Sep 1, 2016
New Product Development Process, an In-depth Look on Innovation
New product development process refers to the complete process of bringing a new product, product improvements, product modifications, or a completely new brand to market. Some people may associate new product development with anything that is new but this is often due to an oversight.
So how do you know if your product is new or not? The answer to this question may surprise you. A product is considered new when it does one or more of the following.
- Opens an entirely new market.
- Adopts or replaces an existing product.
- Significantly broadens the market for an existing product.
- An old product packaged in a different way.
- An old product that is introduced in a new market.
- An old product marketed in a different way.
When we look at the list above, you can see that new doesn’t always mean completely brand new in product development.
Stages of New Product Development Process
This is the beginning of all things innovation. It is when you gather all your ideas. You must utilize internal and external sources to generate ideas for your product.
Use SWOT (strengths, weaknesses, opportunities, and threats) analysis and current marketing trends to help you distance yourself from the competition. Implement an innovation management system to help you collect ideas from everyone in your organization.
Idea screening is the process of evaluating the ideas that you have gathered. Some companies stop at selecting the best ideas. However, it is better to send the best ideas back for more improvements. To make the process more effective, you need to ensure that your team is taking your competitors innovations into account.
Ask yourself questions like, how much market share does your competitor have? What benefits should your end consumer expect? Will your product be better? These questions and more have to be answered in the idea careening stage of the new product development process.
Concept Development and Testing
After the initial design of your product, you need to obtain initial feedback from external and internal sources such as your employees and customers.
Marketing Strategy Development
Your product is only as good as it’s marketing. Once you have acquired feedback and made the necessary changes to your product, you need to design your marketing strategy.
Additionally, you can hire a marketing agency or professional to help you with your marketing strategy.
A business analysis will help you forecast future profits and the cost involved in producing your product. If your product is too costly to produce, you may not make enough profit to stay in the market.
This is the process of producing your product. This also includes technical specs of your product. Sometimes, companies may have to make alterations to products in order to produce them. It is important that your production department, marketing department, and finance departments work together.
Typically, the production department makes plans to produce your product, marketing makes plans to distribute your product, and finance departments will provide the money needed to introduce your product.
This is when you take your product to market. At this stage, your product is already being sold to consumers and you are actively collecting data for improvements.
You want to keep your product firmly in the minds of your customers, as well as contemplating customers. It is a good idea to keep your ads running on a consistent basis.
Post Launch Review and Pricing
This is the last stage of the new product development process. This is where you carefully review the new product development process to look for improvements.
You want to continuously review the pricing of your product to make sure that your prices are not hurting your profits. This is a common problem for new products.
It is worth knowing that these stages of the product development process are not set in stone.
You don’t have to follow them as outlined above, step-by-step. You can complete several stages at the same time. This is referred to as concurrent engineering or time to market.
Also, new product development can be very expensive and risky because many new products fail. You may be thinking that 80% of products fail but new studies have suggested otherwise.
According to George Castellion, a new product development professional, the 80% failure rate is a myth and nothing more than a successful urban legend.
He adds that nineteen peer-reviewed research studies between 1945 and 2004 have found that new product failure rates were in the range of 30% to 49% depending on the industry surveyed. The survey included more than a thousand businesses in over ten industries.
Why Products May Fail
So now that we have the urban legend out of the way, why do products fail anyways? There are several reasons why a product may fail but for the most part, it has a lot to do with the lack of innovation. Here are some reasons why a product may fail.
- Competition is too strong.
- The product is poorly designed.
- The company overestimated the market size.
- Bad timing for the product launch.
- The product is incorrectly positioned.
- Price is too high.
- Poorly advertised product.
- Poor marketing research.
- High cost to produce the product.
How to Reduce The Risk of Failure
To avoid or limit the chances of failure, your company should take a holistic approach to the product development process. A holistic approach means that your entire organization is considered in your product development process.
This is better than having a few departments involved because you don’t want to end up with strong and weak departments all over your organization. Thus, you need the contribution of everyone in your company.
“You need a very product-oriented culture… Lots of companies have great engineers and smart people… there needs to be some gravitational force that pulls it all together”.
– Steve Jobs, entrepreneur, inventor, and former CEO of Apple Inc.
One way to use a holistic approach will be to use a customer-centered product development process.
Essentially, you want to continuously ask your customers about their problems and how you can solve them. This will help your organization create products that will give your customers a satisfying experience.
A good way to tap into the creativity of your customers is to send out a questionnaire. Additionally, you can send out a feedback form that your customers can complete.
You want to find out from your customers, how you can improve the level of service that they receive. You also want to ask them about products that they wish you had.
A second way to do this is by using a systematic product development process. This is when a company installs an innovation management system that enables all their departments to work together. Systematic product development process is what major companies like Toyota, Google, 3M, and many other successful companies use. This method saves time, money, and increases effectiveness.
A great way to implement innovation management is to use innovation management tools like idea management softwares. Technological advances have made it possible for many companies to go through the product development process quickly.
They provide the easiest and cheapest method to get your entire organization working closely together. You can fly in several departments or you can connect them with software so that they can work together. Organizations have found that the second option is much better.
Concurrent Product Development Process or Concurrent Engineering
A concurrent product development process is the approach of doing everything at the same time.
Essentially, the different stages of product development will run simultaneously, rather than one at a time. In most cases, it is better to work through the product development process in a concurrent manner.
There are two reasons why a company might take this kind of approach to their product and they are:
Product Development is a Proactive Process
An effective product development process requires that you allocate your resources to identify market changes and new product opportunities.
Once a product opportunity is found, you want to seize that opportunity before another organization takes advantage of it.
Product Development is an Ongoing Process
Many industry leaders see the new product development process as an ongoing process and it is. Your entire organization should always be looking for new ways to innovate.
This is also referred to as continuous development.
As we have seen, new doesn’t always mean brand new. A new product can consist of an improvement, modification, and repackaging. Your focus should be to find ways that you can
How Do You Create New Products?
How do you organize your ideas and get them out there to consumers? We’re always interested in learning! Let us know in the comments below!