There’s a lot that goes into a product before it is introduced into the market. Show
It starts with a market opportunity which forms the base of the product idea, and converting this market opportunity into a successful product is what new product development is all about. Sadly, not everyone succeeds in it, and 95% of new products fail. But most of these new products fail because the developers undermine the importance of the new product development process and try to take the shortcuts. Although this process differs for different industries, but according to Philip Kotler, new product development can be easily be broken down into eight stages:
But before moving ahead to discuss the new product development process, here are the six categories of new products that are launched in the market – Types Of New Products
A new product isn’t always about developing a new-to-the-world product. In fact, according to Kotler, only 10% of all new products are truly innovative and unique to the world. Upgrading existing products and relaunching them as new products, adding new products to the existing product mix, etc. are all essential practices for the company as they operate in a dynamic business environment where customer’s needs and tastes, technologies, and product life cycles are always changing. But no matter what type of new product the company develops, its process can be easily be broken down into eight stages – Idea GenerationIdeas form the spine of the new product development. They stem from market opportunities and can be innumerable. This stage involves creating a large pool of ideas from both internal and external sources using numerous techniques. New Product Ideas From Internal Sources
New Product Ideas From External Sources
Idea ScreeningWhile the purpose of idea generation is to create a large pool of ideas, this stage involves evaluating the pool and drop as many ideas as possible from consideration. This is done by determining and evaluating the ideas’ –
There’s a likelihood of two types of errors in the new product development process. The idea screening phase acts as a filter to prevent the business from them. The errors are –
Concept Development And TestingAn idea is different from a concept. While an idea is just a mental construct of a business possibility or opportunity, a concept is an idea that has gone through the process of fine-tuning and is less inconsistent. The concept is a presentable version of the product idea which takes into consideration –
For example, a product idea could be a fitness centre. But a product concept would be a fitness centre that focuses on providing Zumba classes to working women offline in the morning and online in the evening. This step involves developing single or multiple concepts based on the product ideas and testing them for their viability. Concept developmentLet’s take the example of an electric car as a product idea. Possible product concepts for this electric car could be –
Concept TestingOnce the concept is developed, it is tested using several methods and processes like –
Testing different concepts gives a clear picture to the management on which concept to take forward and which to drop. Marketing Strategy DevelopmentOnce a promising concept is finalised, the next step involves developing a marketing strategy for the new product. The marketing strategy is divided into three parts:
Business AnalysisOnce the product and its marketing strategy is finalised, the next step involves the evaluation of business attractiveness of this proposed product. This step of the new product development process involves a review and analysis of the sales, costs, and profit projections for the new product. In simple terms, this step evaluates the product as a business by reviewing –
The analysis is done either by conducting market surveys, consulting experts, or by analysing the history of similar products. Once done, this analysis is then compared with the company’s objectives, and the product goes into the production stage only if these factors satisfy the objectives. Product DevelopmentUp to this point, the product only existed as a word description, a drawing, or a prototype. But once the business analysis clears the product, the work is handed over to the research and development department for actual product development. It may take days, weeks, or months to develop the final product as the product goes through a series of testing phases (alpha testing and beta testing) to validate all the assumptions and incorporate everything that was promised during the previous stages.
Test Marketing Or Market TestingOnce the product development is completed, the product is then dressed up with a brand identity and released in a selected market segment as a pilot for testing. This step involves the company to test both the final product and its entire marketing and branding strategy, including
The product is developed in full scale only after test marketing shows positive results. There are three types of test markets –
CommercialisationTest marketing provides the management with the information needed to make the final decision about the product launch. Once the final decision is made and the product is decided to be launched in the market, the new product goes into the final stage -commercialisation or introduction, and is finally produced in the needed quantity. This stage involves the highest costs as
Several important decisions are taken during the commercialisation stage like –
Bottom-Line?Even though there are eight different steps of the new product development, the focus is one – creating superior customer value, because only when you develop a superior customer value, you can develop a new product worth selling. Go On, Tell Us What You Think!Did we miss something? Come on! Tell us what you think of this article on new product development in the comments section. A startup consultant, digital marketer, traveller, and philomath. Aashish has worked with over 20 startups and successfully helped them ideate, raise money, and succeed. When not working, he can be found hiking, camping, and stargazing. Which of the following stages of the product development process assesses a product's compatibility in the marketplace quizlet?-idea development: new ideas come from marketing research, -new idea screening: look at the organization's resources and obj. and assess the firms ability to produce/market the product. -business analysis: assessment of a product's compatibility in the marketplace and potential profitability.
What are the 5 stages of product development?Five phases guide the new product development process for small businesses: idea generation, screening, concept development, product development and, finally, commercialization.
Which stage of new product development when the marketability of a product is tested with a group of customers in a specific location?Stage 6: Test Marketing and Validation
Test marketing is the final stage before commercialization; the objective is to test all the variables in the marketing plan including elements of the product.
What are the 7 stages of product development?Although the product development process differs by industry, it can essentially be broken down into seven stages: ideation, research, planning, prototyping, sourcing, costing, and commercialization.
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