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Developing a new product will gives you a road-map that gives your business a clear path to follow. Improving and updating products is an ongoing consumer market is a very big challenge since "needs and wants" rapidly change. A delay in new product development process could result a loss in sales volume if customers decide to buy our competitor products. The main objective of new product development is to dig, retain and increase firm's market share by meeting customer demand on time. Not all the products is made for every customer’s, so identifying the target market for each and every product is an important factor that should take place early in new product development process. Market researches should be done at all phases of the product and process design on the basis of quantitative and qualitative factors, including before the product or service is formulated, while the product is being designed and after the product has been launched. Get to know about the reasons why companies should develop new products. The eight stages of new product development are explained below.
New product development Process starts with generating ideas. A company has to generate many ideas as much as it can, in order to find the best one which suits them. The Major sources of new product ideas will be from employees, Market research, customers, competitors, consultant’s distributors and suppliers. Almost 55% of all the new product ideas arise from customer after sales service feedback. Almost 28% of new product ideas developed from observing and listening to consumers. Many companies like Toyota and 3M are having special incentive programs for their employees to come up with practical possible ideas. Even customers create new products ideas by their own, and there are few companies which is encouraging these innovative products and placing them on the market. (Eg: Few of the Pillsbury’s four cake mix lines and their several variations of another came directly from Bake-Off winners recipes program)
The second stage in new product development process involves screening Ideas and selecting the ones which are most feasible and practical to develop. Pursing impractical ideas is costly and a waste of resources. This stage is decisive to ensure that the ideas are good or bad, for any reason it may be rejected as soon as possible. Fixed and discrete screening criteria need to be defined for this stage, on various aspects like return on investment, affordability and market potential. These questions need to be answered carefully to avoid product failure. Finally, the new product development team and management can attain an overall score of the company’s potential to launch the product successfully.
Concept testing follows the next stage in new product development. Concept testing is the process of using qualitative and quantitative methods to observe and determine consumer responses towards a product idea prior to the entry of a product in to the market. These imply the evaluation by consumers of product concepts, whether they are having certain rational or irrational benefits. Concept testing is performed using personal interviews, focus groups and field surveys, in combination with various quantitative methods.
Once the concept has been tested and finalised, this stage in new product development has bought the business analytics in to the picture. The company might found out a great idea but the marketing strategy had to be defined well, the product should be financially worthwhile in the long run. The business analysis stage looks more deeply into the Cash flow the product could generate. It involves the appraisal of costs, profits and sales projection of the product to find out whether they meet company’s requirements. If it so, it can moved to the product development stage. This involves a comprehensive marketing strategy which should highlight the target market, product positioning and the marketing mix. This stage will give you the answer for the question how will the product idea be launched in the market?
Here comes the product development stage in new product development. At this stage the product concept transformed into a physical prototype product. The designed product needs to satisfy the demand of a target audience. This will help us to explore exact design & specifications and the feasible manufacturing methods, but also gives something tangible to the consumer testing. (For example feedback on looks, feel and packaging) This will show whether our product idea can be developed into a full- fledged viable product. This prototype will undergo functional tests conducted under laboratory and field conditions, and will be presented to a selected people from the target market segment to see whether changes need to be done.
Test marketing defines testing the product within a specific geographic area in new product development. This new product will be launched in a particular region so that the marketing mix strategy can be evaluated and if it is needed it can be modified before its universal launch. The objective of this stage is to validate the entire product concept from marketing to packaging, advertising, distribution. By testing the entire process before launch, the company can predict the future of the product before its full market launch with investment made. Test marketing gives the company an opportunity to pull the marketing mix before it goes into the product launch. The size of test marketing changes depends up on type of product. Costs of test marketing can be huge and it can also allow competitors to launch a similar product or even destroy the market testing by getting biased results.
Market entry or commercialization is the critical stage in new product development, where the product is fully introduced to the target market. The results obtained from the previous stages of this entire approach are used to draft, design, produce, market and distribute the final product through the appropriate channels. Introducing the product to the market will incur huge costs for manufacturing, advertising and promotion. The company will have to decide on the timing of the launch (seasonality), how and where the product will be launched, will there be a national roll out or will it be region by region. This depends on the ability of the company to bear risk and its reach of the distribution network.
Post Launch Review, In order to learn from any mistakes done, a review of the market performance is needed continuously to access the success of the project. Review the new products which is launched and look for continues improvements. Almost all new products were introduced with introductory pricing, in which final prices are fixed on how the consumers received it? Nowadays, in order to rapidly increase speed to market, many companies are dropping this sequential approach in their development process and are adopting the faster, more flexible, simultaneous development approach. Under this approach, many firms work closely together with cross functional team, overlapping the stages in the new product development process to save time and increase efficiency.
Remember new product development process is an ever evolving testing platform where errors may occur, designs will get ruin, and loss could be recorded. Productivity during new product development can be achieved only if its goals are defined clearly along with the way and each process.
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