The Tough decision of Make or Buy
Any company can add new product offerings either through development (make) or acquisition (buy).
1. Development [Make] – Organic Growth
The company creates new products in its laboratories for product development. They can additionally contract with autonomous researchers or new-product development firms to create a specific new product or new technology.
Example – The Apple Industrial Design Group (IDg) is the industrial design unit of Apple Inc. liable for crafting the appearance of all Apple products.
2. Acquisition [Buy] – Inorganic Growth
The company can buy other companies, patents from other companies, or a license or franchise from another company in an acquisition.
1. Walmart acquired India’s biggest online retailer Flipkart.
2. Microsoft acquired LinkedIn ($26 billion, 2016).
3. Tesla, in 2019 acquired energy storage company Maxwell Technologies in an all-stock settlement valued at $218 million. This deal proposed at helping the electric automaker develop its batteries and lower the costs as more competitors entered the market.
Did you Know?
Facebook has made more than 80 acquisitions to date. Notable ones include:
- Instagram -$1 billion in 2012
- WhatsApp – $16 billion in 2014
- Oculus – a virtual reality company – $2 billion 2014
- Ctrt Labs – which is developing interfaces that would allow users to control a computer with their brains – estimated $500 million to $1 billion in 2019
Types of New Products
There are different types of New Products. 3 are very new type of products which are launched by R&D whereas others are improvements on existing products.
When true new products are released, the category is called the new-to-the-world product category. These products are completely new because they create a total fresh market and make only a small percentage of the new product category.
In today’s ever-developing times, it is more difficult to distinguish hit products that will transform a market, but continuous modernization can broaden the brand meaning while forcing competitors to catch up.
2. Add a New Product Line
Products that take a company into a category that is new to it is called a new product line. Products introduced here are not only new to the market but also to the firm.
Example – Carlsberg Beer Beauty
- Denmark-brewed Carlsberg beer branched out into beauty products in 2015.
- Carlsberg Laboratories, the Research and Development department of Carlsberg Breweries, collectively with cosmetics producer Urtegaarden, formulated a series of male grooming products made from real Carlsberg beer.
- The world’s fourth-largest brewer that dominates a good 8% of the global beer market presented Carlsberg’s Beer Beauty.
Example – Budweiser
- In July 2020, Budweiser launched its 1st nonalcoholic beer. Anheuser-Busch launched its first zero-proof beer under the Budweiser brand name called Budweiser Zero.
- This new brand was released in collaboration with former Miami Heat NBA player Dwyane Wade who will appear in the product’s advertising.
- The nonalcoholic beer has 50 calories, and zero sugar and comes in 12-packs with 12-ounce or 16-ounce cans.
- Wade said in a release that Budweiser Zero is formulated for athletes who do not desire the after-effects of alcohol while training or competing. The beer is also marketed toward buyers who want “a balanced lifestyle.”
3. Additions to Existing Product Lines
When a company adds a new product that solidifies its area of product offerings, it falls under this type.
Example – Red Bull Sugar-Free
Red Bull in 2003 launched the first-ever variant of its flagship energy drink brand in an attempt to target calorie-conscious consumers.
Example – McDonald’s
McDonald’s in 2019 introduced ‘Beyond Meat P.L.T’ to their menu. The company tested a new “plant, lettuce and tomato” sandwich using Beyond Meat’s
patties in 28 restaurants, following major rivals in betting on the growing popularity of plant-based alternative meat.
The world’s largest burger chain joined Tim Hortons, KFC and Dunkin’ Brands in moving ahead with versions of a plant-based addition to their menus using Beyond Meat’s patties.
Example – Victoria’s Secret – Pink
Victoria’s Secret announced the launch of PINK, a new product line targeting young adults and older teenagers on October 16, 2002. The product first arrived in late 2003 in selected stores and a full chain-wide roll out by July 2004.
The product first arrived in late 2003 in selected stores and a full chain-wide roll out by July 2004.
Improvements or Revisions of Existing Products
Almost all new-product activities are devoted to improving current existing products. Most new and improved products have only slight changes in flavours, colours, size, scents or perhaps an upgrade altogether.
Microsoft Windows – 95, 98, 2000, XP, Vista, 7, 8, 8.1, 10
Samsung Galaxy S Series – S1 to S20 Ultra
Example – Apple Watch Series
Series 1 – April 2015 – watchOS 1.0 (iOS 8.2)
Series 2 – September 2016 – watchOS 3.0 (iOS 10.0)
Series 3 – September 2017 – watchOS 4.0 (iOS 11.0)
Series 4 – September 2018 – watchOS 5.0 (iOS 12.0)
Series 5 – September 2019 – watchOS 6.0 (iOS 13.0)
Apple Watch, a line of smartwatches created by Apple Inc was released in April 2015. It combines fitness tracking and health-oriented capabilities by integrating it with iOS and other Apple products and services.
Just after its launch the smartwatch promptly became the best-selling wearable device selling 4.2 million pieces in the second quarter of fiscal 2015. Apple, in the succeeding years, releases a new series every September in order to maintain its market share.