Product innovation

Product innovation is part of the Marketing Mixes of a company and describes the process when a new product is brought onto the market. Etymologically, the word “innovation” goes back to the Latin verb “innovare”, which means something like “to renew”.

Definition / explanation

Sometimes a new way of using a product is already perceived by the customer as an innovation. However, this is not a product innovation. In order to be able to speak of product innovation, a new product actually has to be created. Production-related changes must therefore be made by the company.

There are two types of product innovation:

Market innovation (absolute innovation) - a product is available on the market for the first time

Corporate innovation (relative innovation) - a product that is only new for the company itself, but not for the market

If a product is created that is available on the market for the first time, one speaks of a market innovation or an absolute innovation. In fact, a new product was created that has never existed before.

If a comparable product already exists on the market, but a company expands its product range to include a product that is new to the company itself, this is called a company innovation. So it is not a new invention per se. Only the production techniques of a company are adapted for a product that is new to the company.

Product innovation is always necessary in order to react to changed demand or new types of technological trends

Product deterioration

A special form of product innovation is product deterioration. A product is deliberately made inferior in order to minimize costs and so be competitive. So-called planned obsolete is a special form of product deterioration. Signs of wear and tear on the product are intended to stimulate demand.


  • Product innovation in response to changing demand or technological trends
  • Product innovation = absolute innovation or market innovation (new invention)
  • Product innovation = relative innovation or company innovation (new product for the company)
  • Product degradation to minimize costs and eliminate competition
  • Planned obsolence = signs of wear and tear intended to increase demand
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