Table of Contents
New Product Development
If a company wants to be successful in the long-term, it has to engage in new product development process to introduce new products and satisfy its customers’ needs. There are thousands of new products enter into the process but only few reach to the market. Therefore, it is very important to understand your customers, market conditions and competitors who are offering the same type of products. Every product goes through 8 steps of new product development process.
Idea generation is the first step of New Product Development process. It is a systematic search to find out new ideas. It comes from everywhere and in any form. In the first stage, new ideas are collected from many sources, which are
- Internal Sources. Mostly, large companies have their own formal Research and Development department. But normally any employee can come up with a good idea.
- Customers. A company should always listen to customers’ questions, complaints and feedbacks that help to generate new product ideas to satisfy customer problems.
- Competitors. To generate ideas companies can conduct competitors swot analysis.
- Distributors and suppliers. Also known as collaborators are close to the market. They know the consumer problems and new ideas and techniques to address these problems.
Idea generation can provide us with a pool of ideas. But the second step of new product development process is to find good ideas and drop the poor one. Following are some of the factors influencing evaluating criteria to make it succeeded
- Is the product useful to customer’s needs?
- Company objectives and resources (people and skills)?
- Company strengths and weaknesses?
- Affordability, advertising and distribution?
- Current trends?
- What is the expected return on investment
Concept Development and Testing
Concept development and testing is the third step of new product development process. A product concept provides a detailed description of the idea, keep in mind your consumer perspective.
Those ideas qualify the screening stage to become a concept and it must be tested. Companies cannot launch a new product without properly testing the concept. Concept testing help companies to investigate customers reactions before introducing to the market.
A more physical and visual presentation is required for a more reliable concept test. The concept further engages target market. After exposing the concept, companies ask questions from consumers. Companies want to know the customer’s reactions in term of feedback. Is the concept appealing or not and fulfilling the customers wants?
Marketing Strategy and Business Analysis
In this step, the company develops marketing and business strategy to introduce a new product in the market successfully. The company engages different business units – to perform marketing and financial analysis – to meet the marketing objectives.
The company initially explain target market and product positioning. It should also explain sales forecast, market share and profit both in short and long-run. The company also describes the marketing mix strategy.
Business analysis involves a detailed review of company cost, sales, profit projections whether the company is satisfied with objectives.
When all the marketing and business strategies are finalized. In this step, the product concept is transformed into a physical product. In the development stage, a prototype is designed that is functional and able to satisfy the consumer wants. The product undergoes serious tests to make sure its effectiveness and performance.
After designing a successful prototype, it is introduced for further research and feedback. With the help of test marketing, the company tries to understand the consumers and dealers feedback and reaction. Important changes are made in the actual product if needed. This step completes the process empowers the company to successfully introduce the new product in the market.
Test marketing helps the company to make decisions and launch the new product in the market. Commercialization is introducing the new product in the target market. The marketing mix strategies are applied. Four decisions are important when launching a new product.
- When to introduce the product.
- Where to launch a new product in single or multiple location, national or international market.
- To whom the company must decide distribution and promotion (already decided in test marketing phase).
- How (action plan) a company should introduce the new product in the target market.
A detailed introduction plan is required for a positive impact of the new product in the market. This is also known as the first stage of Product Life Cycle.