New Product Development is an essential part of organization for survival, to retain customers and to generate more profits. Before introducing new product to market or making changes in existing products, marketer must know classification of New Products. Booz Allen & Hamilton Classification Scheme for New Products is one of the most recognised methods for Classification of New Products.

Generally new products can be broadly classified into two groups:

1. New products arising out of technological innovations
2. New products arising out of marketing oriented modifications

Booz, Allen and Hamilton (1982) suggested that two principal dimensions need to considered:

• How new is the product to the company?
• How new is it to the marketplace?

New Products Classification by Booz Allen & Hamilton

No. Type Description Example
1 New To The World These new products creates Entirely new market. LiFi Technology, WiFi, Internet, Antibiotics, VR Technology, Digital camera, 3D Touch display
2 New Product Lines To enter into an established market for the first time Philips in flat TV (after existing CTV market), Micromax TV, ITC Biscuits,
3 Additions To The Existing Product Lines Additions or supplements to established product lines. For Example Package Size, Flavors etc. McDonalds Pudina Flavour or Masala burger for indian consumers
4 Improvement To Existing Products  Improved performance or greater perceived value & replace existing products MS DOS to Windows GUI based OS- 95,98, 2000, XP, 8 & 10, Maruti Suzuki Swift New Version
5 Repositioning Existing Products targeted to new markets or market segment. Cadbury Gems repositioning to target adults,
6 Cost Reductions Similar performance at lower cost. New versions of Splendor+, New cars with black colour fibre bumper, Mobile Phones


1. New-to-the-world products:

These types of new products create an entirely new market.

Example, introduction of products like Laptops and Palmtop has created a new market of mobile computing.

2. New product lines:

New products may allow a company to enter an established market for the first time.

Example, Philips has developed flat TV to target a new segment of already crowded CTV market.

3. Additions to existing product lines:

New products can supplement a company’s established product lines.

Example, McDonald’s introduced Pudina flavoured or Masala burgers for Indian consumers.

4. Improvements & revisions of existing products:

These are the new products that replace existing products by providing improved performance or greater perceived value.

Example, Microsoft replaced its MS-DOS by Windows as an improved, user-friendly GUI (Graphical User Interface) based operating system. They also updated Windows regularly and launched the versions of Windows 95, 98, 2000 and XP.

5. Repositioning:

Existing products can be targeted to new markets or market segments.

Example, Sahara Airlines is revising its fare to target the railway AC 2/3 tier passengers.

6.Cost reductions:

New products may be developed that offer similar performance at lower cost.

Example: The mobile service providers like Airtel, Hutch and Reliance India Mobile are introducing new post-paid schemes with low rental and outgoing facility.

Reference Books

1. Principles of Marketing, Philip Kotler & Armstrong 11th Ed., Estern Economy, PHI.
2. Marketing Management, A south Asian Perspective, Philip Kotler, Keller, Koshy, & Jha, 13th Ed., Pearson.
3. Marketing Management, Ramaswamy & Namakumari, 4th Edition, McMillann