New products refer to original products, product modification, product improvement and new brands that are prepared by the business organization through its own research and development struggles.
Business organization should build balanced flow of products and services due to quick changes in competition, consumer tastes and technology. New product development process can be obtained by the business organization in two ways.
Acquisition is the first way in which particular business organization purchases the other entire business organization, a license or patent to manufacture someone else’s product.
The second way is to build new product in the research & development department of the business organization.
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Stages of New Product Development Process
There are eight stages of new product development and these are as follow.
Idea Generation
Idea generation is the starting point of new product development in which new product ideas are searched systematically.
A lot of ideas should be considered by the business organization so that some of them can be pick from the list.
New product development contains many sources like customers, internal sources, distributors, competitors and suppliers and others.
Through formal research and development, business organization can figure out new ideas by using internal sources. It can choose the minds of its scientists, executives, manufacturing & sales people and engineers.
Successful entrepreneurial programs are built by some business organizations that promote employee to think up and build new product ideas. By watching and listening to customers, better new product ideas can also be obtained.
Complaints and questions of customers can also analyzed by the business organization to figure out new products that effectively solved customer problems.
The business organizations can perform focus groups or surveys to understand about consumer wants and needs or salespersons and engineers of the business organization can come together with consumers and work together to obtain proposition and ideas.
Finally, new products are produced and used mostly by the customers and business organizations can detect these products and make them available in the market in order to get benefit.
Customers too can be a better source of new product uses ideas and enlarge the life of existing product along with the enlargement of the market. New product ideas can also be getting from competitors.
Clues can be obtained by the business organization about their new products by watching the ads& other communications of its competitors.
They purchase competing new products, examine the working of the competing new products, study their sales and finally make decision about developing their own new product or not.
Similarly suppliers and distributers provide many new product ideas. Information about problems of consumers and new product possibilities can be received from resellers, who are close to the market.
Business organization can be informed about new concepts, materials and techniques by the suppliers that can be utilized to build new product.
There are certain other sources of data which will help in development of new product like seminars, trade magazines, shows, government agencies, advertising agencies, product consultants, university and commercial laboratories, marketing research organizations and inventors.
New product ideas should be searched systemically rather than hazardously. Otherwise some of ideas emerged but many better ideas will not be effectively considered.
The flow of main ideas can be directed towards a central point where they can be gathered, considered and evaluated by installing idea management system by the business organizations in order to avoid these problems.
Idea Screening
The aim of idea generation is to produce huge number of ideas. However, in the idea screening stage the aim is to reduce that number. Idea screening is the first idea reducing stage, in which assist in choosing better ideas and dropping bad ideas quickly.
In later stages the costs of product development rises, so the business organization must take those better ideas that can be converted into profitable products.
Executives are allowed to write their ideas on the specified form by many business organizations so that the written ideas can be considered by the new product committee.
The product, competition and target market are specified in the written work. It gives some rough estimate of product price, market size, manufacturing costs, development time & costs and rate of return.
The idea can then be measured by the committee on the basis of particular criteria like is the product is better for our business organization?
Is it utile for the society and customers? Does it work in accordance with the goals and strategies of the business organizations? Do we have skills, people and resources to create it successful? Etc For rating and screening new product ideas, many business organizations have well designed systems for this.
Concept Development and Testing
An appealing idea should be built into a product concept. It is significant to differentiate between a product idea, a product image and a product concept.
An idea for a possible product that the business organization can view itself presenting to the market is referred as product idea.
A point variant of the idea mentioned in the meaningful consumer terms is referred to as product concept. The manner in which consumers comprehend an effective or actual product is referred as product image.
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New product concept should be tested with the portion of targeted consumers is required in the concept testing. The concepts may be shown to consumers physically or symbolically.
A picture or word description might be enough for some concept tests, however the reliability of the concept test will be increased by a more physical & concrete presentation of the concept.
Recently some marketers are discovering new manners to create product concepts more actual to consumer subjects.
Marketing Strategy Development
Marketing strategy development is the fourth step in new product development, in which an initial marketing strategy is designed for launching particular product to the market.
There are three parts of marketing strategy statement. First part contains information about target market, the sales, planned product positioning, profit goals and market share for the starting few years.
In the second part of marketing strategy statement, distribution and marketing budget for first year and planned price of the product is mentioned. While in the third part, profit goals, planned long-run sales and marketing mix strategy are mentioned.
Business Analysis
The business attractiveness of the proposal can be measured by the business organization, after it has decided on its marketing strategy and product concept.
In business analysis step, the costs, sales and profit projections of the new products are reviewed in order to figure out whether they fulfill the objectives of the business organizations or not.
The product can be transferred to product development stage if they satisfy the goals of business organizations. Sales history of the similar products might be viewed by the business organization along with the performing surveys of the market thoughts, in order to estimate sales.
The range of risk can be evaluated by estimating maximum and minimum sales by the business organization. The expected profits and costs for the product can be estimated by the management like R & D, marketing, accounting, operations and finance costs, after preparing the sales forecasts.
The financial attractiveness of the new product can be analyzed by using the sales and costs figures by the business organization.
Product Development
When the product concepts are developed then new product only exists in the shape of a drawing, word description or rough model.
The product concept transfers into product development stage after it has passed the business test. In this step the product concept is built into physical product by the engineer or R&D.
However product development step require large portion of investment. It will present either the product idea has the potential to be turned into useful product or not.
One or more physical versions of the product concept will be built or tested by the R&D department. A prototype will be designed by the R&D that will fulfill and stimulate consumers and that will be generated rapidly and at budgeted costs.
It takes a long time or many days, weeks, months or even years, to develop an effective prototype. Mostly products are passed through rigorous functional tests to confirm that function effectively and safely.
Desired functional characteristics should be present in the prototype and the product also communicate the intended psychological features.
Test Marketing
If the product succeed consumer and functional tests, test marketing is the next step in which the marketing programs and product are launched into more actual market settings
Experience of marketing the product before passing to the high expense of full launching is given by the test marketing.
The product is tested along with testing of complete marketing program like advertising, pricing, positioning strategy, distribution, packaging, branding and budgeted levels, in the step of test marketing.
With every new product, the amount of test marketing varies. The marketing costs can be too much and competitors may get benefits due to the reason that too much time is spending at this stage.
The business organization can perform less or no test marketing in case when the management is confident about the product or when the costs of building and launching the product are low.
Mostly business organizations neither do nor perform teat marketing in case of copied products of competitors or simple line extensions.
Commercialization
The information required to perform final decision about introducing the new product or not, is obtained from the stage of test marketing.
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The business organization will deal with high costs if it decides to go for commercialization which means launching the new product in the market.
A manufacturing facility should be developed or rented by the business organization. Introduction timing should be first decided by the business organization introducing new product.
Next, the business organization should decide about where to introduce the new product either introduce it internationally, nationally, regionally or at single location.
There are some business organizations that have capital, confidence and ability to introduce new product into complete international or national distribution.
A planned market rollout over time is developed by these business organizations. On the other hand small business organizations move into appealing regions or cities one at a time.
However, large scale organizations may rapidly launch new models into full national market or into many regions.
