New product development is an eight step process which involves all the key elements required for developing a product. These Steps are beneficial in getting information input and decision-making while developing a new product. Other than this, market research also plays a crucial role in the process. The process of new product development is as follows:
Idea Generation
The most vital and first step of new product development is gathering and evaluating new ideas to reach the potential product options. Idea generation is considered as an on-going process for many companies involving the assistance from internal and external sources of the organisation. Several market research techniques are applied to boost ideas such as running focus groups with customers, organisation’s sales force and channel members, encouraging customer suggestions and complaints via website forms and toll-free telephone numbers. This can also be done by and gaining insight on product development activities of competitors through secondary data sources. Brainstorming is one of the significant research techniques used to generate ideas, where different creative thinkers collect to share their ideas and thoughts. These will help the group members to generate one idea out of another which may lead to a wide range of new products.
Screening of the Idea
In this step, all the ideas generated in the first step are analysed and the best possible one is selected for new product development. Working on non-feasible ideas may be costly and risky for an organisation. Hence, the ideas generated above are evaluated effectively by the company personnel to select the most feasible idea. The screening of ideas primarily depends upon the number of ideas generated, based on which the screening process may be held in rounds like the first round comprising of judgments of ideas by company executives, whereas other successive rounds may involve advanced research techniques. After the selection attractive ideas, a rough estimate of an idea is made, which includes its potential in terms of sales, profit, production cost, competitor’s response, etc. If the ideas are suitable then they are moved to the next stage of new product development.
Concept Development and Testing
Once the marketer has finalised few ideas, he initiates towards the attainment of initial feedback from the customers, its employees, and distributors. These ideas are then represented to the focus groups through storyboards, board presentations, etc. For example, the customers may be shown the product concept by drawing the product idea on the whiteboard or an advertisement introducing the new product. They may also be presented with mock-up of ideas which may not be the actual functional version of the product idea. The most feasible ideas selected by the organisation are put forward to the target audience. What do they think about the idea? Will it be practical and feasible? Will it offer the benefit that the organisation hopes? Or have they overlooked certain issues? It is not a working prototype, but just the idea or concept that is presented to the target audience.
Marketing Strategy and Development
After concept testing, a primary marketing strategy plan is developed. A marketing strategy is used to launch the product idea in the market. For this, a comprehensive plan is laid down including the marketing mix strategy, segmentation, targeting and positioning strategy, with the expected sales and profits. The marketing plan can be categorised into three parts:
- Firstly, the marketing Strategy discusses the Structure, behaviour and size of target market, the planned positioning of new product, estimated sales, market share and profitability goals to be achieved in the initial years.
- Secondly, the strategy outlines the distribution strategy, planned price and marketing budget for the first year.
- Lastly, the plan defines the sales and profit in the long-run and also the marketing-mix strategy for future.
Business Analysis
In this stage, the large numbers of ideas are condensed to one or two ideas, by the marketer. During this stage, market research is used extensively to analyse the viability of product ideas. (In many situations, a product remains only an idea, if not found viable). The main aim of this step is to find out the valuable estimates of market size (i.e., total market demand), operational costs (i.e., production costs), and financial predictions (i.e., sales and profits). Moreover, it is most significant to determine if the product is suitable for company’s overall mission and strategy. The market research can be directed in two ways, i.e., internal and external. Internal market research may involve discussions with production and purchasing personnel whereas, external market research comprises of customer and distributor surveys, secondary research, competitor analysis, etc. Other than all this, the organisation must also scrutinise the financial viability of the product in the long-run such as cashflow generation. production cost. market share of the product and expected product life cycle.
Product and Marketing Mix Development
A prototype of the product is produced at this stage. Before launching the prototype in the market, it must clear all the tests and then finally the product is offered to the target audience. While doing business analysis, the suggestions and ideas are given due consideration. The initial design or prototype of that idea is then developed by the research and development team. The marketer also designs a marketing plan for the idea, and once the prototype is ready, it is introduced to the customers. Unlike the concept-testing stage, in this stage the customers go through the actual product or idea and its related aspects such as marketing mix, distribution channels, etc. On the basis Of customer reactions about the product, marketer is able to take decisions for the final market launch while, considering the purchase rates and customers’ needs and wants.
Test Marketing
The word ‘test’ refers to examination or trial. Test marketing is defined as the process of testing a product before it is commercialised in the market at large scale. Here, test marketing is also known as field-testing. This provides a better understanding of the market and marketing considerations like nature of demand, competition level and consumers’ needs and wants. Test marketing of a product is done within a particular market area so as to monitor the marketing mix strategy and if required, it is revised before launching it nationally.
Commercialisation
Launching the product/Service: Once the product passes the test marketing stage, then the product goes for national launch. However, few factors are considered before finally launching the product in the market such as time and place of launching, whether it will be launched nationally or regionally, how it will be launched, etc. Some of the organisations prefer introducing the new products region by region. This helps the organisation to manage its production activities in an effective manner and also improvise the marketing mix while, approaching a new region.
