Innovation is essential for a successful organization and the management of innovation is central to this success.
The product is regarded as a new one if it opens up an entirely new market, if it replaces an existing product or if it broadens significantly the market for the existing product. Some old products may be regarded as new if this product is introduced to a new market, packaged in a different way, a different marketing approach is used or a mix variable is changed.
The sources for new products include licensing, acquisition, internal product development, customers, external inventors, competition, academic institutions, and etc.
As the new product development and launch is a very costly and risky business. Viewed against alternative growth strategies in Ansoff's matrix, it is generally judged to be several times more risky than market penetration or market development. The way to ensure that money is not wasted developing new product failures is to do the job properly in the first place and this means adopting the NPD (New Product Development) process. The NPD process includes idea generation, screening of new ideas, concept development and testing, marketing strategy, business analyses, and etc. The success of the new product may be planned and measured against its performance at different stages of PLC (Product's Life Cycle) if a company uses this method of control over the progress of its products. With regard to product launch the most important are introductory, growth and maturity stages. However the company may choose some other indicators.
For example, such indicators as revenue from sales of a new product/service, profit margin and cash flow will show the new product performance from the financial perspective. However, new products are usually loss makers at the stage of introduction due to insufficient demand, high fixed costs, investments in R&D, and etc. This fact should be taken into consideration for setting objectives and measuring results. As a rule, growth in market share also serves as the positive indicator of a success though not for all products and for all markets, for example there are specific niche products or a product is unquestionably new and it has to open its own market.
The group of the indicators with internal perspective comprises indicators that reveal how the processes inside the company influence the success of a new product development and launch: compliance with budget and schedule, evaluation of NPD process and marketing mix, occurrence of any shortages/excess of resources and new products. Overbudgeting, going behind the schedule, regular shortages indicate that something is going wrong within the company's operations that may result in new product failures. At the same time regular evaluation of NPD process and the quality of marketing mix will add to company's expertise and will help to identify what modifications or changes can be made to improve the performance of products and therefore general performance of the company.
The next group of indicators reveals the influence of new product launch on the situation within the company. New products development and production usually require some new skills and it means that some employees or groups of employees will need some training. It is an undoubtedly positive with regard to the popular concept of a learning organization. In view of the same concept it is important to encourage the participation of the employees in the development of new products. And, of course, it is essential to evaluate and analyze every launch in order to develop the company's expertise in new product launch.
The indicators with customer perspective include number of complaints, percentage of repurchase and the perception of a new product by the customers. While the information for the first two indicators is easily obtained in-house, the research about perception is usually commissioned to the specialized agency.