New product development (NPD) is the process of introducing new product in to the market. The business may need to engage in the process of NPD due to the change in the consumer preferences, increasing technology, grabbing new opportunity. Business survive in the market when they know what their consumers want, by making product improvements, and developing new products that meets the customer’s expectations. There are 8 major steps followed in the New Product Development process:
- Idea Generation: The first stage of product development is idea generation. In this stage pool of ideas is created from various sources. These resources could be:
A. Internal sources: the company finds new ideas internally. Many companies provide incentives to the employees who come up with the ideas.
B. External sources: the company finds new ideas externally. The external users generally include: distributors, suppliers, competitors and customers. The most important external source is customer, because the new product development process should focus on creating customer value.
- Idea screening: the next step in NPD is idea screening in which the best ideas from the pool of ideas is chosen. All ideas are screened to select the best ones and drop the bad ones. The company will choose the product that will maximise the profits.
- Concept development and testing: concept is a detailed blueprint or strategy version of data. When an idea is made presentable in every aspect it is called concept. NPD needs to be tested with certain groups of target market is known as concept testing. Some selected customers are chosen from the targeted group to test the concept. Their feedback helps the company to modify their concept further.
- Marketing strategy development: next step is the marketing strategy development. After a concept has been developed and tested, now it is the time for designing the marketing strategy for the product. The product profitability estimation is done, branding strategies are decided.
- Business analysis: in this step various projections are estimated to find out if the new product goes with the objectives of the company. In this step, management evaluate the business attractiveness of the new product.
- Product development: once all the above steps are completed the product is converted into a tangible product. All the strategies decided previously are applied to the product in this stage. The products undergo various steps to make sure they perform effectively and safely before launching it in the market.
- Test marketing: in this stage the product and its marketing strategies are tested in the market. This testing will help the marketer to know whether the strategies laid out are working effectively or not before introducing it fully in the market.
- Commercialisation: the previous step of test marketing has given the idea to the marketer about whether to launch a product or not in the market. In this step, the new product is introduced into the market. Introduction place and timings are decided before the product is launched. At this point, the highest costs are incurred: the company may need to build or rent a manufacturing facility. Large amounts may be spent on advertising, sales promotion and other marketing efforts in the first year.
Astha Gupta, BBA 3MB, TIAS