In business the term new product development also referred to as NPD is the complete process of bringing new product to market. It is described as the transformation of a market opportunity into a product available for sale and can be tangible or intangible.
An understanding of customer needs and wants, the competitive environment and the nature of the market are the most important factors for the success of a new product. It is important to note that introducing new products on a consistent basis is important to the future success of any organization. The following are important steps in new product development process.
Generating the idea
Using basic internal and external SWOT analyses and the current market trends, you can stay out of competition by generating ideas which take into account return on investment (ROI) and widespread distribution costs. Lean, mean and scalable are the most important points to remember.
Screening the idea
This is the process of checking out if the idea is viable. Set specific criteria for ideas that should be continued and those that should be dropped. The objective of this step is to eliminate unsound concepts prior to devoting resources to them. At this point the individual screening the idea should ask a number of questions for example, how will the target customers benefit from the product, what is the size and growth forecasts of the target market, is it technically feasible to manufacture the product? These and many other questions must be considered at this point.
Testing the idea
In this step the biggest question that should be asked is, does the consumer understand, need or want the product or service? Knowing where the marketing messages will work best is important in testing the concept. On top of that, this step should give answers to questions like what will be the consumers’ reaction to the product, how will the product be produced and what will it cost to produce the product?
Business analytics
During this process, estimate the likely selling price based on competition and customer feedback. You should also estimate the sales volume basing on the market size. Additionally, you should estimate profitability and break-even point. You should also include input metrics for example average time in each stage and output metrics that will measure the value of the new product.
Marketability tests
This involves arranging private test groups forming test panels and launching beta versions after the product has been tested will give provide you with important information that will facilitate last minute improvements on the product.
Technical implementation
This step provides the technical aspects involved in the development of the product. it involves new program initiation, resource estimation, logistics plan, finalizing quality management system, department scheduling, engineering operations planning, program review and monitoring, contingencies planning just to mention but a few.
Commercialization
This stage involves launching the product, producing and placing advertisements, filling the distribution pipeline with product and consistent monitoring of the progress.
New product pricing
Most new products are introduced into the market with an introductory price. The final price is usually set after observing consumers reaction. In this stage you will gauge the overall value of new product development based on the cost of goods sold.