StrategyStreet and the Board of Directors
PRODUCTS AND SERVICES
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6. How long will the product and service innovations generate new sales for the company?
The company must be unique in some way for its customers. A customer cannot choose between two suppliers unless one supplier offers something unique. In a market with several suppliers competing with one another, an innovation by one company that another company copies begins to lose its ability to attract new customer sales volume. The innovation must retain its customer attraction long enough to pay for itself. Otherwise, the company loses money on the innovation.
The company can guess at the length of time an innovation is likely to remain attractive by examining the past few years of innovations in its market. The innovation categories of Function, Reliability and Convenience reappear at this stage. The company categorizes each innovation from the last few years and gauges how long innovations in each category attracted customer purchases. This period of time is a good starting point for the estimates of the probable life spans of innovations in the current strategy.
For further discussion of this question, see:
Basic Strategy Guide Step 18: Modify the Company's prouduct and service innovation program to reflect the worth to the Company and the practicality of each innovation.
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