New product development process

New product development process.

New product development is a process which is designed to develop, test and consider the viability of products which are new to the market in order to ensure the growth or survival of the organization.

1.      Idea generation: a product idea is the starting point of new product development. It is targeted at satisfaction of unmet customer needs. It is a possible product that can be offered to the market. New ideas can be generated by:

-          Conducting marketing research to find out the consumers' needs and wants.

-          Inviting suggestions from consumers.

-          Inviting suggestions from employees.

-          Brainstorming suggestions for new-product ideas.

-          Searching in different markets viz., national and international markets for new-product ideas.

-          Getting feedback from agents or dealers about services offered by competitors.

-          Studying the new products of the competitors.

2.      Idea screening: This process involves shifting through the ideas generated above and selecting ones which are feasible and workable to develop.  It is the process of eliminating unfeasible ideas. The ideas are screened in terms of organizations objectives, policies, resources and technical capabilities. Ideas can be promising, marginal and rejected ones. Promising ideas are evaluated for consideration in the next stage. Marginal ideas are stored for future uses. Rejected ideas are dropped.

3.      Concept development and testing:

Concept testing is done after idea screening. It is different from test marketing. In this stage of concept testing, the company finds out:
Whether the consumers understand the product idea or not?
Whether the consumers need the new product or not?
Whether the consumers will accept the product or not?

Here, a small group of consumers is selected. They are given full information about the new product. Then they are asked what they feel about the new product. They are asked whether they like the new product or not. So, concept testing is done to find out the consumers' reactions towards the new product. If most of the consumers like the product, then business analysis is done.

4.      Marketing strategy and business analysis:
a. Marketing strategy: a preliminary marketing strategy for the selected project concept is developed. It covers
-target market for the product
-product positioning strategy

-estimates of market share
-marketing budget
-marketing mix
b. business analysis: a business analysis is done to evaluate the product concept’s business attractiveness. It involve:
-competitor analysis

-demand forecasts

-cost statement and break-even analysis to estimate costs

-profit projections

If the product concept passes the marketing strategy and business analysis test, it moves to the next stage of product development.

5.      Product development: At this stage the prototype is produced. The product concept is developed into physical product. Functional tests under lab and field conditions are conducted to see that the product performs safely and effectively.

6.   Test marketing: test marketing means to introduce the new product on a very small scale in a very small market. If the new product is successful in this market, then it is introduced on a large scale. However, if the product fails in the test market, then the company finds out the reasons for its failure. It makes necessary changes in the new product and introduces it again in a small market. If the new product fails again the company will reject it.

Test marketing reduces the risk of large-scale marketing. It is a safety device. It is very time-consuming. It must be done especially for costly products.

7.      Commercialization

If the test marketing is successful, then the company introduces the new product on a large scale, say all over the country. The company makes a large investment in the new product. It produces and distributes the new product on a huge scale. It advertises the new product on the mass media like TV, Radio, Newspapers and Magazines, etc.