Creating Successful New Products: Challenges for Indian Industry1

Introduction In the increasingly competitive environment in India, the development and launch of new products have become an important competitive tool. In a crowded marketplace, there is greater need for differentiation; in markets that tend to be stagnant there is pressure to create excitement. The development and launch of new products helps in both situations. In certain industries like the two wheeler industry, new product development has become critical to survival. Stringent new emission standards and multi-point competition are pushing two wheeler companies to broaden their product lines and introduce new technologies such as four stroke scooters and mopeds. Today, the Indian two wheeler industry has more than fifty models/variants with one or two new launch announcements every month. Such developments are happening in other industries as well, though perhaps not as visibly as in the two wheeler industry. This paper is prompted by our belief that there are unique problems faced by Indian companies in rapidly developing a new product development capability. While the new product development challenges faced by large, established firms in deve loped markets have received considerable attention in recent years since the publication of the epochal The machine that changed the world (Womack, Jones and Roos, 1990), the problems faced by “emerging market companies” are different and have not received enough attention. Emerging markets like India are different from developed markets. Emerging markets are often characterised by specific local needs, limited purchasing power and high price sensitivity (Prahalad and Lieberthal, 1998). Khanna and Palepu (1997) have suggested that in emerging economies, to make up for the absence of well-developed markets for labour and capital, firms may have to create their own infrastructure. There are thus contextual factors which can potentially influence an important strategic activity like new product development in the emerging market context and make the challenges before companies in these markets different from those in established economies. Specifically, unlike established companies in developed markets, Indian companies