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Product Development Process

The product development process involves 8 main steps: 1. Idea generation and screening 2. Concept development and testing 3. Marketing strategy 4. Business analysis 5. Product development 6. Test marketing 7. Commercialization 8. Review of market performance The process transforms a market opportunity into a product for sale through understanding customer needs, testing concepts, analyzing business factors, developing the product, testing the market, full commercial launch, and reviewing performance.

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593 views2 pages

Product Development Process

The product development process involves 8 main steps: 1. Idea generation and screening 2. Concept development and testing 3. Marketing strategy 4. Business analysis 5. Product development 6. Test marketing 7. Commercialization 8. Review of market performance The process transforms a market opportunity into a product for sale through understanding customer needs, testing concepts, analyzing business factors, developing the product, testing the market, full commercial launch, and reviewing performance.

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anuraj
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product development process

In business and engineering, new product development (NPD) covers the complete process of
bringing a new product to market. A central aspect of NPD is product design, along with various
business considerations. New product development is described broadly as the transformation
of a market opportunity into a product available for sale. The product can be tangible (something
physical which one can touch) or intangible (like a service, experience, or belief), though
sometimes services and other processes are distinguished from "products." NPD requires an
understanding of customer needs and wants, the competitive environment, and the nature of the
market, Cost, time and quality are the main variables that drive customer needs. Aiming at these
three variables, innovative companies develop continuous practices and strategies to better
satisfy customer requirements and to increase their own market share by a regular development
of new products. There are many uncertainties and challenges which companies must face
throughout the process. The use of best practices and the elimination of barriers to
communication are the main concerns for the management of the NPD.

STEPS: 1.Idea Generation and Screening 2.Concept Development and Testing


3.Marketing Strategy 4.Business Analysis 5.Product Development 6.Test marketing
7.Commercialization

1. Idea generation The first step in new-product development is idea generation. New
ideas can be generated by: •Conducting marketing research to find out the consumers' needs
and wants. •Inviting suggestions from consumers. •Inviting suggestions from employees.
•Brainstorming suggestions for new-product ideas. •Searching in different markets viz., national
and international markets for new-product ideas. •Getting feedback from agents or dealers
about services offered by competitors. •Studying the new products of the competitors.

2.Idea screening Most companies have a "Idea Committee." This committee studies all
the ideas very carefully. They select the good ideas and reject the bad ideas. Before selecting or
rejecting an idea, the following questions are considered or asked: •Is it necessary to introduce
a new product? •Can the existing plant and machinery produce the new product? •Can the
existing marketing network sell the new product? •When can the new product break even? If
the answers to these questions are positive, then the idea of a new-product development is
selected else it is rejected. This step is necessary to avoid product failure.

3. Concept testing Concept testing is done after idea screening. It is different from test
marketing. In this stage of concept testing, the company finds out: •Whether the consumers
understand the product idea or not? •Whether the consumers need the new product or not?
•Whether the consumers will accept the product or not?

Here, a small group of consumers is selected. They are given full information about the new
product. Then they are asked what they feel about the new product. They are asked whether
they like the new product or not. So, concept testing is done to find out the consumers' reactions
towards the new product. If most of the consumers like the product, then business analysis is
done.

4. Business analysis Business analysis is a very important step in new-product


development. Here, a detailed business analysis is done. The company finds out whether the
new product is commercially profitable or not. Under business analysis, the company finds
out... • Whether the new product is commercially profitable or not? • What will be the cost
of the new product? • Is there any demand for the new product? • Whether this
demand is regular or seasonal?• Are there any competitors of the new product?• How the
total sales of the new product be? • What will be the expenses on advertising, sales
promotion, etc.? • How much profit the new product will earn? •So, the company studies
the new product from the business point of view. If the new product is profitable, it will be
accepted else it will be rejected.

5.Product development At this stage, the company has decided to introduce the new
product in the market. It will take all necessary steps to produce and distribute the new product.
The production department will make plans to produce the product. The marketing department
will make plans to distribute the product. The finance department will provide the finance for
introducing the new product. The advertising department will plan the advertisements for the
new product. However, all this is done as a small scale for Test Marketing.

6. Test marketing Test marketing means to introduce the new product on a very small scale
in a very small market. If the new product is successful in this market, then it is introduced on a
large scale. However, if the product fails in the test market, then the company finds out the
reasons for its failure. It makes necessary changes in the new product and introduces it again in
a small market. If the new product fails again the company will reject it. Test marketing reduces
the risk of large-scale marketing. It is a safety device. It is very time-consuming. It must be done
especially for costly products.

7. Commercialization If the test marketing is successful, then the company introduces


the new product on a large scale, say all over the country. The company makes a large
investment in the new product. It produces and distributes the new product on a huge scale. It
advertises the new product on the mass media like TV, Radio, Newspapers and Magazines, etc.

8. Review of market performance The company must review the marketing performance of
the new product. It must answer the following questions: •Is the new product accepted by the
consumers? •Are the demand, sales and profits high? •Are the consumers satisfied with the
after-sales-service? •Are the middlemen happy with their commission? •Are the marketing staffs
happy with their income from the new product? •Is the Marketing manager changing the
marketing mix according to the changes in the environment? •Are the competitors introducing a
similar new product in the market? The company must continuously monitor the performance of
the new product. They must make necessary changes in their marketing plans and strategies
else the product will fail. )))))))))))))))))))product development process 2

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