A new business starts with a product idea that you might have scribbled on a napkin in that restaurant a few months ago. Perhaps you start making calls the moment inspiration strikes. Either way, you’ll need a concrete route to take your product idea from birth to customers.
The new product development process, also known as NPD process is the road that leads you there. That’s the first stage of the NDP in the entire product life cycle. Two main components of the new product development process are market research and analysis. You also have to create a proof of concept, test, and launch new products. The guide here navigates around the five stages of the new product development process, including research and product creation.
What is New Product Development Process (NDP)?
Developing a new product starts with idea generation, followed by rigorous screening before the final phases of production, launch and commercialisation according to Flevy.com. The NPD process is crucial for the survival of innovative companies; moreover, today’s business environment is dynamic and highly competitive. To fend off competition from large multinationals, smaller enterprises must continuously update their products to adapt to current buying trends.
The new product development process (NDP) is essentially the cycle a new product needs to undergo from its concept to its ultimate launch into the marketplace.
Benefits of the New Product Development Process
The bottom-line benefits of a new product development process include an increase in revenue since new products can provide new revenue streams.
Moreover, redesigning existing products decreases costs and increases profit margins. The ultimate driver for that may be in response to competition. Fewer defects and superior quality are achieved through better-designed products and methods of assembly. Sales can increase through wider networks of distribution, leading to an overall increase in market share.
Additional benefits include the exploitation of market changes to match existing products with the buyer’s needs.
Products quickly become obsolete; therefore, the marketer consciously strives to reach market segments by improving existing outcomes or launching new ones.
Risk diversification is another benefit of using a new product development process. The threat of obsolescence hangs over the most well-known products.
5 stages of the NDP
- Stage 1 – Concept Generation
- Stage 2 – Screening
- Stage 3 – Concept Development
- Stage 4 – Prototyping and Evaluation
- Stage 5 – Launch and Commercialisation
1 – Concept Generation
Concept Generation is the backbone of the new product development process, reducing the chances of failure manifold. The critical question is how to generate ideas for a new product.
You need to start by identifying genuine customer needs, and even at this early stage, you should answer fundamental questions such as Who is your customer? What specific needs will the new product satisfy? How can you communicate the product’s value?
It would help if you listened attentively to customer complaints to analyse potential areas for turning them into your next idea. The stage lays the foundations for the other phases, and the ideas you generate serve as a guide to the overall process of the new product development.
2 – Screening
The ideas you generate must go through a rigorous screening process to filter out the viable ones. You can seek employees, customers and other businesses opinions to avoid pursuing costly and unfeasible ideas.
External factors will affect small businesses and influence decision criteria. They include competition, legislation and advances in technology. After the screening process, only a few feasible ideas will remain from the larger pool. While the idea-generating stage is primarily about adding to your collection of ideas, the screening process reduces the number of views.
You can filter the good ideas from the bad, and proceed only with the ones you think will create genuine value for your customers. It will give you a competitive edge and generate better returns. You can document your new product ideas describing the product or service, your target market, existing players, an estimate of the market size, the cost of manufacturing, time of development, and return rate.
The criteria for filtering the best new ideas include the following,
- Customer’s Expectations
- Research & Development Costs
- Target Market Needs
- Affordability
- Technical Feasibility Study of the Idea
- Expected Return on Investment
3 – Concept Development
Only a handful of realistic new product ideas will remain after the screening. You will need a comprehensive plan in place and blueprint before you launch into a prototype.
You should assess the designing costs, manufacturing process, packaging, and distribution of the product concept. You may opt for third-party vendors, or you could create internal systems wherever possible. You will identify the capital and human resources you require, and the core features you need for a working product. You can start on a potential marketing plan and an overall business strategy that takes in projected revenues and market share for the new product. It would help if you researched at this stage to find out potential costs and gains arising from the new product.
A SWOT analysis will assist you in identifying the strengths, weakness opportunities and threats in the market at present, and the marketing strategy will set out the product’s target group. That will facilitate market segmentation of the product. Once you identify a niche, it will influence most of your marketing decisions.
4 – Prototyping and Evaluation
The prototyping and evaluation stage breathes life into your new product concept. The design and production stage helps you create an actual prototype or mock-up. It’s advisable to run a small-scale, trial release at this point. Another option is to assemble a group of target customers to evaluate the experimental new products.
It will be your last chance to iron out technical issues or add in-demand features. You will need to run Beta tests if developing an app, for instance. The development process commences with manufacturing a prototype that can facilitate market testing. Those tests will assist the business owner in deciding whether or not to undertake a large-scale production.
5 – Launch & Commercialization
Your product finally enters the marketplace during the fifth stage. You essentially launch your minimum viable product (MVP).
The first release generally includes only core features to move forward and start generating essential sales revenue. By the time of its eventual launch, the supporting operations should be firmly in place. Technical and customer support should also be ready, pricing, distribution if necessary, and sales, marketing, and distribution. It would be best to utilise your research and tests to determine how and when to promote your products best.
Round-Up: Bringing Something Different to the Market
Each finished product is different, and different industries have unique challenges to create something new. Therefore, each new product development will be different from another. However, according to this article, following the five new product development stages will help you overcome the hurdles and challenges. You will be breaking down the overwhelming task of launching a new product into a highly competitive market into digestible, manageable phases.
No matter what product you develop, putting in the necessary preparation of researching, planning, prototyping, costing, and sourcing, you are setting yourself up for a highly successful final new product.