Editor's Note: Take a look at our featured best practice, Pricing Strategy (38-slide PowerPoint presentation). Pricing Strategy is a core pillar of Marketing and Product Strategy. It is 1 of the 4 Ps of Marketing (also known as the Marketing Mix - Product, Price, Placement, and Promotion). As such, knowing how to properly price your product is extremely important to the commercial success and viability of [read more]
New Product Development Process
Also, if you are interested in becoming an expert on Strategy Development, take a look at Flevy's Strategy Development Frameworks offering here. This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. By learning and applying these concepts, you can you stay ahead of the curve. Full details here.
* * * *
Developing a new product is a massive undertaking that requires careful planning, research, market knowledge and a clear product development roadmap. Only a tiny percentage of new product ideas come to fruition, with failure rates for new products at almost 50%.
A structured, planned approach provides a far better chance of avoiding pitfalls that may result in the new product’s failure. Spending time and resources efficiently is critical to success.
New Product Development Process Definition
The new product development process refers to every stage of product building, from birth to launch, to consumption. The strategy revolves around procedures during the entire life of a product’s journey.
Benefits of the New Product Development Process
Now that we have established why it’s useful to plan the new product development process, we can look at the benefits and advantages. The process works towards providing the best quality for the product. Moreover, it can assist in expanding the market, and achieves a stable demand, and decreases the possibility of product obsolescence. There are additional benefits of using a new product development process, including the following.
Keeping in touch with buying habits
Keeping pace with consumers’ buying habits isn’t easy with many variables and the changing volatile economies. A new product development system allows you to stay in touch with consumers to ensure the product remains relevant.
Creating a culture for innovation is crucial as new products continually require new ideas. All ideas must get a chance irrespective of seniority, or role in enabling fresh ideas.
Discovering New Opportunities
By keeping a finger on every stage’s pulse, you can focus on the customer’s needs rather than solely the shareholders. It permits new avenues for growth and allows you to discover new opportunities.
Improve Brand Recognition & Drive Higher Value
Using a tried and tested new product development process improves brand recognition and leads to a higher value proposition. Companies that consumers believe are innovative are far more likely to test new products you launch and back its innovative approach.
Faster Marketing Times
Having a plan helps you to market your product quicker. The process will be streamlined to identify bumps and create practical strategies for the product development process according to Mind the Product. That will ensure the journey is smoother.
Avoiding Common Pitfalls
Finally, the process helps you avoid common pitfalls and adverse situations. By identifying problems early on, you can take appropriate action to stem negative influences. They may include failing to meet your customers’ requirements, high development and resource costs, setting an unrealistic price, overestimating the market size and competition, and misaligned advertising.
Stages of the New Product Development Process
The product development process has several stages that cover brainstorming for new ideas up to the launch. You can condense them into these seven stages.
Stage 1: Brainstorming Ideas
Generating ideas is the first stage to brainstorm new product ideas, ultimately focusing on meeting customers’ needs and solving their problems. With solid research, you can build up buyer personas that delve deep into their issues. A checklist of what customers expect will help you focus on creating customer value.
Stage 2: Screening Ideas
A key benefit of using a new product development process is having all the ideas available at a touch, rather than having to wade through mountains of disorganised ideas. Ask engineers, designers, and marketers for their opinions and work closely with them. What significant advantage does your product have over others?
Stage 3: Developing a Concept & Testing
Concept development transforms a new idea into a concept. By creating alternative concepts, you evaluate the idea regarding its attractiveness to customers. The testing process should be precise and provide meaning to be effective.
Stage 4: Market Strategy and Business Analysis
Designing a marketing strategy and analysing the product’s attractiveness is crucial from a business perspective. This stage includes outlining the selling price and a marketing budget for business analysis. The process involves an in-depth business analysis designed to determine whether the new product idea is feasible.
Stage 5: Product Development
Once the idea is finalised, a marketing strategy created, and a thorough business analysis is performed, it’s time to start the product development cycle that ensures a finished, marketable product.
Stage 6: Test Marketing
Test marketing is the final, crucial stage before you commercialise the new product. The Alpha testing process delivers the product to test engineers to evaluate for performance and to detect issues which may need to be addressed immediately. Beta testing gives your product to whole groups of consumers to gain their feedback.
Stage 7: Product Commercialisation
Finally, you are ready to commercialise your product after testing. You will find out if the product is ready to launch or perhaps go back to an earlier stage. The commercialisation phase is more than advertising, and it means you are prepared to launch your new product on the market.
Goals of the New Product Development Process
The scope of new product planning and development includes defining goals. Clearly define expectations within each timeframe, so all departments are clear about the goals and final objectives. After a particular phase, you might want to send the project to designers. In turn, their objectives may indicate target customers, the projected final selling price, and the new product’s purpose. Working backwards allows you to set timeframes for each stage of the development process. Work back from your final goal and select achievable dates that are doable and practical. A schedule works back and supports the product launch dates, previous stages, packaging, and product testing with set completion times. Measurable goals allow you to plan better without nasty surprises. You will be familiar with every facet of the production process and be able to allocate resources accordingly.
Other factors you can review during the process include product design and size. It will help to determine if the product will be profitable. The last stages of the new product launch include choosing an appropriate name. You also need to set the retail price, which will depend on perceived demand, competitors’ pricing, and customers’ purchasing power. The success of the new product will depend on the right price. You may need distinctive packaging or labelling to differentiate the product from the competition and create brand loyalty. The conglomeration of the development process with hands-on management will take you nearer to your ultimate goal of launching a new product.
Want to Achieve Excellence in Strategy Development?
Gain the knowledge and develop the expertise to become an expert in Strategy Development. Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. Click here for full details.
"Strategy without Tactics is the slowest route to victory. Tactics without Strategy is the noise before defeat." - Sun Tzu
For effective Strategy Development and Strategic Planning, we must master both Strategy and Tactics. Our frameworks cover all phases of Strategy, from Strategy Design and Formulation to Strategy Deployment and Execution; as well as all levels of Strategy, from Corporate Strategy to Business Strategy to "Tactical" Strategy. Many of these methodologies are authored by global strategy consulting firms and have been successfully implemented at their Fortune 100 client organizations.
These frameworks include Porter's Five Forces, BCG Growth-Share Matrix, Greiner's Growth Model, Capabilities-driven Strategy (CDS), Business Model Innovation (BMI), Value Chain Analysis (VCA), Endgame Niche Strategies, Value Patterns, Integrated Strategy Model for Value Creation, Scenario Planning, to name a few.
Readers of This Article Are Interested in These Resources
29-slide PowerPoint presentation
46-slide PowerPoint presentation
Top 10 Recommended Documents on Product Launch Strategy