Essentially involves applying a new technology to an existing product to create a new product. Aims to capitalise on existing product market position, in order to gain market entry for the 'new' product. Hence a hybrid strategy. Cannot be used by new firms. Although for existing, attractive strategy. Keeble (1997), notes that exploitation of new technologies is not confined to npd, can also occur through 're-innovation' or complete re-design. For example, the development of a heat gun for paint-stripping, by Black and Decker, was applied to existing components from a product, due to uncertainty new tech might fail to take off. This lowered development cost and scale of investment in innovation. Hence, derivative strategy was used, but tech not completely new.