The importance of new product development is a result of the necessity for developing new products if a business is to survive. In other words, new product development is tied to the ability of a business to remain competitive and also to the longevity of such a business. Any business that does not realize the importance of developing new products will not last very long as a consequence of the fact that business is all about innovation and change, making it absolutely necessary for businesses to adapt to those changes in order to remain relevant. New product development may be geared toward the conceptualization of a new idea regarding a completely new line of products currently not in the market, or it could be aimed toward upgrading products that may be in the market already. Whatever the case, the development of new products is an essential part of the application of business strategies by companies.
An illustration of the importance of new product development can be seen in the area of the transition from physical books to e-books. Some companies that built their reputation and even their entire company on the sale of physical books quickly folded due to the fact that they failed to realize the importance of new product development. These companies did not keep up with the changes in other areas of the market, such the innovations in technology that made it more convenient for people to download books onto a device rather than purchasing the physical book. Other companies that embraced new product development anticipated this change and not only made it possible for customers to download books from their Web sites, but also integrated this download with their own personal electronic readers, making it a complete package. This understanding of the importance of new product development has kept such companies relevant even in the face of constant innovations in technology and the tastes or preferences of customers.
Another illustration of the importance of new product development is in the area of smart phones where some companies have managed to establish themselves as market leaders due to the fact that they always take the lead in new products. Such companies always come up with new products periodically, astutely gauging when their products in the market are already reaching the end of their product lifecycle. By replacing worn-out products with new ones, they manage to retain the interest of customers and to make their product and company relevant.