New Product Development

New Product Development:

Improving and updating products is an ongoing task as consumer needs and wants continuously change. A failure to develop products could result in a reduction in sales if consumers decide to buy competitor products.

The Product Development can be defined as "creating, innovating, or developing entirely a new product , or presenting an existing Market product with enhanced utility, improved features, more Attractive design, better quality  and reliability to satisfy the requirements of its end-users."

In this Rapid-changing world we are experiencing change in our daily life and at marketplace too. Customer needs, wants, and expectations are changing more rapidly. Customers are increasingly demanding advance features, attractive designs, better quality, and reliability in products. To meet the changing demands of customer, business organisations are investing heavily in research and development (R&D). Business organisations are updating existing products and developing new products to satisfy changing customer needs, wants, and expectations.

Meaning of Product Development

Product means a good, service, idea or object created as a result of a process and offered to serve a need or satisfy a want. Development means the act or process of growing, progressing, or developing. Product Development  is a process of improving the existing product or to introduce a new product in the market. It is also named as New Product Development.

Major Stages in New-Product Development

Product Development Process

Product development process is a crucial process for the success and survival of any business. Present-days, businesses are operating in a highly dynamic and competitive environment. Business organisations have to continuously update their products to conform to current trends. The product development process starts from idea generation and ends with product development and commercialisation.

The key to successful innovation is in a total-company effort, strong planning, and a systematic new product development process. The new-product development process consists of eight stages: idea generation, idea screening, concept development and testing, marketing strategy development, business analysis, product development, test marketing, and commercializati n.  At each stage, a decision must be made as to whether the idea should be further developed or dropped. The company wants to minimize the chances of poor ideas moving forward or good ideas being rejected.

1.             Idea Generation - The first step of product development is Idea Generation that is identification of new products required to be developed.  This is the systematic search for new product ideas.

For every one hundred new product ideas, only a very few ever make it to commercialization. 

The search for these ideas should be systematic not haphazard. Followings  are the sources for new product ideas.

a. Internal sources where formal research and development, company scientists and

engineers, company executives, and company sales people can contribute ideas based on

their formal and informal research and experience.

b. Customers feedback and needs.

c. Competitors are another source of new-product ideas. It is a good idea to watch

competitor's  market products, ads and other communications to get clues

 about  new products. In

addition, the organization can buy competing products, take them apart, analyze the

business processes used to sell the product, and then decide whether to make a similar

product themselves.

d. Distributors, suppliers, and others in the distribution chain can be sources of

information. Resellers are close to the market and can pass along information about

consumer problems and new-product possibilities. Suppliers can tell about new

concepts, techniques, and materials that can be used to develop new products. Other

sources can be trade magazines, trade shows, seminars, government agencies,

consultants, university and commercial laboratories, etc.

2.             Idea Screening : selecting the best idea among the ideas generated at the first step. selecting ones which are feasible and practical to develop. As the resources are limited, so all the ideas are not converted to products. Most promising idea is kept for the next stage.

Idea Screening   involves screening new product ideas in order to spot good ideas and drop poor ones as soon as possible. Because product-development costs rise dramatically in later stages, companies must proceed only with product ideas that will turn into profitable products. One way to keep information organized is to have executives write up new-product ideas on a standard form that can be reviewed by a new-product committee. A well-designed system for rating and evaluating new-product ideas prevents problems at latter stages.

3.             Concept Development - At this ,selected idea is moved into development process. For the selected idea different product concepts are developed. Out of several product concepts the most suitable concept is selected and the concepts needs to be taken to the target audience. What do they think about the idea? Will it offer the benefit that the organisation hopes it will? or have they overlooked certain issues? Will there be a demand for the product? Note the idea taken to the target audience is not a working prototype at this stage, it is just a concept.

4.             Market Strategy Development - At this step the market strategies are developed to evaluate market size, product demand, growth potential, and expected sales and  profit estimation for initial years. Further it includes launch of product, selection of distribution channel, etc. the marketing strategy statement describes the planned long-run sales, profit goals, and marketing mix strategy.

5.             Business Analysis - The company has a great idea, the marketing strategy seems feasible, but will the product be financially worthwhile in the long run? The business analysis stage looks more deeply into the Cash flow the product could generate, what the cost will be, how much market shares the product may achieve and the expected life of the product. Business analysis includes - estimation of sales, frequency of purchases, nature of business, production and distribution related costs and expenses, and estimation of profit.

6. Product Development - At this step the concept moves to production of finalised product. Decisions are taken from operational point of view whether the product is technically and commercially feasible to produce. Here the research and development department develop a  prototype model. This step calls for a large jump in investment. The prototype will undergo a serious tests, and will be presented to a selection of people made up of the target market segment to see if changes need to be made.. 
7. Test Marketing - Now the product is ready to be launched in market with brand name, packaging, and pricing. Initially the product is launched in a test market. Test marketing means testing the product within a specific geographic area. The product will be launched within a particular region so the marketing mix strategy can be monitored and if needed modified before national launch. If the product is found acceptable in test market the product is ready to be launched in target market.
8.  Commercialisation - Here the product is launched across target market with a proper market strategy and plan. The following decisions regarding the target market need to be made

o    Timing of the launch

o    How the product will be launched

o    Where the product will be launched