New Product Development Process

Ever wondered how is a product developed? As a consumer, we only see how a new product is available for us to consume whether it be a new flavoured yoghurt or even a Tesla. Each product goes through specific stages.

1.)Idea Generation

New product development starts with idea generation — the systematic search for new product ideas. A company typically generates hundreds — even thousands — of ideas to find a few good ones. Major sources of new product ideas include internal sources and external sources such as customers, competitors, distributors and suppliers, and others.

Internal Idea Sources

Using internal sources, the company can find new ideas through formal R&D. For example, Ford operates an innovation and mobility centre in Silicon Valley staffed by engineers, app developers, and scientists working on everything from driverless cars to Works with Nest apps that let consumers control home heating, lighting, and appliances from their vehicles.

External Idea Sources

Companies can also obtain good new product ideas from any of several external sources. For example, distributors and suppliers can contribute to ideas. Distributors are close to the market and can pass along information about consumer problems and new product possibilities. Suppliers can tell the company about new concepts, techniques, and materials that can be used to develop new products.

Crowdsourcing

More broadly, many companies are now developing crowdsourcing or open innovation new product idea programs. Through crowdsourcing, a company invites broad communities of people — customers, employees, independent scientists and researchers, and even the public at large — into the innovation process.

2.)Idea Screening

The purpose of idea generation is to create a large number of ideas. The purpose of the succeeding stages is to reduce that number. The first idea-reducing stage is idea screening, which helps spot good ideas and drop poor ones as soon as possible. Product development costs rise greatly in later stages, so the company wants to go ahead only with those product ideas that will turn into profitable products.

3.)Concept Development and Testing

An attractive idea must then be developed into a product concept. It is important to distinguish between a product idea, a product concept, and a product image. A product idea is an idea for a possible product that the company can see itself offering to the market.

Concept Development

When the concept or the idea is selected, the marketer needs to check through which concept can he then introduce the product. For example, continuing, the example of new yoghurt.

• Concept 1: Vanilla flavoured yoghurt
• Concept 2: Low Sugar/ Fat yoghurt.
• Concept 3: Strawberry flavoured yoghurt.

Concept testing

Testing new product concepts with a group of target consumers to find out if the concepts have strong consumer appeal.

4.)Marketing strategy development

Designing an initial marketing strategy for a new product based on the product concept.

5.)Business Analysis

Once management has decided on its product concept and marketing strategy, it can evaluate the business attractiveness of the proposal. Business analysis involves a review of the sales, costs, and profit projections for a new product to find out whether they satisfy the company’s objectives. If they do, the product can move to the product development stage.

6.)Product Development

For many new product concepts, a product may exist only as a word description, a drawing, or perhaps a crude mock-up. If the product concept passes the business test, it moves into product development. Here, R&D or engineering develops the product concept into a physical product. The product development step, however, now calls for a huge jump in investment. It will show whether the product idea can be turned into a workable product.

7.)Test Marketing

If the product passes both the concept test and the product test, the next step is test marketing, the stage at which the product and its proposed marketing program are tested in realistic market settings. Test marketing gives the marketer experience with marketing a product before going to the great expense of full introduction. It lets the company test the product and its entire marketing program — targeting and positioning strategy, advertising, distribution, pricing, branding and packaging, and budget levels.

8.)Commercialization

Test marketing gives management the information needed to make a final decision about whether to launch the new product. If the company goes ahead with commercialization — introducing the new product into the market — it will face high costs.