NEW PRODUCT DEVELOPMENT
Author- Younus Miraj
Shanto-Mariam University of Creative & Technology
“Our experience with Enova is that it’s a flexible, out-of-the-box application that
provides the backbone for a very strategic part of our business—new product
New product development (NPD) is the complete process to bring a new product in
market. A product is a set of benefits offered for exchange and can be tangible (that is,
something physical you can touch) or intangible (like a service, experience etc.) There
are two parallel paths involved in the new product development process. There are
one involves the idea generation, product design and detail engineering; the other
involves market research and marketing analysis. Companies typically see new
product development as the first stage in generating and commercializing new product
within the overall strategic process of product life cycle management used to maintain
or grow their market share.
New product success depends on many factors which will influence the destiny of the
new venture. In later venture life the decisions about future investment of profits and
the strategic soundness of those decisions will determine long term sustainability of
the firm. New product development is one of the most important aspects of long term
New product development (NPD)
To create the next product in a company‘s product line a design team goes through
product development process steps. Starting with a product idea, the team moves
through several stages to generate all the details and documents needed to get the
product built. A new product development (NPD) process goes through the same
steps, however as this product has not been developed by the team before, new risks
and uncertainties are introduced and often additional information is documented and
shared with manufacturing.
The Role of Product Development in the Enterprise
New product development (NPD) is the manifestation of the idea to exploit the
chosen opportunity. It is the centre of all strategies and the vehicle that will get the
enterprise going in the market. New product development is the chosen basis of
growth for companies like Nokia, Sony, Apple and Galaxy of which they have
completely relied upon as a strategy. These companies are what they are today
because of new product development. The place of new product development in the
web of company strategies and operations is shown in below:
Figure 1:The Relationship of New Product Development to the Enterprise
1. Planning takes place around a specific project or number of small projects,
2. The development process will not necessarily reflect itself in traditional
indicators like increased revenue and employment,
3. Strengths and weaknesses of the base will be an important factor in the
eventual success of the new development.
Types of New Products
Amongst the large number of products coming out onto the market each year, it is
sometimes very difficult to distinguish what is really a new product. Thus there are
many ways of classifying new products. There are given below:
New to the world products
New to the world products are the first of their kind in the market. They are usually
something invented or enhanced by a significant change in technology. These
products would revolutionise the market or even create a new market, which may
require significant consumer learning to become familiar with the new product.
Examples of this would be the new micro-chip processors, Intel has just announced,
which will make computers more energy efficient, light weight and smaller, the
progression from land line based telephones to mobile phones and now hand phones,
the progression from typewriters to electric typewriters to word processors etc.
Regulation Product Design
Skills & Learning
New Product Lines
New Product Lines are not new to the market but good position is hard to catch into
the market. This is where a company would enter a market for the first time, where
success and profitability will depend upon the timing. The later the company enters
the market, the less will be the concept risk taking, but the greater will be the
Figure 2:Speed to the new market for that company
Additions to Existing Product Lines
Additions to Existing Product Lines are products that extend a range marketed by a
firm. The product is different from existing products either in function or consumer
application or as a variant of an existing product, such as a different pack size, flavour
or fragrance etc. All company wants to keep catching good position.
Improvements and Changes to Existing Products
Improvements and Changes to Existing Products are undertaken to improve quality or
make the product more convenient to use by the consumer. This is often a continuous
process by companies, but when the product has been overhauled substantially,
companies may undertake a relaunch or promotional campaign to inform consumers
about the change. Sometimes products are phased out with a replacement product to
maintain their competitive position in the market. This happens continually in the
mobile phone market, sometimes a number of times each year.
Product Repositioning are products that are retargeted at new consumer groups or a
larger proportion of consumers sharing the same wants. For example, a detergent may
be repositioned in a new pack size to attract new consumers.
Basic new product development steps
There are five basic steps in a new product development process. These are given
1. Concept —
At first, every person or organization will come new idea or concept. It is the
basic things of new product development. New product development process by
clarifying the type of product, the problem the product solves and the financial
and technical goals to be achieved by the product.
2. Ideation —
During the ideation step the team brainstorms to discover some of the many ways
a product can solve the problem and meet internal goals. Ideas are evaluated and
the most promising are selected for further investigation.
3. Design —
It‘s in this step that the execution of the best way to create and construct the
product happens. Engineering details are generated to flesh out the high level
concepts from the ideation stage.
4. Test —
Testing verifies if the product meets the original goals or if additional refinement
5. Release —
Once testing has confirmed that the product solves the problem and will meet the
company goals; it is ready to start the new product introduction (NPI) process and
get the product built.
8 Step Process of New Product Development
The New Product Development process is often referred to as The Stage-Gate
innovation process, developed by Dr. Robert G. Cooper as a result of comprehensive
research on reasons why products succeed and why they fail. When teams collaborate
in developing new innovations, having the following eight ingredients mixed into
your team‘s new product developmental repertoire will ensure that it‘s overall
marketability will happen relatively quick, and accurately – making everyone
productive across the board.
Figure 3:Speed to the new market for that company
Step 1: Generating
During the NPD process, keep the system nimble and use flexible discretion over
which activities are executed. You may want to develop multiple versions of your
road map scaled to suit different types and risk levels of projects.
Step 2: Screening the Idea
Because product development costs are being cut in areas like Wichita, ―prescreening
product ideas,‖ means taking your top three competitors‘ new innovations into
account, how much market share they‘re chomping up, what benefits end consumers
could expect etc.
The screeners should ask several questions: (a-f)
a. Will the customer in the target market benefit from the product?
b. What is the size and growth forecasts of the market segment / target market?
c. What is the current or expected competitive pressure for the product idea?
d. What are the industry sales and market trends the product idea is based on?
e. Is it technically feasible to manufacture the product?
f. Will the product be profitable when manufactured and delivered to the
customer at the target price?
Step 3: Testing the Concept
As Gaurav Akrani has said, ―Concept testing is done after idea screening.‖ And it is
important to note, it is different from test marketing. Aside from patent research,
design due diligence, and other legalities involved with new product development;
knowing where the marketing messages will work best is often the biggest part of
testing the concept. Does the consumer understand, need, or want the product or
Step 4: Business Analytics
During the New Product Development process, build a system of metrics to monitor
progress. Include input metrics, such as average time in each stage, as well as output
metrics that measure the value of launched products, percentage of new product sales
and other figures that provide valuable feedback. It is important for an organization to
be in agreement for these criteria and metrics.
Step 5: Beta / Market Tests
Arranging private tests groups, launching beta versions, and then forming test panels
after the product or products have been tested will provide you with valuable
information allowing last minute. (a-c)
a. Test the product in typical usage situations
b. Conduct focus group customer interviews at trade show
c. Make adjustments where necessary
Step 6: Technicalities
Provided the technical aspects can be perfected without alterations to post-beta
products, heading towards a smooth step 7 is imminent. According to Akrani, in this
step, ―The production department will make plans to produce the product. The
marketing department will make plans to distribute the product.
a. Finalize Quality management system
b. Requirement publication
c. Engineering operations planning
d. Department scheduling
e. Resource plan publication
f. Program review and monitoring
Step 7: Commercialize
At this stage, your new product developments have gone mainstream, consumers are
purchasing your good or service, and technical support is consistently monitoring
a. Launch the product
b. Produce and place advertisements and other promotions
c. Fill the distribution pipeline with product
d. Critical path analysis is most useful at this stage
Growth Maturity Decline
Sales & Profits
Losses & Investment
Figure 6.9. The Product Lifecycle
Step 8: Post Launch Review and Perfect Pricing
Review the NPD process efficiency and look for continues improvements. Most new
products are introduced with introductory pricing, in which final prices are nailed
down after consumers have ‗gotten in‘.
a. Value Analysis (internal & external)
b. Competition and alternative competitive technologies
c. Differing value segments (price, value and need)
d. Product Costs
Entrepreneurial New Product Development
Successful new product development comes from experience and with it, the
individual discipline and maturity to know when they are biased in their thinking of
potential success or failure of a product. Industry knowledge is very important, but it
must be used objectively without emotional baggage etc. we have a long history in
that market and it is ours or we have always been successful with new products in this
market etc. It is not accepted by consumers who associate the fragrance with grave
yards and jasmine is rejected by 80% of the consumers.
There are discussed the below: (a-d)
a. Less than 5% of new products launched on the market are successful,
b. Out of 100 new ideas, less than 2 become a commercial reality
c. Most companies are followers in the market and not innovators
d. Most new products are actually only incremental steps in enhancement of
products rather than something completely new.
Product Life Cycles
Products have a life cycle. The product life cycle of products is a reason why
companies must continue to develop new products to replace those in the market
place that have come to the end of their useful life. It is difficult to develop strategy
according to the product life cycle.
There are given below of product life cycle:
Figure 4:Speed to the new market for that company
1. The product development stage
The product where are an idea evaluated and developed into a commercial product.
This is where time is spent on developing the product without any sales revenue at all
with increasing costs as time goes on.
2. The introduction stage
The introduction stage is where the product is first introduced into the market. Usually
this period takes time, especially during a new enterprise start up as gaining access to
distribution channels is also a learning experience with much trial and error being
undertaken with potential buyers. However once distribution is established there is a
period where the product moves very slowly and sales growth is slow while potential
customers evaluate the product for potential purchase and use.
3. The growth stage
The growth stage will be entered into if consumers accept the new product and
continue to repurchase it on a regular basis. If this becomes the case then sales will
begin to rapidly rise from faster shelf off-take and gaining new distribution points
from conservative channel outlets that held of on initial purchase and support of the
new product. New competitors will be likely to enter the market and existing
competitors likely to retaliate through discounting and more vigorous merchandising
at store level to maintain their market-share.
4. The maturity stage
The maturity stage is where sales slowdown. Products usually enter this stage when
there are a number of competing products in the market. During this period,
competitors will use promotion and discounting to maintain sales levels and target
erosion of competitors‘ sales to gain market-share.
5. the decline stage
Eventually the product falls into the decline stage where sales begin to go do almost
steadily. This can be a very gradual process in stable technology markets like food
and household products or be extremely rapid in technology based products like
media and communications. In food and household products this is normally.
Product development is a broad field of endeavour dealing with the design, creation,
and marketing of new products. Sometimes referred to as new product development
(NPD), the discipline is focused on developing systematic methods for guiding all the
processes involved in getting a new product to market. The new product development
process is all about creating and defining the next new product. With revision control
processes in place and data collected in one location, everyone will know where to
find the latest information and be able to tell what happened along the way.