New product development involves making changes to existing products or introducing new products. There is a defined 8-stage process for new product development that includes idea generation, screening, concept development and testing, marketing strategy development, business analysis, product development, market testing, and determining a roll-out strategy. The goal is to balance risk and potential payoff when bringing new products to existing markets or entering new markets.

1. New Product Development
(NPD)

2. •Product development means making
changes in the size, design, color, shape,
characteristics, packing etc. of the product. It
may include addition of a new product line,
addition of a new product item in a particular
product line, elimination of existing product
or product line & changes in the size, color,
design, packing, characteristics, and prices of
the product & discontinuation of the
unprofitable item or product line.
What is New Product Development

3. Types of New Products
Risk
Potential Payoff
Improve performance of existing product
Add feature to existing product
New product to existing markets
New product to new markets

4. The 8-Stage New Product
Development (NPD) Process

5. New Product Development (NPD)

6. 1. Idea Generation & 2. Idea Screening
• Generation: Firms are always on the
look-out
• Screening:
•Fit with manufacturing and
distribution expertise
•Feasibility

7. 3. Concept Development & Testing
• Prototype or storyboard
• Focus group: Would you be interested
in a service that . . .
• Approximation of willingness to pay

8. 4. Marketing Strategy Development and
5. Business Analysis
• Marketing strategy:
•Developing credible marketing plans
with positioning, target and
Marketing Mix
• Business analysis:
•Is there a high chance of a good
payoff?

9. 6. Product Development
• Convert product concept into physical
product
• product design
• Raw material Development
• Process Development

10. 7. Market Testing
• Some firms (“fashion goods”) don’t test
the market: Put it out there, see if people
buy it (the costs of this must be small)
= “Market test by roll out”
• Simulated test market (dummy store) new
product is mixed in with familiars
• Test markets: Several cities let us tweak
the Marketing Mix … but rivals may
attempt disruption

11. 8. Possible “roll-out” strategies
during “commercialization”
• By geography
• By market size
• By customer type
(business/consumer/government)
• By channel of distribution (Rx/OTC)
• By use (special occasion/every day)
• By benefit sought