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The Firm's Viewpoint

13 May, 2016 - 16:19

Classifying products in terms of their newness from the perspective of the manufacturer is also important. There are several levels of possible newness that can be derived through changes either in production, marketing, or some combination of both.

Based on a schema developed by Eberhard Scheuing, new products, from the perspective of the business, can take the following forms:11

  • Changing the marketing mix: one can argue that whenever some element of the marketing mix (product planning, pricing, branding, channels of distribution, advertising, etc.) is modified, a new product emerges.
  • Modification: certain features (normally product design) of an existing product are altered, and may include external changes, technological improvements, or new areas of applicability.
  • Differentiation: within one product line, variations of the existing products are added.
  • Diversification: the addition of new product lines for other applications.

A final consideration in defining "new" is the legal ruling provided by the Federal Trade Commission. Since the term is so prevalent in product promotion, the FTC felt obliged to limit the use of "new" to products that are entirely new or changed in a functionally significant or substantial respect. Moreover, the term can be used for a six-month period of time. Given the limited uniqueness of most new products, this ruling appears reasonable.

Figure 7.6 The "Got Milk" campaign made an old product new.