Economic Evaluation of New Product Proposals

Abstract

The company selling to industrial markets faces much the same kind of pressure for product innovation as does the manufacturer serving consumer markets. Thus, producers of industrial goods are highly dependent on their development of new products for remaining competitive, for ensuring company growth, and for offsetting the effects of product obsolescence. | The problem that many executives fail to consider in launching a new-product venture is the prospect for economic success. This failure to make an economic evaluation of the product can be attributed to management's belief that an analysis is either too difficult to perform or that the methods used for quantitative analysis do not produce meaningful results. An investigation into this reasoning will frequently reveal that the decision maker does not fully comprehend the concepts involved in making an economic analysis.