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The New Product Development Process (NPD) – 8 Steps to Success

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• Innovation , New Products , Product , Product Launch
• Posted: January 31, 2022
• Updated: June 10, 2024

In order to stay successful in the face of maturing products, companies need a continuous stream of new ideas successfully developed into new products. The way to obtain new products is to have a structured and carefully executed new product development process (NPD).

But companies face a problem: Although they must develop new products, the odds weigh heavily against success. Among thousands of products entering the process at the top, only a handful eventually reach the market. Therefore, it is of crucial importance to understand consumers, markets, and competitors in order to develop new products that deliver superior value to customers.

In other words, there is no way around a systematic, customer-driven new product development process for finding and growing new products. We will go into the eight major steps in the new product development process .

What is New Product Development (NPD)?

Before jumping into the actual new product development process, let’s spend a few seconds on understanding what new product development (NPD) actually is.

As always, there is a number of ways to define NPD. This also depends on the angle you take. From a marketing perspective, new product development refers to the complete process of bringing a new product to the market . This may be a completely new product, but it may also mean renewing an existing product. In some cases, we may also refer to introducing an existing product in a new market, which usually implies to apply at least a few steps of the new product development process.

As you can imagine, the NPD process looks a bit different when looking at it from an engineering perspective. Here, the technical aspects are more emphasized, while the business implications are in the background. This means that new product development is much more focused on the technical design, integration of features, prototyping etc.

Marketing vs Engineering Perspective on New Product Development

In a sound new product development process, both perspectives (i.e., marketing and engineering) are combined to develop a product that satisfies consumer needs (focus of the marketing perspective) in a technically superior way (focus of the engineering perspective).

While the NPD process can run in parallel in both the marketing and the engineering departments, the first step is usually taken in the marketing department. Here, consumer problems and needs are analyzed to generate new product ideas (see step one below). However, this also occasionally happens in the engineering department. Sometimes, engineers stumble upon great technological solutions – whether there is a need in the market for that solution then remains to be seen. As a result, idea generation on the engineering side can, while of course sometimes resulting in great successes, also waste a significant amount of resources. This implies that idea generation in the marketing department tends to be more efficient and allows to focus scarce resources on those ideas for which there is actual demand in the marketplace.

The 8 Steps of the New Product Development Process

With a common understanding of what NPD actually is, let’s now jump into the 8 steps of the new product development process.

1. Idea Generation

The new product development process starts with idea generation. Idea generation refers to the systematic search for new-product ideas. Typically, a company generates hundreds of ideas, maybe even thousands, to find a handful of good ones in the end. Two sources of new ideas can be identified:

• Internal idea sources: the company finds new ideas internally. That means R&D, but also contributions from employees. For instance, many companies use a so-called suggestion box, which employees can throw new ideas into. In many cases, employees are the best source of new ideas, as they work with the product, but also the feedback of customers every day.
• External idea sources: the company finds new ideas externally. This refers to all kinds of external sources, e.g. distributors and suppliers, but also competitors. The most important external source are customers, because the new product development process should focus on creating customer value. Collecting new product ideas from customers becomes ever more important and simple in the digital era, where the conversation between companies and customers is as interactive as never before. Actively listening to customers’ suggestions can be a great source of innovation.

2. Idea Screening

The next step in the new product development process is idea screening. Idea screening means nothing else than filtering the ideas to pick out good ones. In other words, all ideas generated are screened to spot good ones and drop poor ones as soon as possible.

While the purpose of idea generation was to create a large number of ideas, the purpose of the succeeding stages is to reduce that number of ideas. The reason is that product development costs rise greatly in later stages. Companies cannot afford to take every single idea to the next stages. Therefore, it is necessary to filter and go ahead only with those product ideas that are likely to turn into profitable products. Dropping the poor ideas as soon as possible is, consequently, of crucial importance.

At this early stage, filtering for the potentially profitable ideas can be tricky. A key to success is to initiate the conversation with customers early and look for feedback. For instance, by surveys and focus group interviews, companies can get early insights whether their ideas might meet customer demands in a better way than existing products.

3. Concept Development and Testing

To go on in the new product development process, attractive ideas must be developed into a product concept. A product concept is a detailed version of the new-product idea stated in meaningful consumer terms. You should distinguish the following sub-stages:

• A product idea – this is really just an idea for a possible product.
• A product concept – this is a detailed version of the idea stated in meaningful consumer terms.
• A product image – this is the way consumers perceive an actual or potential product.

Concept development and testing is a crucial stage in the new product development process. Therefore, let’s go into the two sub-stages in more detail.

Concept Development

Imagine a car manufacturer that has developed an all-electric car (BEV). The idea has passed the idea screening stage and must now be developed into a concept. The marketer’s task is to develop this new product into a number of alternative product concepts. Then, the company can find out how attractive each concept is to customers and choose the best one.

A product concept should at least capture the realization or form the product will take, the target group it caters to, as well as the main use cases. Possible product concepts for the electric car idea could be:

• Concept 1: An affordably priced mid-size car designed as a second family car to be used around town for visiting friends and doing shopping.
• Concept 2: A mid-priced sporty compact car appealing to young singles and couples for fun rides in their free time.
• Concept 3: A high-end midsize utility vehicle appealing to those who like the space SUVs provide but also want an economical car for everyday use in the city.

As you can see, these concepts need to be quite precise in order to be meaningful. In the next sub-stage, each concept is tested.

Concept Testing

New product concepts, such as those given above, need to be tested with groups of target consumers. The concepts can be presented to consumers either symbolically or physically. The question is always: does the particular concept have strong consumer appeal? For some concept tests, a word or picture description might be sufficient. However, to increase the reliability of the test, a more concrete and physical presentation of the product concept may be needed. After exposing the concept to the group of target consumers, they will be asked to answer questions in order to find out the consumer appeal and customer value of each concept.

At the end of the concept testing stage, you should have a clear idea of which product concept is the best in terms of customer feedback. In some cases, it may be that several concepts seem to work great. For instance, two different versions may prove to cater well to two different sub-target groups. Provided each of the target groups provides a sufficiently large and relevant target market , the company may choose to go ahead with both product concepts.

4. Marketing Strategy Development

The next step in the new product development process is the marketing strategy development. When a promising concept has been developed and tested, it is time to design an initial marketing strategy for the new product based on the product concept for introducing this new product to the market.

The marketing strategy statement consists of three parts and should be formulated carefully:

• A description of the target market, the planned value proposition, and the sales, market share and profit goals for the first few years.
• An outline of the product’s planned price , distribution and marketing budget for the first year.
• The planned long-term sales, profit goals and the marketing mix strategy .

5. Business analysis

Once the company has decided upon a product concept and marketing strategy, management can evaluate the business attractiveness of the proposed new product. The fifth step in the new product development process involves a review of the sales, costs and profit projections for the new product to find out whether these factors satisfy the company’s objectives. If they do, the product can be moved on to the product development stage.

In order to estimate sales, the company could for instance look at the sales history of similar products and conduct market surveys. Having a precise view of the likely demand for the eventual product is absolutely crucial. There are countless cases where this stage was underestimated. For example, think of cars that turned out to be flops when introduced to the market. Often, companies tend to skip this stage or spend too little time on it. The reason is in many cases a bias to focus too much on the company perspective, rather than listening to customers. When you come up with a new idea, think it through, design the product, include all those features you like and so on, you may have developed a great product for yourself. However, this does not mean that it will be a great product for the market . Customer feedback is therefore a critical element along all stages of the new product development process.

Once the initial demand analysis has been estimated, the company should be able to estimate minimum and maximum sales to assess the range of risk. Based on the sales forecast, the company should estimate the expected costs and profits for a product, including marketing, R&D, operations etc. All the sales and costs figures together can eventually be used to analyze the new product’s financial attractiveness.

6. Product development

The new product development process goes on with the actual product development. Up to this point, for many new product concepts, there may exist only a word description, a drawing or perhaps a rough prototype. But if the product concept passes the business test, it must be developed into a physical product to ensure that the product idea can be turned into a workable market offering. The problem is, though, that at this stage, R&D and engineering costs cause a huge jump in investment.

The R&D department will develop and test one or more physical versions of the product concept. Developing a successful prototype, however, can take days, weeks, months or even years, depending on the product and prototyping methods.

Also, products often undergo tests to make sure they perform safely and effectively. This can be done by the firm itself or outsourced.

In many cases, marketers involve actual customers in product testing. Consumers can evaluate prototypes and work with pre-release products. Their experiences may be very useful in the product development stage.

7. Test marketing

The last stage before commercialization is test marketing. In this stage of the new product development process, the product and its proposed marketing program are tested in realistic market settings. Therefore, test marketing gives the marketer experience with marketing the product before going to the great expense of full introduction. In fact, it allows the company to test the product and its entire marketing program, including targeting and positioning strategy , advertising, distributions, packaging etc. before the full investment is made.

The amount of test marketing necessary varies with each new product. Especially when introducing a new product that requires a large investment, when the risks are high, or when the firm is not sure of the product or its marketing program, a significant amount of time may be spend on test marketing.

8. Commercialization

Test marketing has given management the information needed to make the final decision: Launch or do not launch the new product. The final stage in the new product development process is commercialization. Commercialization means nothing else than introducing a new product into the market. At this point, the highest costs are incurred: the company may need to build or rent a manufacturing facility. Large amounts may be spent on advertising, sales promotion and other marketing efforts in the first year.

Some factors should be considered before the product is commercialized:

• Introduction timing – For instance, if the economy is down, it might be wise to wait until the following year to launch the product. However, if competitors are ready to introduce their own products, the company should push to introduce the new product sooner.
• Introduction place – Where to launch the new product? Should it be launched in a single location, a region, the national market, or the international market? In many cases, companies may lack the confidence, capital and capacity to launch new products into full international distribution from the start. Instead, they usually develop a planned market rollout over time.

Getting the product launch right is a key requirement for the success of your product or service. Therefore, have a look at our guide to preparing the perfect product launch strategy .

Closing words

In all of these steps of the new product development process, the most important focus is on creating superior customer value. Only then, the product can become a success in the market. As you can imagine, only very few products actually get the chance to become a success. The risks and costs are simply too high to allow every product to pass every stage of the new product development process. Given these risks and costs, it is of crucial importance to get these 8 steps of the new product development process right.

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New product development process: all stages and examples.

New product development, or NPD, is an important process for turning new ideas into goods that people will want to buy. new product development definition, product development process includes coming up with ideas, figuring out if they will work, making a prototype, trying it, and launching it. Effective NPD helps businesses grow, makes them more competitive, and makes customers happier and more loyal.

This piece goes into detail about the steps of the NPD process, talks about its many benefits, and gives examples from big companies like Amazon, Apple, Tesla, Microsoft, and Google. Knowing how important NPD is can help companies come up with new ideas and stay ahead of the competition in their fields.

What is New Product Development?

New product development, or NPD, is the process of bringing a new product development in marketing. This process involves generating innovative ideas, initiating the product, and monitoring its performance. It includes creating entirely new products or improving existing ones. For companies to stay competitive and meet changing customer needs, new product development (NPD) is a must.

Several departments, like marketing, engineering, and production, need to work together on this process to make sure the product meets the wants of the market and the company's abilities. Effective NPD helps businesses come up with new ideas, grow, and stay relevant in the market.

READ ALSO- What is ios App Development Cost For Apple Platforms?

The Main Stages of New Product Development

Idea generation.

Generating ideas is the first steps in new product development. Encourage innovative thinking to develop fresh product concepts. It involves market research, consumer trend analyzing, and brainstorming sessions to identify unmet requirements and potential business prospects. Ideas can come from a variety of sources, including competitively analyzing, new technologies, and client feedback.

The goal is to produce numerous unique concepts for further exploration. Generating ideas is the first step in the development process. This guarantees that the product satisfies consumer demands and has the potential for success.

Idea Screening

The idea screening process entails sifting through the generated ideas to identify the most promising ones. At product development stages, evaluate the project's viability, market potential, and alignment with the company's goals.

Its can use cost, profitability, technical viability, and competitive edge as screening criteria. The goal is to eliminate useless ideas so the development team can focus on the beneficial ones. Screening ideas effectively keeps work from going to waste and ensures that only the best ones move on to the growth stage.

Concept Development and Testing

Concept creation and testing are the steps to turning the chosen ideas into detailed product  concepts and getting feedback from people who would buy the products. You show potential buyers prototypes, sketches, or written accounts of the product to get feedback. The objective is to comprehend the customers' feelings, preferences, and possible changes.

Testing identifies issues or areas for improvement before investing significant time and resources. By testing the idea with real people, companies can ensure that the product meets market demands and has a better chance of being successful when it comes out.

The marketing strategy and business research stage involves creating a detailed plan for launching the product into the market. It includes choosing the target market, positioning, pricing, methods of distribution, and ways to get the word out. It conducts a detailed study to see if the product will make money. This includes figuring out costs, sales predictions, and profit margins.

To check the product's market strategy and business case at this stage to ensure they align with the company's general goals. For a product launch and growth to go well, you need a clear marketing plan and a full analysis of your business.

Product development is the process of turning an idea for a product into a real thing. It includes planning, creating, and producing the product while ensuring it meets the standards and requirements. During this step, we make, test, and improve prototypes based on feedback and technical assessments.

The development team works closely together to solve problems and make changes as needed. The objective is to produce a finished product in large quantities. When you create a product well, you end up with a high-quality product that meets the needs of the market and the rules.

Test Marketing

Test marketing means putting a product on the market with a small group of people to see how well it works and get feedback before launching it to everyone. This step helps find any problems that might come up, see how people react, and make marketing plans better.

Test marketing gives you useful information for making final changes, like sales numbers, customer feedback, and market reaction. Make sure the products and marketing strategy work. A favorable test market helps lower risks and raises the chances of a successful full-market launch.

Product Launch

The product launch is the last step in making a new product. This phase involves expanding the products reach to a wider audience. It includes following the marketing plan, getting the product to customers, and promoting it to increase awareness and sales.

Important for different areas, like sales, marketing, and distribution, to work together for a launch to go well. During product development process, it's crucial to monitor the product's performance, solicit customer feedback, and implement any necessary modifications. A well- planned product launch  makes the most of the market's effect, establishes the product in the market, and sets the product up for long-term success.

What are The Benefits of New Product Development?

Enhance market growth.

New products expand the market by providing innovative solutions to evolving consumer needs. This way, companies can reach new groups of people, gain more customers, and grow their market share. Businesses can stay ahead of market trends and take advantage of new possibilities.

Being proactive helps retain current customers and attract new ones, leading to long-term growth. Creating new products helps a business reach more people, be more visible, and stay a leader in its field.

Improve Competitiveness

By making its goods stand out from those of its competitors, new products help a company be more competitive. Thanks to innovation, businesses can stand out in the market by introducing new features, better quality, or more advanced tools.

By constantly developing new products, a company can stay ahead of its competitors and keep its customers interested. This competitive edge helps you get a bigger share of the market, keep customers longer, and build a strong brand name. Keep ahead of the competition and lead your industry.

Improve Product Image and Loyalty

Adding new goods can make a company products look much better and make customers more loyal. Businesses demonstrate that they value quality and new ideas by regularly changing and adding to their product lines. This proactive approach boosts the brand's image, making it a synonym for cutting-edge solutions and values that put the customer first.

Customers are more likely to stick with brands that keep up with their changing wants and needs. If you like a new product, you might buy it again, tell your friends about it, and build long-term relationships with customers. This will improve brand loyalty and customer retention in the long run.

Improve Profits

Creating new products is a big part of how businesses make money. Companies can charge higher prices, gain more customers, and increase sales by creating new products. These new products often have higher profit margins because they are new and different.

New products can help make money and reduce dependence on older products that are becoming less popular. Companies can improve their finances   , ensure steady revenue growth, and become profitable in the long run by expanding their product lines and entering new markets.

Improve Employee Engagement

New products development can encourage employees to come up with new ideas and work together, making them much more involved. The artistic process makes employees feel like they own and are proud of their work. It makes them more likely to share their thoughts, figure out issues, and try new things.

This kind of participation raises morale, job satisfaction, and drive, which makes people more productive and likely to stay with the company. Working on fun and new projects can also help a group get the best people to join. Focusing on making new products makes the workplace exciting and motivating, which is beneficial for both workers and the business.

The Roadmap Aims To Address Challenges and Solutions During NPD

Researching the best idea.

Challenge:  It's challenging to choose the best product idea because there are so many options, and market wants and trends are difficult to predict. Selecting the most innovative and best product idea for development requires extensive study, creativity, and an understanding of customer behavior.

Solution:  Do a lot of market research to find gaps and opportunities. Look at your competitors and gather feedback from customers to help you come up with ideas. Consider whether ideas are feasible, market-driven, and company-aligned. Using data and insights, pick the most likely ideas. It will help you minimize risks and build a strong base.

Securing Resources and Budget

Challenge:  Getting the right budget and resources can be challenging, which makes it harder to move through each stage of development successfully. Lack of funds and resources can lead to project delays, lower standards, and missed key deadlines, thereby jeopardizing the product's success.

Solution:  Carefully plan and assign your financial, human, and technology resources. Make a detailed budget that includes all of the project costs. Give stakeholders a thorough business case to get the money you need. Effective budgeting and resource control prevent delays, ensuring smooth progress and the development of high-quality products  within the budgeted costs.

Managing Timing

Challenge:  It's important to keep track of time because delays can mean missing out on market chances and having to pay more. Keeping track of all the different tasks and stages while meeting deadlines is hard, especially when problems come up out of nowhere and delay the project's completion or failure to reach the market.

Solution:  Make a detailed project schedule with clear due dates. Set realistic due dates for each step and put tasks in order of importance. Check on work often and make changes to schedules as needed. When you manage your time well, you can ensure that deliveries happen on time and that the launch of your product aligns with market opportunities and customer expectations.

Effective Communication and Collaboration

Challenge:  Misunderstandings, delays, and less-than-ideal results can happen when teams don't talk to each other or work together. It's challenging to make sure that everyone is on the same page with project goals and deadlines, especially when the project involves a lot of different departments and is complicated. It can lead to mistakes and wasted time.

Solution:  Set up clear ways for teams and partners to communicate and share information on a regular basis. Use tools to collaborate, share data, and solve problems quickly. Encourage people to collaborate and help each other out to boost imagination and problem-solving, and make sure that everyone works together as a unit during the development process.

Addressing Technical Challenges

Challenge:  Technical problems can happen at any point, which could lower the quality and functionality of the goods. Early detection and resolution of these issues are challenging due to the need for specialized knowledge, comprehensive testing, and collaboration among various teams to ensure adherence to technical standards.

Solution:  Prepare for technical problems by trying and prototyping thoroughly. Work together with teams from different departments, like engineers and artists, to find and fix issues quickly. Make sure the product meets technical standards and is reliable by putting in place strong quality assurance measures and practices for continuous improvement.

Product Launching

Challenge:  A poorly planned product launch can result in a small market share and few new customers, which hurts the business's overall success. It's difficult to coordinate marketing, sales, and promotion, and a mistake can break the product's sales.

Solution:  Make a full plan for the launch of your product, including actions for marketing, distribution, and promotion. Coordinate the work of different sections to ensure a smooth market introduction. Check the product before selling, and use the feedback to improve it. Check your performance after starting, and adjust your strategies to maximize sales.

New Product Development Process Examples

Scalable cloud computing services  presented a big opportunity for Amazon, which did much studying to understand what the industry needed. Focusing on scalability, dependability, and ease of use, they made different prototypes for AWS services.

They thoroughly checked out performance, security, and flexibility. Amazon used a targeted marketing approach that emphasized how flexible and affordable AWS was. To get new customers, they made direct sales, put on educational events, and gave away free trials and credits. This helped AWS become a star in cloud computing services.

Apple market research to find out what people wanted and what technologies were available. They looked at trends, competitors, and user comments. Apple created several versions of the iPhone to test its designs, features, and functions.

The device passed strict tests to make sure it met quality standards and user expectations. Apple came up with a full marketing plan that focused on the iPhone's unique features . Apple ran powerful ads, got the media talking, and held high-profile launch events to get the word out and get people interested, which changed the smartphone business forever.

Tesla started with the ambitious idea of making electric cars  that could last for a long time and be just as quick and appealing as gas-powered cars. In-depth feasibility studies looked at whether production was technically and financially possible. Tesla puts much money into designing vehicles in new ways that combine style and cutting-edge technology.

Tesla created several prototypes to enhance safety, speed, and the user experience. Much testing was done to make sure that it was reliable and met all the rules set by the government. Tesla launched their cars into the market in a smart way, with targeted marketing efforts and active participation on social media. At the same time, they built up their charging network to accommodate new cars.

Microsoft saw a need in the market for a device that could do a lot of different things, like a laptop and a tablet. Microsoft made the Surface Pro after conducting extensive research on user preferences and market trends. It has developed several prototypes to enhance the hardware's design, speed, and usability.

Thorough testing made sure that it would last, work, and be compatible with software. Microsoft made a marketing plan that focused on the Surface Pro's special features. Targeted advertising efforts, product demos, and partnerships with businesses and schools helped them make the Surface Pro the best device on the market.

Google saw that there was a growing need for smart home gadgets  that work well with their ecosystem. They did a market study to find out what people wanted and needed from voice-activated assistants. Designers made different versions of Google Home to test different shapes, features, and ways to connect with other smart devices.

The designers conducted numerous tests to ensure that the product functions effectively. They also made sure that it accurately recognizes voices. Additionally, they ensured that it can seamlessly integrate with Google services and other devices.

Google launched a big marketing campaign to promote the features of Google Home. They used ads, product demos, and partnered with retailers. To get people to buy it early, Google also offered deals and discounts.

How Can Technanosoft Technologies Help Convert Your Ideas Into Reality?

Technanosoft Technologies excels at turning new ideas into items that people want to buy. Our team provides services such as market research, feasibility studies, and strategy planning. These services help ensure that your idea is viable and ready for the market.

We handle all aspects of new product development . This includes designing and building prototypes, as well as testing and launching the final product. Through collaboration, we ensure everyone is on the same page and can communicate.

We quickly solve technical problems using cutting-edge technology and best practices in the field. This provides a high-quality result. When you work with Technanosoft Technologies, your thoughts will come to life with accuracy, speed, and quality.

FAQs About New Product Development Process

Q.1- what is npd full form.

A- It stands for new product development meaning NPD. It includes all the steps needed to bring a new product to market, from coming up with an  idea and developing it into a plan  to launching the product and advertising it.

Q.2- What is the NPD process?

A- The new product development process includes steps such as coming up with ideas, evaluating those ideas, developing concepts, conducting feasibility studies, designing the product, making a prototype, testing it, and finally releasing the product. This organized method ensures that new products meet the market's needs and perform well in the business world.

Q.3- New product development process examples?

A- The NPD process is evident in Apple's creation of the iPhone, which necessitated extensive research, prototyping, testing, and marketing, and in Tesla's production of electric cars, which followed a rigorous development cycle from concept to market launch.

Q.4- New product development in marketing?

A- In marketing, "new product development" refers to the planned steps taken to introduce a new product to the market. Researching the market, determining customer needs, formulating marketing strategies, and promoting the product are all part of the process.

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New product development, or NPD, is an important process for turning new ideas into goods that people will want to buy. new product development definition, product development process includes coming up with ideas, figuring out if they will work, making a prototype, trying it, and launching it. Effective NPD helps businesses grow, makes them more competitive, and makes customers happier and more loyal.   This piece goes into detail about the steps of the NPD process, talks about its many benefits, and gives examples from big companies like Amazon, Apple, Tesla, Microsoft, and Google. Knowing how important NPD is can help companies come up with new ideas and stay ahead of the competition in their fields.   What is New Product Development?

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Product Development Process: The 9 Stages (with Examples)

Without product development, product ideas will remain as ideas and never get launched into the market and reach the organization's target audience.

Before a company’s market launch, the product development process must happen from the brainstorming session where ideas are generated till the finished product is successfully launched.

Ensuring that an idea comes to life, becomes a widely accepted product in the market, and meets customer needs is the desire of every product manager. The product development process makes this achievable.

This article will discuss various aspects of the product development process and the factors that influence it.

Let's get started.

What is Product Development?

Product development refers to the strategic process of building a new product from start to finish. It is a vital aspect of product design. The product development process begins from the initial idea generation phase or brainstorming session till the product launch.

Furthermore, the product development process refers to all the activities and steps an organization takes to bring a product into the market successfully. It covers other aspects like introducing an old product to a new market and renewing an existing product.

Successful product development entails identifying a market need, building the product roadmap , conceptualizing the product, launching the product into the market, and collecting customer feedback.

Some of the best product roadmap software that helps you take a product from initial conception to development and launch include Monday.com, ClickUp, and Wrike.

New Product Development Process

The new product development process is a vital aspect of product design and does not end until the product life cycle is completed.

In simple terms, the new product development process involves bringing an original product idea to market. You can use the best product management tools for visual product planning and effective product process management.

9 Stages of Product Development

Different organizations use different product development techniques, but the product development process is broken down into nine stages.

1. Idea Generation (Ideation)

The first stage of the product development process is the ideation stage. Many entrepreneurs have issues moving beyond this sage; most get stuck here and either come up with unscalable ideas or no idea.

Product development begins when a new product idea is generated or birthed.

The ideation stage can also be called the product innovation stage, where you thoroughly brainstorm certain product concepts based on market research , concept testing, and customer needs.

The following factors should be considered when initiating a new product concept.

Target Market

Your target market is your potential customers. A target market is essentially the customer profile built specifically for your product.

Identifying your target market at the early stage is vital so that you can customize your product concepts in line with your target market from the start.

Existing Products

Accessing your existing product portfolio is important when you have a new product concept.

Some factors you must consider within your product portfolio include:

• Do your existing products provide solutions to similar problems?
• Do your competitors offer a product that does not permit market share?

If the answer to these questions is positive, you must consider whether your new product concept is substantially different enough to be viable. Acquiring the right answers to these important questions will guarantee the success of your new concept.

Functionality

You need to have a general idea of what functions your product will serve to the user and how it will benefit your customer.

At the initial stage, it is not compulsory to have a well-crafted report of the product's functionality is not compulsory. Having a general picture of its core functionality will go a long way.

You should consider why a potential customer will be interested in purchasing your product, what it looks like, and what esteem benefits it provides.

SWOT Analysis

Building the best version of your new product concept is feasible when you have considered every important factor and analyzed your product’s strengths, weaknesses, opportunities, and threats early in the development process.

A proper SWOT analysis will ensure your product solves the market gap and is distinct from competitors.

SCAMPER Method

With brainstorming techniques like SCAMPER, you can refine your product ideas properly. SCAMPER is an acronym for substituting, combining, adapting, modifying, putting to another use, eliminating, or rearranging your product concept.

Documenting your generated ideas as a business case will further validate your product concept. With this SCAMPER strategy, your team members will clearly understand the original product features and the new product launch objectives.

2. Preliminary Idea Validation Using Market Research (Idea Screening)

After successfully generating your product idea, you should research before going into production, as most entrepreneurs do. Failure to validate your idea may result in various issues and problems.

Validating your idea (product validating) eliminates the constraints of producing a product that is not fit for the target customers. It prevents you from investing your precious time, money, effort, and resources on an idea that will not sell.

Producing a product your target audience will not be willing to pay for is counterproductive to the business goal of making a profit.

Here are some idea screening techniques to validate your product ideas.

• You can get useful and early feedback on your idea by sending an online survey using online survey software tools .
• You can start a crowdfunding campaign.
• Sharing your idea with friends and family is also a good way to validate your idea.
• You can ask for feedback on forums like Reddit, where you will get detailed insight into your idea's viability.
• With Google Trends, you can thoroughly research market demand and compare the information with your idea.
• You can get early user feedback and gauge the interest of potential customers via email opt-ins or pre-orders.
• Ask the opinions of people with strong industry knowledge in your target niche.

In validating your idea, you must be conscious that you require feedback from an unbiased and substantial audience concerning why they will buy your product or not.

You can implement an effective marketing strategy by running a technical feasibility study or carefully accessing the idea to know if it will generate a good return on investment ( ROI ) or not.

Product validation guarantees that you create a product people will be willing to purchase. A major aspect of validation research is competitive analysis. If your idea can take up a market share, inevitably, competitors are already operating in that space.

You can acquire relevant information to validate your product by visiting competitors’ websites and signing up for their email lists. These actions will give you clear insight into how your competitors attract customers and make sales.

Another step you can take is to gather information from your potential customers about their opinion of your competitors’ products. This information will be of great help when you want to define your competitive advantage.

All the information gathered from the market research you conducted and product validation will help you effectively project and gauge the demand for the product. You will get insight into the competitive landscape before you proceed to the planning phase.

3. Product Definition

Product definition means concept development or scoping, and the main focus is to refine the product strategy successfully.

Here are some specifics that you must define in this stage.

Business Analysis

The business analysis includes e-commerce strategy, effectively mapping your distribution strategy and more in-depth competitor analysis. Effective business analysis enables you to start building a clearly defined product roadmap.

Value Proposition

A value proposition describes what exact problem the product is solving. You should compare the difference between the product and other products in the market.

This value is useful for developing your market strategy and conducting market research.

Success Metrics

Clarifying your success matrices should be done early in the development phase for you to measure and evaluate success after launching your product.

Certain key success metrics you should consider are key performance indicators ( KPIs ) like average order value or custom set goals which are more direct and relevant to your organization.

Marketing Strategy

Start a brainstorming session to develop the perfect strategy that fits your need. Consider the best platform for promoting your product, such as a blog post, SMS marketing , or social media.

You may have to change your strategy eventually, especially when the finished product is out and ready to be launched. Still, it is best to be prepared and plan concerning what marketing strategy you will implement.

4. Prototyping

The prototyping stage entails intensive research and documentation of the product by the product development team.

Prototyping is done by constructing the product and creating a more detailed business plan. It involves creating a sample, release, or model of a particular product to evaluate a process concept.

An advantage of creating a prototype is that it helps you identify major risk areas associated with the product before it is created.

Here are the areas of focus in the prototyping phase:

Feasibility Analysis

Evaluating your product strategy based on feasibility is the next step in this process. You must eliminate assumptions and ensure the workload and estimated timeline are achievable.

After the analysis, if you discover that these parameters are not achievable, you can make the necessary adjustments by changing the dates accordingly and requesting assistance from stakeholders.

Market Risk Research

Before your product is created, you must analyze any possible risks associated with the product’s production process. Identifying the potential market risks prevents your product launch from derailing from the original business plan .

Document the information derived from the research in a risk register which is a useful tool for communicating risks to your team.

Development Strategy

At this stage, you begin to work through your development plan, which means you assign tasks, and the timeline of these tasks will follow. The critical path method can help you effectively plan tasks and estimate timelines.

Minimum Viable Product (MVP)

The prototyping stage's minimum viable product (MVP) is the outcome. An MVP is a product with the necessary structure required to launch and nothing above what is required for the product to function.

One of the advantages of creating an MVP is that it helps your team execute the product launch faster than when they have to build all the necessary features, which can extend the launch timeline.

The desired features can be added later when bandwidth is available. For example, an MVP motorbike would have features like breaks, fuel tanks, wheels, and seats without a basket or bell.

5. Initial Design

The initial design phase is characterized by project stakeholders working together to produce a product caricature of the product based on the MVP prototype.

While creating the design, you should make every decision with the target audience in mind. Consider the necessary features to meet your target audience's needs and complement your product's key functions.

A successful product design entails several activities that may require repeated interaction to get the design perfect. It may involve communicating with several distributors to acquire necessary materials.

Producing the initial product design involves:

Source Materials

To successfully design the initial product mockup, you must source relevant materials. Source materials may entail ordering equipment, working with various vendors, or creating your product.

Documenting your sourced materials in a shared space where they can be referred to later or when needed is important because these materials were sourced from various places.

Connect with Stakeholders

Communication Is a key component for any project to be successful. Regarding creating the initial design, keeping a tight communication channel is important to verify if your initial design is still on the right track and has not derailed.

You should share daily or weekly progress reports to keep the stakeholders updated and get approval as needed.

Receive Initial Feedback

After completing the design, you must request initial feedback from the senior management team and relevant stakeholders.

With the feedback acquired, revise the product design as required until the final design has come to the point where it can be developed and implemented.

You will then move to the validated phase once the senior management team and stakeholders have approved the product for final testing before launching the product.

6. Validation and User Testing

Before launching a new product, you must validate and test it first. The validation and testing process ensures that every aspect of the product, from the development to the marketing, is functioning before it is marketed to the general public.

The validation and user testing process entails:

Validation Testing

Validation testing is the process of confirming that the product meets its proposed use and that its features can meet the various beads of its users, resulting in the users being satisfied with the product.

Concept Development and Testing

After developing your product prototype, you need to access the prototype and provide viable solutions to issues encountered in the physical production or software development process.

You can test the product’s functionality by enlisting the help of beta testers and team members to assure development.

Front-end Testing

During the front-end testing phase, you are required to test the front-end functionality of the product to access risks with consumer-facing errors or development code.

Front-end testing also includes checking the eCommerce functionality and ensuring it is stable for launch.

Test Marketing

Testing your market plan for functionality and errors is crucial before you start the production of the final product. Ensure all necessary camping equipment is properly set up and ready to launch.

7. Sourcing (If It’s a Physical Product)

Before going into production, you must gather all the materials and secure the necessary partners. Build an efficient supply chain that includes the vendor's activities and resources required to create a product and market it to the right customers who will purchase it.

The sourcing phase is characterized by activities like finding suppliers and manufacturers and associated factors like storage, warehousing, and shipping.

Finding multiple suppliers and different potential manufacturers for the materials required for the product will enable you to compare costs to pick the one best suited for your needs.

Diversifying your supply chain has the added advantage of creating a backup option when one supplier fails to deliver.

Additionally, having multiple supply options helps to protect and safeguard your business for the long term.

During the sourcing phase, you will have to decide if you will produce your product locally or internationally. Both options have pros and cons; you should access them diligently before deciding the best fit for you.

8. Costing and Business Case Development

A clear picture of what it will cost to produce your product is essential in the development process.

Costing is a fundamental business analysis in which you compile all the acquired information and sum up your cost of goods sold ( COGS ) to determine the gross margin and retail price.

You can calculate the product cost by creating a spreadsheet with each extra cost broken out as a separate line item. Items within the spreadsheet should include your factory setup cost, all of your raw materials, shipping cost, and manufacturing cost.

An extra cost can significantly impact your cost of goods sold (COGS). These expenses include import fees, shipping, and any duties you may pay to make your product available to your consumers.

The amount you are expected to pay is largely dependent on the location you are producing the product.

Suppose you secured various quotes for materials or manufacturers while sourcing necessary resources. You can add different columns for each line item that compare the cost.

You can also create another spreadsheet version, comparing local and international products.

You can create your pricing strategy for your product after you have successfully calculated your total cost of goods sold (COGS) and subtract it from that price to get your potential gross margin, or profit, on each unit sold.

9. Commercialization

After creating a profitable and successful product ready for the world, the next step is to commercialize it.

Before you reach this stage, you must have quality tested your development and marketing efforts and finalized your product design. Checking off these activities should boost your confidence in your final iterations and be ready to produce your final product.

Here are the factors you should pay attention to in this stage.

Product Development

Product development involves physically creating the product you intend to launch or release to your customers. At this stage, you may require additional development for the software concept.

You should give the development team the MVP interaction and final prototype to produce the product to the perfect specifications.

Ecommerce Implementation

After the product has been successfully developed, it is time to launch. Your development team will transfer your eCommerce materials to a live state.

You may have to do additional testing to ascertain that your live product performs as it was designed to function during the previous front-end testing phase.

After every other important step has been carried out in the development process, the final product is then introduced to the market. The marketing team completes this step after the product development team has completed its job.

When it comes to marketing, you do not necessarily have to spend too much to run ads. Instead, you can use the following tactics for effectively marketing your product to the right audience.

• You can run chat marketing campaigns.
• Use gift guides to display your product features and increase awareness
• You can run an affiliate marketing campaign by working with major influencers
• Enable Instagram shopping
• Send product launch emails to generated leads
• Run chat marketing campaigns

Product Development Examples

The product development cycle is different for various industries. Since you have acquired an adequate understanding of the new stages of product development, let us look at real-world examples where they can be applied.

Let’s consider two popular and well-established industries: beauty & cosmetics and food & beverage. Here are some well-documented case studies about how the product development processes of these industries function.

Beauty and Cosmetics

Within the beauty and cosmetics industry is a wide range of products constantly expanding due to self-care and wellness trends. These products range from skincare products to makeup to bath products.

Additionally, reasonable beauty and cosmetics brands diversify into all-natural ingredients and sustainability, making it feasible and easier for you to craft a product using the readily available ingredient.

A relevant example is white labeling, which involves the strategic process of sourcing for an existing product or manufacturer and packaging and branding the product they produce with your brand name.

Whatever strategy you use is acceptable, but certain constants exist concerning mass manufacturing cosmetics. You would require a lab to carry out the manufacturing process and a chemist to ensure the quality stays consistent at scale.

Other factors to consider include:

• Shelf Life: You must conduct the necessary quality tests and include the product's expiration date.
• Labels and Warnings: You must identify all the available ingredients used in the product's manufacturing process and highlight the possible reactions.
• Laws and Regulations: You should thoroughly research FDA regulations and their relevance to your product and packaging. Factors considered include where the products are manufactured and where you intend to sell them.

Food and Beverage

The food and beverage industry is a major player in starting a business easily and developing at a low cost from the comfort of your home.

You can create a new soft drink business in the comfort of your home by sourcing the recipe you can purchase online and also market and sell online and in various stores within your reach.

To produce food that the FDA would approve and to move from mixing recipes to packaging the product and selling in stores or online, you would have to get a licensed commercial kitchen to produce food that has passed all the necessary health and safety inspections.

To set up your kitchen, you will require ovens and various cooking equipment to accommodate large batches.

Suppose you plan to produce in mass and packaging. In that case, you will require a co-manufacturer and a manufacturing facility specializing in processing raw food and beverage products on a large scale.

Here are some other factors you should also consider:

• Laws and Regulations : Within various countries are specific regulations concerning allergen warnings, dietary information, and vital health claims that you must comply with.
• Labels and warnings: Displaying the ingredients used for manufacturing and the nutrition information is vital.
• Expiry Dates: A clear understanding of your product life cycle helps make the right decisions about how you package, product, and stock the product to accommodate the expiration dates.

Who is Part of the Product Development Team?

The product development process is not successful without the input of many stakeholders and development teams who assist in ensuring the process's smooth sailing.

Among everyone involved in the process, the major leader is the product manager. Product managers oversee all product tasks related to idea generation, research, development, and product launch.

Here is a list of relevant stakeholders involved in the product development process.

Product Manager

A product manager is primarily responsible for overseeing all areas of the product life cycle and ensuring regular and constant communications between internal and external teams.

The product manager is responsible for initiating product creativity, new product launches, and relevant market research. He is responsible for all product management roles.

Project Manager

When it comes to cross-departmental communication in product development, the project manager plays a vital role.

Project managers assist product managers with task delegation , role and project management, and goal tracking. Every project manager must have the essential project management skills to manage projects successfully.

Design Team

The design team plays a vital role during the design and prototyping phase regarding the visual product concept.

Connecting UX best practices with product design and brand guidance is crucial for successful product development.

Development Team

The development team's responsibility is to make the implementation of your product on your website possible. In most cases, a team of developers collaborates to build the new product offering depending on the complexity of the concept.

Marketing Team

Before launching the product, the marketing team is responsible for creating and testing an effective marketing strategy. The marketing team measures the success of the marketing initiative.

The sales team collaborates with the project manager to develop a crafted sales strategy and a detailed report on the success metrics after product implementation.

Senior Management

Before the product can launch, the senior stakeholder has to access it and give the final approval.

Apart from these roles, other teams involved in the developmental process include finance, engineering, and other key stakeholders.

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Anastasia belyh.

Anastasia has been a professional blogger and researcher since 2014. She loves to perform in-depth software reviews to help software buyers make informed decisions when choosing project management software, CRM tools, website builders, and everything around growing a startup business.

Anastasia worked in management consulting and tech startups, so she has lots of experience in helping professionals choosing the right business software.