Meaning of New Product Development
New product development is the process through which the business takes the new product or service conception to market. It is the means through which the company launches a new product in the market.
New product development involves the creation of new products and services as per the current requirement of the people. It is an important element for a business to increase its sale and customer base by converting the market opportunity into a product available for sale.
It is the function of top management personnel’s to develop an idea of a new product by taking and analysing the information from the market and finally launching it. This process involves conducting market research to grab information regarding customers’ needs to develop a new product idea accordingly.
New product development process involves series of steps to be followed before developing and launching a new product: Idea generation and evaluation, Concept testing, Business analysis, Product development, Test marketing and at last commercialization. Steps required to be followed in the new product development process are as follows:
Steps of New Product Development
Idea creation step in the new product development process is concerned with the generation of new product ideas. It initiates the new product development process. This step involves performing systematic research to find the idea that is worthy of pursuing. There are different sources for searching the product ideas which are categorized as internal sources and external sources.
Customer need and wants are the prime focus for the development of product ideas. Internal sources are suggestions of employees, company salesman and technical sales staff, brainstorming sessions of management, company sales record etc. Whereas external sources include consumers, competitors, wholesalers and retailers, trade fair etc.
This step involves screening and evaluation of different product ideas developed. It involves critical analysis of all and finding out the most appropriate and worthwhile to follow. Idea generation step is concerned with the generation of the large pool of product ideas whereas Idea screening step is concerned with rejection and neglecting all unfavourable ideas. Many factors like product policy of firm, financial capability, resources availability etc. are considered before eliminating unfavourable ideas.
Concept Development and Testing
Concept development and testing is the third step in the new product development process. It involves the conversion of attractive and favourable product ideas into product concept. Product concept is basically a detailed version of product idea in meaning consumer terms.
Different product concepts are tested in this stage to select the most appropriate one. In this step, it is found out whether the product idea is understood by the consumers, whether the consumer needs the product and whether he will accept the product. Here, a small group of customers is selected and full information regarding the new product idea is shared to get their response regarding it.
Business analysis is a very crucial step in the new development process. In this product idea and concept is analysed from a business point of view. The company finds out whether the product is commercially profit for it.
Companies analyse different factors in this step like cost and demand of a product, whether its demand is seasonal or regular, competitors of new product, amount of expenses required to be incurred on its promotional activities etc. Companies perform a detailed investigation of a product idea to find out their profitability.
Product development is the step concerned with development of the product. Here product idea on paper is converted into an actual product. Business agreed to adopt the product idea and plans to develop the product accordingly. Various departments have conveyed the message to initiate the processes concerned with new product. The production department will plan the production, the finance department will provide the required funds and the marketing department will plan how to promote and distribute the product.
Test marketing is the step in which product is commercially introduced into market for test and evaluation purposes. Thereafter product development, it is introduced in a small market area or selected geographical area before introducing in a large market.
If the product gets passed and gets a positive response in the test market then only it is introduced on a large scale. Response and suggestions of people are taken into account by bringing further improvement in product quality. It is important to step as it helps in removing all faults from the product.
Commercialization/ Market introduction
This is the final step in the Product development process. After the product is successfully passed in the test market, it is now introduced to the public on a large scale.
Product is now available for people in the market on a large scale. Huge promotion and advertising is done by the company to create awareness and beat the competition in the market. Product is now available for all the people all over the country.