Business: How to Develop a New Product
What is New Product Development?
A new product development process is the overall activities that are undertaken by a product development company to introduce a new product into the market. It starts from idea generation and conceptualization, passes through a number of distinct processes up to until the stage of product commercialization is reached.
The process of new product development consists of eight different steps that depend on one another. Step one must be done for step two to begin and three must be completed for step four to be worked on.
1. Idea Generation
Idea generation happens to be the first of the eight product development processes. It starts in brainstorming probable ideas that can be turned out into profitable and successful business ideas. Brainstorming involves gathering all product ideas that have chance of being turned into a viable businesses and choosing the best one among the many suggested ideas. The process of new product development starts with this step which is first of eight steps. The Idea generation step plays a significant role in the product development and is often important in the overall performance of the product when it’s finally introduced into the market.
Product ideas can be sourced from two main sources:
- Internal = Internal sources of new product development ideas are those that involve or have to do with the internal structure of the company which may most likely include but not limited to junior employees, top management, the salesmen, the research and development department e.t.c. each group is approached for unique product ideas.
- External = This includes external stakeholders like suppliers of raw materials, consumers, competitors, wholesale and retail distributors e.t.c. they come in contact with the company and in one way or another they are capable of suggesting good product ideas.
2. Idea Screening
Idea screening is the second step in the product development process. This strategy has to do with filtering new product ideas to determine the good and the bad ones. The probable ideas are presented as a pool and a thorough evaluation and selection criteria is carried out based on such factors as affordability, sustainability, acceptability to consumers e.t.c and the best idea is chosen and adopted.
3. Development & Testing
This is the third stage of the process of new product development. Development and testing as a product development process involves interpreting the product idea into a meaningful product that is useful to the consumer. Testing on the other hand has to do with experimenting with the product to make sure that it serves the intended purpose it was made for. Testing can be carried out by introducing a beta version of the product to the target consumers and asking them how they feel about the product.
4. Marketing Strategy Development
Marketing strategy is concerned with putting in place the 4 p’s of marketing (price, placement, product and promotion.) and making sure the product becomes a big success in its target market. At this stage of the new product development process the marketing aspect equation is introduced into the system. Strategies that are intended in presenting the product to the target market and consumers are put in place and adopted.
5. Business Analysis
Business analysis in a new product development process has to do with determining if the project has of any use to the company and if at all it adds to the company’s profitability. The projected costs, sales volume, profit margin are measured to make sure that the product development is a worthwhile undertaking. The company has to make sure that the product satisfies the company’s many objectives like profitability and high turnover. The question “does it have financial value?” has to be asked and answered before the next step of the new product development process is moved to.
6. Product Development
This is the stage in the product development life cycle that involves turning the product concept into a physical product that tends to serve the function it was meant for. A sample or a prototype of the product is developed to see how exactly it turns out.
7. Test Marketing
Test marketing involves carrying out a wholesome and extensive marketing plan that includes on such areas as positioning, distribution, advertising, pricing model to be adopted, and branding, packaging etc.
This step emphasizes on the launching of the product into the market and selling to interested buyers. Commercialization is all about the final introduction of the new product into the target market and making it readily available in designated places where those who are interested in it can purchase the product. The right time and place should be used in the product launching and commercialization comes after that.
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