What is new product development (NPD)?To create the next product in a company’s product line a design team goes through product development process steps. Starting with a product idea, the team moves through several stages to generate all the details and documents needed to get the product built. A NEW product development (NPD) process goes through the same steps, however as this product has not been developed by the team before, new risks and uncertainties are introduced and often additional information is documented and shared with manufacturing.
6 Phases in New Product Development
Idea Generation and Screening
Every new product starts its life as an idea. In some cases the idea comes out of a brainstorming session, while other ideas develop as a direct response to a need in the market or a response to a competitor product. Once the idea generation phase ends, the ideas must undergo a screening process to weed out all but the best ideas. The screening process typically includes a variety of general projections including cost, market reception and profitability.
The concept development and testing phase seeks to gauge consumer reaction to the overall idea of the new product. Large companies often use focus groups to collect data about whether consumers would buy the product, how often they might purchase and acceptable price levels. Small-business owners can use focus groups, though informal questions to existing customers can also yield valuable information about interest in a new product.
If the new idea survives the concept development and testing phase, a business needs to put together a formal analysis of the new product's viability. In general, this analysis encompasses production costs and expected profit margin, as well as total market size for the product. Businesses must also weigh the product's position within the business brand.
Product development calls for the actual creation of a product, such as a working model or running a short-term test with a new service. Most businesses also consider and develop marketing materials during this phase. The product development phase often follows a rinse-and-repeat model of refining the product and marketing, then testing again with customers or focus groups.
In short, market testing takes the product and offers it to a limited group or geographic region. Large companies may also use computer simulations to mimic customer responses. For small businesses that typically cater to a small geographic region or a specific market segment, the market testing phase is often skipped.
The commercialization phase consists of making the product available to the customer base at large and launching a marketing effort to support it. Commercialization includes producing enough of the product to cover initial demand or having sufficient staff to provide the new service.
Basic new product development stepsThere are five basic steps in a new product development process: Concept, Ideation, Design, Test and Release.
Concept — The concept step sets basic direction and
boundaries for the entire development process by clarifying the type of
product, the problem the product solves and the financial and technical
goals to be achieved by the product.
Ideation — During the ideation step the team
brainstorms to discover some of the many ways a product can solve the
problem and meet internal goals. Ideas are evaluated and the most
promising are selected for further investigation.
Design — It’s in this step that the execution of the
“best” way to create and construct the product happens. Engineering
details are generated to flesh out the high level concepts from the
Test — Testing verifies if the product meets the original goals or if additional refinement is needed.
Release — Once testing has confirmed that the
product solves the problem and will meet the company goals; it is ready
to start the new product introduction (NPI) process and get the product