Recipe For Creating New Products

Sloan Review:

When it comes to brand extension, the conventional wisdom is simple: Don’t overextend. The idea is that companies should stay within established product lines to avoid dilution of the brand identity. After all, it makes intuitive sense not to diversify into categories that are remote to core products.

To rejuvenate established product families, brand managers thus typically combine features of one product with those of others in the same family. Think of a cellphone-organizer-computer-etc.

The problem with the don’t-overextend mind-set is that managers can easily fall into the trap of inbreeding: They overwhelm customers with additional features taken from related product lines.

To be sure, combining two existing products to form a “hybrid” product is not a new phenomenon. Classic examples of hybrid products include the sofa-bed, fax-phone, and fridge-freezer.

What is new, however, is forming hybrids by using products from dissimilar or even highly remote product categories. For example, DeLonghi SpA and Kenwood Corp. produce a stylish radio-toaster (a two-slice toaster with built-in FM radio).

LG Electronics Inc. has launched the fridge-TV, and a glucose meter-phone—a cellphone with a built-in glucose meter for diabetics. Users place a drop of blood on a test strip that is then inserted into a slot on the phone; an application calculates the blood glucose level, displays it on-screen, and can even automatically send the results via text message to caregivers.

It’s a useful product for children and the elderly, two vulnerable groups that must be closely monitored and need frequent feedback on treatment options. The product, co-developed with health-care-equipment-maker Healthpia America, of Palisades Park, N.J., was launched in South Korea in 2004.

Read more.

Photo by MSDesigns.

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