.
How to Implement Product Innovation
Product innovation is a process that influences every product development stage. Innovative products can fail for many reasons, including shortcomings in implementation.
Once you have an innovative idea a significant amount of work has to be done to make sure it’s suitable for your market, brand and bottom line. Here’s a look at the first steps that should be taken to successfully implement product innovation.
Determine If There’s a Need for a New Product
Even the most innovative products will tank at market if there’s no real need for it or benefit for the end consumer. There are two ways to determine if a new type of product will have demand that drives sales:
User Behavior Analytics – Data can drive product innovation by revealing how customers use your existing products. You can learn which features are currently used the most, what frustrates users the most, where they run into difficulties and much more. This strategy is extremely useful if you plan to create a new feature for one of your existing products.
Surveying Users – You can also survey customers directly and ask them what they need or how you can improve or expand a product to better serve their needs. Just keep in mind what consumers say and what they do aren’t always the same. Combining surveys with user behavior studies often yields the best information.
Another consideration is whether the benefits are clear to consumers. If consumers aren’t aware of the benefits they’ll stick with what they know. If a product is so innovative it challenges conventional belief or is completely unfamiliar you may want to launch an informative marketing campaign shortly before launching the product in order to prime the target market.
Identify the Target Market
The research above will also help you determine the target market for your innovative product. Choosing the correct target market is essential for any type of product. The features, pricing and quality can be perfect, but if a product is marketed to the wrong people it will be hard to sell.
The appropriate target market is the people who have a need for your product. These are the consumers that are most likely to see the value in your new concepts and are willing to adopt it.
Check Out the Competition
There are two very important reasons you’ll want to look into what the competition is currently doing or what they have in the works.
First, make sure your new product will be superior to the competition and is obviously unique from what they offer.
Second, competitive research will help you avoid a potential lawsuit if the new product encroaches on a patent or intellectual property.
Determine Profit Potential
You may have a great idea for an innovative product, but will the venture be profitable? Developing a new product can be extremely expensive. Before you sink resources into the project, it’s best to figure out if your company will be able to generate enough revenue for ROI.
There’s a lot to think about when you are determining the profit potential of an innovative product. Questions to answer include:
- Given the expenses, how much profit can be made per sale?
- And how long will it take to reach profitability?
- Is that profitability sustainable?
- How likely is it that competitors will try to replicate your product?
- What are the chances a new technology can make the product obsolete?
- Will the sale of the new product cut into sales of existing products?
It can take years for a new product to become profitable. Taking the time to estimate the profit potential at the beginning can save you a lot of money in the long-run.
Fit the Product Into Your Portfolio
Each product in your portfolio is a reflection of your brand. They should also complement, not compete, with one another. What you don’t want is for product innovation to turn into brand cannibalization.
You also don’t want a new product to defy the values of your brand. Doing so could turn off your existing customers and cause an overall decline in sales.
Innovative products are developed every day, but many fail to succeed. A good idea, in theory, can be hard to make a reality. The process above helps set a new product up for success by making sure there’s a market, enough differentiation from the competition and fits your portfolio so that all of your products remain profitable.