New product development (NPD) is the process of developing, testing, and evaluating new products to ensure company growth. It involves generating product ideas, screening concepts, developing and testing selected concepts, creating marketing strategies, analyzing business potential through projected costs and sales, beta testing products, and commercially launching new products. The goal is to introduce successful new products to consumers while avoiding the high failure rates common with new products.

1. New Product Development

2. What is New Product Development?
 New Product Development (NPD) is a process which
is designed to develop, test and consider the viability
of products which are new to the market in order to
ensure growth or survival of the organization.
 The overall process of strategy, organization, concept
generation, product and marketing plan creation and
evaluation and commercialization of a new product.
Also frequently referred to just as "product
development."

3. New Product Development Strategy
 New Products suffer from high failure
rates.
 New Products can be obtained via
acquisition or development.
 Several reasons account for failure.

4. Examples of New Products
 New to the consumer – High definition
Plasma/LCD Television, iPod,
 New product lines – Mars ice-cream
 Replacement and product improvement
– new car model

5. New Product Development Process
– Stage 1
Idea Generation
 From Internal sources:
- R&D in a organization, employees, trade
shows, sales team etc.
 From External sources:
- Customers, competitors, distributors, suppliers,
vendors etc.

6. New Product Development Process
– Stage 2
Idea Screening
 Ideas are evaluated against criteria; most
are eliminated prior to devoting resources
on them.
 Product development cost increase
substantially in later stages.

7. New Product Development Process
– Stage 3
Concept Development and Testing
 Develop the engineering and marketing details.
 Product concepts provide detailed version of
new product ideas in meaningful consumer
terms.
 Test the concept by asking target customers to
evaluate product concepts.
 Turning ideas into tangible products that
consumers perceive as being valuable.

8. New Product Development Process
– Stage 4
Marketing Strategy Development
Designing an initial marketing strategy
for a new product based on the product
concept
Market Research is carried out to
assess the product’s market potential

9. New Product Development Process
– Stage 5
Business Analysis
 A review of the sales, cost and profit projections for
the new product is carried out to find out if this
matches with the organizations goals
 Estimate potential sales, income, break-even point,
profit and return on investment from the new product.
 Projecting probable costs and sales; will profit reach
the organization’s targets?

10. New Product Development Process
– Stage 6
Beta Testing/Market Testing & Product Development

Create a physical prototype and test the product in
typical usage situations

Conduct focus group customer interviews or introduce
the new product in Trade shows

Releasing the product into a small but representative
market where consumer reactions/marketing mix can
be assessed and checked.

Make adjustments where necessary

Produce an initial run of the product and sell it in a test
market area to check the customer acceptance

11. Commercialization/Product Launch
 Timing is critical for success.
 Introducing of a new product into the market.
 Heavy promotional expenditure at the launch.
 Pricing of the product should be skim or
penetration pricing.
 The product has to be well targeted and
positioned in the market.
New Product Development Process
– Stage 7

12. Stages in a New Product
Development (NPD)
 Idea Generation
 Idea Screening
 Concept Development and Testing
 Marketing Strategy Development
 Business Analysis
 Beta Testing/Market Testing & Product
Development
 Commercialization and Product Launch

13. Thank you