What is new product development process?
The process by which ideas are generated, evaluated, directed and turned into products is called the “new product development process.” A new product follows certain phases or stages before it is launched. Some of these phases or stages include:
- Idea generation
- Product idea evaluation or screening
- Business or economic analysis i.e economic feasibility
- Development of the product – creating the product
- Test marketing of the product
- Launching or commercialization
- Modifying the new product
New product or service ideas are collected from different sources depending on the type of product or service (i.e industrial or consumer). Sources of new product or service idea include salesmen, consumers, engineers, scientists, competitors, shareholders, freelance inventors etc
In some industrial product market, customers look up to suppliers for improvement in their production methods. It is common for customers to be a major source of new product ideas. Most big firms such as Lever Brothers, Guinness, Shell, Mobil, NBC, Chevron, IBM, DuPont, General Electric etc have well-funded research departments. These research departments have provision for feedback from outside sources for new product ideas.
Product idea evaluation or screening stage
This is the stage where the product or service idea that are not compatible with organization’s long term objectives are eliminated. The basic and relevant question here is “does this new product idea have enough feasibility and desirability to warrant more careful analysis? At this stage some ideas with potentiality of generating profit may be sold out to other firms with better capability and compatible objectives.
Business or economic analysis
This entails detailed analysis of the product or service evaluation. The following would be assessed at this stage:
- The likely profitability of the product
- The cost of production
- The expected sales volume
- The return on investment (ROI) of the product or service
- The strength and weaknesses of the company as regards the development of the new product or service.
Development of the product
Development is the process whereby the desired new product or service is created. A model or prototype of the product is made, and this enables the firm know exactly what its product or service will look like and whether it can be produced at a lower cost.
Testing stage is the information gathering stage. The marketing research group is involved in different marketing research questions such as “how many consumers, clients, or businesses are likely to purchase the product? How much would they pay? What product features would they buy? How do we reach our buyers? and What are their buying behaviours? Not only does a test marketing help in making sales forecast, it can also be used to identify flaws in product or promotional plans.
A test marketing strategy enables a company to “test the waters” of the market before launching the product or service. As a result of test marketing, the marketer will determine whether to go ahead with a full product launch, which target markets to emphasise and the relevant marketing mix elements to use, among other considerations.
Commercialization of the product
The organization starts by fashioning out effective promotion strategies required to create awareness for the new product or service. The distribution network for the new product is decided so that the product or service will be available to the desired target market.
Cycle time is the time it takes a product to move from idea generation to launching or commercialization. The time can be short or long.
Modifying the product
At some point in time, you might decide to make changes to the product, or give your users an added feature either to gain a competitive advantage or for better user experience.
Hey there, why stop at this? Check out the product life cycle stages here: Product Life Cycle
Linda Gorchels., The product manager’s handbook
Steven Haines., The product Manager’s desk reference 2E