Improving a Competitor's Product

April 13, 2006

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Sometimes the best, least expensive, fastest, and least risky way to introduce new products is to copy or improve upon a competitor's new product introduction.

Many companies, large and small, consciously adapt a strategy to "follow the leader" when it comes to new product introduction, pricing, and other business changes. It saves scarce funds for expensive R&D and for educating the target buyers.

However, companies that successfully adapt this new product strategy have to:

be able to move quickly to commit company resources to capitalize on a competitor's new products
compete in product categories where innovation does not necessarily depend upon proprietary technology, large capital improvements, and preemptive patents to protect new ideas
often settle for less sales potential than the innovator
be careful of losing marketing focus and spreading the company too thinly over too many segments of the market

For example, a small, local, snack food company could bring out a less-expensive version of a new baked tortilla chip, following the lead of Guiltless Gourmet and Frito-Lay in introducing a baked (not fried) tortilla chip. Or an independent, local car repair shop could institute a 20-minute "quick lube" oil change service at a slightly lower price than national chain shops.