HOW TO DEVELOP AND LAUNCH A NEW PRODUCT IN THE MARKET?
In order to stay successful in the phase of maturing products, companies have to obtain new ones by a carefully executed new product development process. But they face a problem, although they must develop new products, the odds weigh heavily against success. Of thousands of products entering the process, only a handful reach the market. Therefore, it is of crucial importance to understand consumers, markets, and competitors in order to go through the product development process by delivering 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.
NEW PRODUCT DEVELOPMENT PROCESS
However, now let’s get into the eight major steps in the new product development process.
The new product development process starts with idea generation which 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 where the company finds new ideas internally. That means R&D, but also contributions from employees.
- External idea sources where 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.
The next phase in the new product development process is idea screening which 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. The reason is that product development costs rise greatly in later stages. Therefore, the company would like to go ahead only with those product ideas that will turn into profitable products. Dropping the poor ideas as soon as possible is, consequently, of crucial importance.
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
- A product idea is an idea for a possible product which you are about to invest in
- A product concept à a detailed version of the idea stated in meaningful consumer terms
- A product image is another way that allow consumers to perceive an actual or potential product.
Once 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’s development stage.
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 last stage before commercialization in the new product development process 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 requiring a large investment, when the risks are high, or when the firm is not sure of the product or its marketing program, a lot of test marketing may be carried out.
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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.
THE BOTTOM LINE
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. 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. And if you want to create a new online store for your product, Shopifyninja has exciting features stored in for you. For more details or similar blogs open the website.