How To Develop A New Product
New product development is the process of producing new products or services which may be developed for the purpose of consumers or business organizations. New products are totally new tangible or intangible products which are categorized into truly new products and innovative products from the already existed products. After internationalization, the need for new products raised because of the competitive products in the markets and customer’s tastes and preferences. Changes in the customer’s mindset brought changes in the market conditions also. Consumers started finding products and services which can give value to their money, so in the present market situations consumers are accepting all the new products and creating the market.
This spirit is motivating the entrepreneurs and new entrants to develop and introduce new products into the markets. By developing new products marketers can enjoy the monopoly, which is one of the reasons, why organizations are producing new products.Various categories of new products can be produced such as completely new products, new product lines, improvements in the existing products, and extensions in the product line, etc.
Need to develop new products
The main focus of organizations to develop new products is to create a brand image, to meet the unfulfilled needs of the customers, to make customers loyal towards their products or services and to occupy the market segments. In the fast changing market conditions, existed products may not survive for longer years. The demand for such products suddenly ends with the innovations of new products, facing such an uncertainty is highly tough, this is the reason many companies are facing several losses. Such situations are forcing the companies to produce new products or substitute products to their own company’s products; it makes them continue the business successfully. If the product is at maturity stage, companies should develop strategies related to product modifications to stimulate and create demand for the product, otherwise it many leads to decline stage. Technological development is also forcing the companies to develop new products.
Various steps in the new product development process
New product development is the process of improving creativity and developing innovations, which are in a profitable business way. All the new products may not be successful because of many reasons such as poor product features, lack of durability, the cost of the production, etc. so developing new products by proper research and analysis can give profitable results.
“Need is the mother of inventions” needs make organizations to think and produce new benefits and value to the customer’s money. Changing needs of the customers, severe competition, and maturity or declining stage of the existing product, technological changes, and globalization make the companies produce new products or services. The successful idea can be generated by the internal and external SWOT analysis, market research, customer feedback, strengths or failure of the competitor’s products.
Before developing a new product any organization or an entrepreneur should analyze the strengths, weakness, opportunities and threats. Strengths and weaknesses can be controlled but the threats cannot be controlled because these are the challenges from the external environment. Finding opportunities is also a great challenge to the entrepreneurs. Proper analysis of strengths, weaknesses and expected opportunities and threats facilitate new product development.
Idea screening is the stage of evaluating ideas and deciding which ideas to be discard and which one to be selected for the further development. Selecting an alternative may depend on various factors such as,
- Changing needs of the customers and most significantly identified need
- Scope of technical feasibility
- Availability of the resources such as materials, money, man, machine, etc.,
- Compatibility between objectives of the organization and new product.
- Cost of production per unit and breakeven point
- Environmental and legal issues
- Benefits of the target markets and value to the customer’s money
- Areas of product improvements
- Strengths and weaknesses of the competitor’s products.
Concept development and testing
Concept development and testing are different from product testing and test marketing. In concept testing, the definition of the product or service or product idea is introduced to the potential and loyal customers for the feedback. Concept development and testing help the researchers to know how customers will respond to the new idea, it tells the success of the product in future. Concept testing creates awareness and helps in building brand image. But before testing the concept, organizations should search for the patent to protect the new idea and should carefully determine the intellectual property issues.
Business analysis and market strategy
Concept testing with potential customers creates a scope to analyze future business growth; it involves the study of inputs and expected outputs such as Percentage of expected sales, cost and price fixation, the study of product’s break-even point etc. Business analysis acts as a valuable asset to develop objectives, strategies, and policies.
Teamwork of various departments such as production, marketing, finance, Research and development and human resources transforms an idea into a product. And introduce to markets. Product development plan varies with the type and nature of the product. It involves product planning, design and review, prototype building, pilot production and finally mass production.
Product testing and test marketing:
In test marketing, products are introduced to the target markets and observe its performance. There is a difference between product testing and test marketing, whereas, in product testing, products are introduced to the various customer groups by providing them incentives, test marketing involves marketing elements, and here products are introduced to the broader markets with ideal samples. Product testing and test marketing, enables organizations to commercialize the final product successfully.
Commercialization involves successful mass production and implementation of the total marketing plan such as developing strategies to promote and distribute the product.
Challenges of new product development:
New product development is a big challenge to the companies, particularly in this competitive environment. The majority of the new product ideas fails at the initial stages only because of the competitor’s prior strategies, financial barriers, resource constraints, lack of technical feasibility, cost oriented reasons, and facing failures in concept or product testing or test markets. Developing new product and marketing successfully is only possible after facing many challenges.