New Product Development (NPD)

Concept of New Product Development(NPD):
A new product concept is basically a blueprint for your idea. When developing a new product concept, we should list features and benefits of our product that may appeal to our customers. Do a research, conduct focus groups and one should determine our target audience thorough market research.

3 Steps To Build An Effective Concept Test -
Step 1: Choose your test methodology
Step 2: Design and field your study
Step 3: Identify the most promising product concept

Needs of New Product Development(NPD):

1. Company growth
2. Higher profit margins
3. Business planning
4. Utilisation of excess capacity
5. Recycling of waste product
6. Improvement and development of existing firms
7. Improvement and development of existing processes
8. Introduction of novel production process

Meaning of Product:
Since 1575, the word “product” has referred to anything produced. In marketing, a product is anything that can be offered to a market that might satisfy a want or need. In retail, products are called merchandise. In manufacturing, products are purchased as raw materials and sold as finished goods. Commodities are usually raw materials such as metals and agricultural products, but the term can also refer to anything widely available in the open market.

The Six Categories of New Products:

1. New-to-the-world Products (really new Products)
2. New-to-the-firm Products (new Product Lines)
3. Additions to existing Product Lines.
4. Improvements and Revisions to existing Products.
5. Repositionings.
6. Cost Reductions.

Techniques of New Product Development(NPD):

1. Prototyping
2. Lean strategy
3. Trick for design
4. Framework
5. Scalable product
6. Test driven development
7. Version control

Process of New Product Development (NPD):

1. Idea Generation
   The first stage of the New Product Development is the idea generation.This stage involves creating a large pool of ideas from various sources, which include –
   • Internal sources – many companies give incentives to their employees to come up with workable ideas.
   • SWOT analysis – Company may review its strength, weakness, opportunities and threats and come up with a good feasible idea.
   • Market research – Companies constantly reviews the changing needs, wants, and trends in the market.
   • Customers – Sometimes reviews and feedbacks from the customers or even their ideas can help companies generate new product ideas.
   • Competition – Competitors SWOT analysis can help the company generate ideas.
2. Idea Screening
   Ideas can be many, but good ideas are few. This second step of new product development involves finding those good and feasible ideas and discarding those which aren’t. Many factors play a part here, these include –
   • Company’s strength,
   • Company’s weakness,
   • Customer needs,
   • Ongoing trends,
   • Expected ROI,
   • Affordability, etc.
3. Concept Development & Testing
   A concept is a detailed strategy or blueprint version of the idea. Basically, when an idea is developed in every aspect so as to make it presentable, it is called a concept. All the ideas that pass the screening stage are turned into concepts for testing purpose. You wouldn’t want to launch a product without its concept being tested. The concept is now brought to the target market. Some selected customers from the target group are chosen to test the concept.
4. Marketing Strategy Development:
   • The marketing strategy statement consists of three parts –
     • The first part describes the target market, the planned product positioning and the sales, market share and profit goals for the first few years.
     • The second part of the marketing strategy statement outlines the product’s planned price, distribution, and marketing budget for the first years.
     • The third part of the marketing strategy statement describes the planned long run sales, profit goals and marketing mix strategy.
5. Business Strategy Analysis & Development
   The testing results help the business in coming up with the final concept to be developed into a product. It’s time for it to analyse and decide the marketing, branding, and other business strategies that will be used. Estimated product profitability, marketing mix, and other product strategies are decided for the product.
6. Product Development
   Once all the strategies are approved, the product concept is transformed into an actual tangible product. This development stage of new product development results in building up of a prototype or a limited production model. All the branding and other strategies decided previously are tested and applied in this stage.
7. Test Marketing
   Unlike concept testing, the prototype is introduced for research and feedback in the test marketing phase. Customers feedback are taken and further changes, if required, are made to the product. This process is of utmost importance as it validates the whole concept and makes the company ready for the launch.
8. Commercialization
   The product is ready, so should be the marketing strategies. The marketing mix is now put to use. The final decisions are to be made. Markets are decided for the product to launch in. This stage involves briefing different departments about the duties and targets. Every minor and major decision is made before the final introduction stage of the new product development.

Diagram Representation of Process of New Product Development(NPD)