New Product Development (NPD)
Improving and updating product lines is crucial for the success for any organisation. Failure for an organisation to change could result in a decline in sales and with competitors racing ahead. The process of NPD is crucial within an organisation. Products go through the stages of their lifecycle and will eventually have to be replaced There are eight stages of new product development. These stages will be discussed briefly below:
Stage 1: Idea generation
New product ideas have to come from somewhere. But where do organisations get their ideas for NPD? Some sources include:
• Within the company i.e. employees
• Distributors, Supplies and others.
Stage 2: Idea Screening
This process involves shifting through the ideas generated above and selecting ones which are feasible and workable to develop. Pursing non feasible ideas can clearly be costly for the company.
Stage 3: Concept Development and Testing
The organisation may have come across what they believe to be a feasible idea, however, the idea needs to be taken to the target audience. What do they think about the idea? Will it be practical and feasible? Will it offer the benefit that the organisation hopes it will? or have they overlooked certain issues? Note the idea and concept is taken to the target audience not a working prototype at this stage.
Stage 4: Marketing Strategy and Development
How will the product/service idea be launched within the market? A proposed marketing strategy will be written laying out the marketing mix strategy of the product, the segmentation, targeting and positioning strategy sales and profits that are expected.
Stage 5: Business Analysis
The company has a great idea, the marketing strategy seems feasible, but will the product be financially worth while in the long run? The business analysis stage looks more deeply into the cashflow the product could generate, what the cost will be, how much market shares the product may achieve and the expected life of the product.
Stage 6: Product Development
Finally it is at this stage that a prototype is finally produced. The prototype will clearly run through all the desired tests, and be presented to the target audience to see if changes need to be made.
Stage 7: Test Marketing
Test marketing means testing the product within a specific area. The product will be launched within a particular region so the marketing mix strategy can be monitored and if needed, be modified before national launch.
Stage 8: Commercialization
If the test marketing stage has been successful then the product will go for national launch. There are certain factors that need to be taken into consideration before a product is launched nationally. These are timing, how the product will be launched, where the product will be launched, will there be a national roll out or will it be region by region?