In this article you will learn about the 8 stages of new product development Process in detail.
New Product Development Process
The entire process of bringing a product to market is referred to as product development. It also includes bringing an old product to a new market and updating an already existing product.
This entails determining the demands of the market, envisioning the product, creating the product roadmap, launching the product, and gathering customer feedback.
A crucial component of product design is new product development (NPD). The procedure doesn’t finish till the end of the product life cycle. By upgrading or including new features, you can iteratively create new versions while continuing to gather consumer feedback.
The process of bringing a brand-new product idea to market is known as new product development (NPD).
When creating a new product, there are 8 crucial stages. These are listed below:
- Idea generation
- Idea screening
- Concept development and testing
- Marketing Strategy Development
- Business Analysis
- Product development
- Test marketing
Let’s look more closely at these 8 stages of new product development.
1- Idea Generation
Businesses will carry out significant user and customer research, examine market trends, and assess their users’ needs throughout this phase. In order to build a product that can address a problem that people are currently facing, this preliminary effort is essential. The business might use a variety of sources to get a steady flow of fresh product ideas.
Internal sources, customers, competitor businesses, distributors, and suppliers are among the main sources of new product ideas.
There are two different approaches you can use to coming up with new ideas:
Internal idea generation – Internal ideas can emerge from a variety of departments inside your company, such as the technical department, sales team, and customer support.
The business develops new ideas internally. That includes employee contributions as well as R&D.
For instance, many businesses provide a “suggestion box” where staff members can place new ideas. As they interact daily with both the product and consumer feedback, employees are frequently the finest source of new ideas.
External idea generation – External ideas are derived from outside sources, such as examining the competition or collecting feedback from your target audience.
The major objective during this phase is to generate as many good ideas as you can while continuing to focus on providing value to your consumers.
The business looks outside for new ideas.
This includes competitors as well as other external sources like distributors and suppliers.
Customers are the most significant external source since the new product development process should be focused on generating value for customers.
In the digital age, when communication between businesses and customers is more dynamic than ever before, gathering new product ideas from customers becomes both increasingly crucial and straightforward. Taking feedback from customers seriously can lead to some truly innovative ideas.
The goal of screening is to identify good ideas and discard weak ones as quickly as feasible.
The focus of this stage is picking the idea with the best chance of succeeding. Lay up all the options accessible for internal review. That is, for idea screening, seek for individuals with relevant industry expertise and experience.
The ideas need to be filtered. A group of professionals selected from your internal teams frequently handles this.
To determine the initial feasibility of each project, they should ask the following questions:
- How will using the product assist customers in the target market?
- Does the product really benefit consumers and society as a whole?
- Is this product suitable for our specific business?
- What market demand that is unmet will the product address?
- Why do you succeed when other goods fail in satisfying this need?
- Do you have the necessary processes and knowledge for product design to do this well?
- Do you possess the technological know-how necessary to produce the product?
- Does the suggested product match your capabilities for manufacturing and distributing it?
- Does product fit well with the objectives and strategies of the company?
- Do we have the necessary personnel, expertise, and resources to succeed?
- Is product cost performance better to competitive products?
- Is product easy to advertise and distribute?
3- Concept Development and Testing
Now, attractive ideas must be turned into product concepts. It’s critical to understand the differences between the stages of the different stages:
Product idea: An idea for a potential product is one that the business may envision releasing to the market.
Product concept: A product concept is a more in-depth presentation of the idea in understandable consumer terms.
Product image: The way consumers perceive a real or potential product is called a “product image.”
Imagine of a car company that has created an all-electric car. The concept now has to be developed after passing the idea screening step. The marketing company job is to develop this new product into a number of alternative product concepts. The business may then determine how attractive each concept is to customers and select the best one.
A product concept should at the very least describe how the product will be used, its target market, and its primary use cases. The following are possible product concepts for the electric car idea:
Concept 1: A reasonably priced mid-size car intended to serve as a second family vehicle for visiting friends and shopping trips around town.
Concept 2: A reasonably priced sporty small car that appeals to young singles and couples looking for fun drives.
Concept 3: A high-end midsize utility car that appeals to people who prefer the spaciousness but also need a economical car for commuting around the city on a daily basis.
In order for these concepts to have any real significance, they must be quite precise. Each concept is tested in the following sub-stage.
It’s important to test new product concepts with target consumer groups, such the ones mentioned above. Consumers might be introduced to the concepts either physically or symbolically.
Is the particular concept appealing to consumers in a significant way?
A description in words or pictures may be adequate for some concept tests. However, a more concrete and physical presentation of the product concept may be required to improve the test’s reliability.
Following the concept’s delivery to the group of target consumers, questions will be posed to them to determine the consumer attractiveness and customer value of each concept.
You should know which product concept, based on customer feedback, is the best after the concept testing stage. In some circumstances, it’s possible that numerous concepts seem to work really well.
For instance, two distinct versions might work effectively for two distinct sub-target audiences. The business may decide to proceed with both product concepts if each of the target groups offers a sizable and relevant target market.
4- Marketing Strategy Development
The development of a marketing strategy is the next step in the development of a new product. It is time to construct an initial marketing strategy for the new product based on the product concept for bringing this new product to the market once a promising concept has been created and tested.
The three components of the marketing strategy statement should be carefully formulated:
- A description of the target markets, the anticipated value offer, and the initial targets for sales, market share, and profits.
- An outline of the product’s first-year marketing budget as well as its distribution and price plans.
- Sales and profit targets for the long term, as well as the marketing mix strategy.
5- Business Analysis
Management can assess the proposed new product’s business attractiveness once the company has chosen a product concept and marketing strategy.
Reviewing the new product’s sales, cost, and profit estimates in order to determine whether they meet the company’s objectives is the fifth phase in the new product development process. If they do, the product can go to the next phase of development.
The business could, for instance, research market surveys and the sales history of comparable products to estimate sales. It is imperative to have a clear understanding of the potential demand for the final product. This level has been underestimated in several instances.
Consider vehicles as an example, which were first a failure on the market. This step is frequently skipped by businesses, or it is given insufficient attention. The cause is frequently a propensity to hear only what the business has to say rather than what the customers have to say.
You might have created a fantastic product for yourself when you come up with a new idea, carefully consider it, design the product, include all the characteristics you enjoy, and so on. This does not necessarily imply that it will be a successful product on the market, though.
Therefore, customer feedback is essential at every stage of the creation of a new product.
The business should be able to estimate minimum and maximum sales once the initial demand analysis has been performed in order to determine the risk level.
The business should calculate the anticipated expenses and profits for a product, including marketing, R&D, operations, etc., based on the sales projection.
Eventually, the combined sales and cost data can be utilized to evaluate the financial attractiveness of the new product.
6- Product Development
The process of creating a new product continues together with the creation of the real product. Many new product concepts may simply have a word description, a design, or even a basic prototype as of this phase.
To make sure that the product idea can be turned into a viable market offering, the product concept must be developed into a real product if it passes the business test. However, the issue is that at this point, R&D and engineering costs result in a significant increase in investment.
One or more physical prototypes of the product concept will be created and tested by the R&D department. However, depending on the product and prototyping techniques, it may take days, weeks, months, or even years to develop a good prototype.
Additionally, testing are frequently conducted on items to ensure their effectiveness and safety. The company may handle this internally or externally.
Marketers frequently use real customers to test their products. Consumers can test out early versions of products and assess prototypes. In the process of developing the product, their experiences might be quite helpful.
7- Test Marketing
This phase of the new product development process involves testing the product in actual market conditions as well as the suggested marketing strategy.
So, before incurring the high cost of complete introduction, test marketing allows the marketer to get expertise with marketing the product.
In reality, it enables the business to test both the product and the entirety of its marketing plan, including targeting and positioning, advertising, distribution, packaging, etc., before making a full investment.
The amount of test marketing required varies depending on the new product. A great amount of time may be spent on test marketing, particularly when launching a new product that demands a sizable expenditure, when the risks are high, or when the firm is unsure of the product or its marketing program.
Management now has the information required to make the final decision thanks to test marketing: Launch the new product, or don’t.
Commercialization is the last step in the process of developing a new product. Simply said, commercialization is the process of releasing a new product onto the market.
At this stage, the corporation may need to build or rent a manufacturing facility, which may incur the largest expenditures. In the first year, significant sums may be spent on advertising, sales promotion, and other marketing initiatives.
Before the product is launched, a few things need to be taken into account:
Introduction timing – If the economy is weak, it can be a good idea to postpone the launch until the following year. However, the business should seek to launch the new product sooner if competitors are prepared to launch their own products.
Introduction place – Where should the new product launched? Should it launch in just one place, a specific area, the national market, or the international market?
Companies frequently lack the confidence, resources, and capacity to launch new products into wide international distribution right away. Instead, over time, they often establish a planned market rollout.
A crucial requirement of your product or service’s success is a successful product launch.
The primary goal of each of these stages in the new product development process is to maximise value for the customer.
The product can only achieve market success after that. As you might expect, only a very small number of items genuinely have a chance to be a success.
Every product cannot successfully complete the new product development process because the risks and expenses are simply too great. Given these costs and risks, it is imperative that these 8 steps of the new product development process be completed correctly.