New product development

New Product Development is a business and engineering term which describes the complete process of bringing a new product to market. There are two parallel aspects to this process : one involves product engineering ; the other marketing analysis. Marketers see new product development as the first stage in Product Life Cycle Management.

There are several stages in the new product development process:

• 1 Idea Generation
  • ideas for new products obtained from customers, R&D department, competitors, focus groups, employees, or trade shows
  • formal idea generating techniques include attribute listing, forced relationships, brain storming, morphological analysis, and problem analysis
• 2 Idea Screening
  • eliminate unsound concepts
  • must ask three questions:
    • will the target market benefit from the product
    • is it technically feasible to manufacture the product
    • will the product be profitable
• 3 Concept Development and Testing
  • develop the marketing and engineering details
    • who is the target market
    • what benefits will the product provide
    • how will consumers react to the product
    • how will the product be produced
    • what will it cost to produce it
  • test the concept by asking a sample of prospective customers what they think of the idea
• 4 Business Analysis
  • estimate likely selling price
  • estimate sales volume
  • estimate profitability and breakeven point
• 5 Beta Testing and Market Testing
  • produce a physical prototype or mock-up
  • test the product in typical usage situations
  • make adjustments where necessary
  • produce an initial run of the product and sell it in a test market area to determine customer acceptance
• 6 Technical Implementation
  • New program initiation
  • Resource estimation
  • Requirement publication
  • Engineering operations planning
  • Department scheduling
  • Supplier collaboration
  • Resource plan publication
  • Program review and monitoring
  • Contingencies - what-if planning
• 7 Commercialization
  • launch the product
  • produce and place advertisements and other promotions
  • fill the distribution pipeline with product
  • critical path analysis is useful at this stage

These steps may be iterated as needed. Some steps may be illiminated. To reduce the time the process takes many companies are completing several steps at the same time (referred to as concurrent engineering). Most industry leaders see new product development as a proactive process where resources are allocated to identify market changes and seize upon new product opportunities before they occur (in contrast to a reactive strategy in which nothing is done until problems occur). Many industry leaders see new product development as an ongoing process (referred to as continuous development) in which a new product development team is always looking for opportunities.

see also: Product management, marketing, Engineering, product, Product Life Cycle Management, brand management

List of Marketing Topics	List of Management Topics
List of Economics Topics	List of Accounting Topics
List of Finance Topics	List of Economists