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.
Concept Development/Testing
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.
Analysis
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
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.
Market Testing
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.
Commercialization
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 steps
There 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
ideation stage.
-
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
buil
