When it comes to successful new product development, productivity is key. Entrepreneurs seeking to remain relevant, efficacious and profitable must
When it comes to successful new product development, productivity is key. Entrepreneurs seeking to remain relevant, efficacious and profitable must continuously conceive and develop new products that not only make it to the market, but also deliver great value to target audience members. Namely, it is crucial for businesses to understand what consumers want, whether similar products already exist on the market and how they can create products superior to those developed by their competition.
To take great product ideas and translate them into even greater final physical products, a new product development strategy (NPD strategy) is of the essence. Your NPD strategy should be systemic, customer-driven and sales-goal oriented. When your product management team collaborates on developing a new product, following these eight stages of the new product development process will ensure ultimate productivity and drive the product’s overall marketability upon introduction. Your NPD strategy should therefore be systemic, customer-driven and sales-goal oriented. Here’s how:
Stage 1: Idea generation
Idea generation is a continuous, meticulous search for new, viable product development opportunities. Often, companies employ basic internal and external SWOT (strengths, weaknesses, opportunities and threats) analyses and examine market trends to generate hundreds, or even thousands of potential product ideas. Internal ideas can be sourced through R&D and employee brainstorming, while external ideas tend to come from studying and communicating with distributors, suppliers, customers and competitors.
Some methods for generating new ideas include:
- Dimensional analysis – listing all physical characteristics of a product idea and asking relevant questions to assess its potential for success.
- Scenario analysis – identifying market evolution to capitalize on anticipated consumer needs.
- Problem analysis – formulating a list of existing consumer problems, pain points and needs to serve as a basis for new product development ideas.
- Benefit structure analysis – identifying which product benefits and features consumers desire or would be pleased to have, to determine deficiencies in existing products and provide the market with enhanced, or totally new solutions.
The goal of the idea generation stage is to come up with an idea that separates your business from the competition through enhanced affordability and ROI and reduced distribution costs. Multiple versions of a single idea can be generated, to maximize scalability while minimizing necessary resources.
Stage 2: Idea screening
Your product management team may come up with many new product development ideas, but few will likely be great, or even feasible. This second step of new product development involves screening all newly-generated ideas to sift the good ones from the not-so-good ones – and discarding the latter, taking into account several factors:
- Your company’s strengths,
- Your company’s weaknesses,
- Customer needs,
- Current market trends,
- Expected/desired ROI,
- What your competitors are producing
- And more.
Attributes belonging to each new idea are compared to these factors, now a standardized checklist, to weed out poor, unsuitable or less attractive ideas that would otherwise progress through the stages of new product development.
While the purpose of the idea generation stage of the NPD process was to create a database of as many new ideas as possible, the purpose of the idea screening stage is to reduce that number, according the criteria mentioned above, to ensure only profitable ideas are invested in (in time, money and human resources).
Stage 3: Concept development & testing
Next in the new product development process is concept development and testing. In reality, this stage is two-fold:
All ideas passing the screening stage are developed into concepts, which will subsequently be tested for real-world viability. A product concept is a detailed version or blueprint of your product development idea, formulated into meaningful, relatable consumer terms so that it is optimally presentable. For every feasible new product development idea, multiple alternative concepts can be created, from which your company can select the one most likely to appeal to your target audience. These alternatives can vary according to several factors, such as quality, price point, features and comfort/convenience of use.
Once concepts have been developed, each one is tested with sample target consumer groups. The feedback these focus groups provide is used to further develop the concept to better meet customers’ needs and demands. After all, you wouldn’t want to launch a product that doesn’t have strong consumer appeal – and for that you need to test, test, test.
Here’s how the process works:
- A sample group is gathered and presented with the concepts, either physically or using symbolic information.This helps them visualize the product.
- The group asks representatives of your business questions to better understand the concept and the solution it aims to provide.
- Your business asks the group members questions about their perception of the concept – does it fulfill their wants and needs? Is it something they are likely to buy? What is missing from the product, and more.
The concept testing process therefore enables your business to quickly and economically gauge initial attitudes towards your new product, before copious amounts of time, money and manpower is spent on actual prototype development.
Stage 4: Business strategy analysis & development
Once a promising concept has been selected, it is time to put together an initial business and marketing strategy. This requires an in-depth analysis of the methods your product management, marketing and sales teams will ultimately use to create and sell the product to your target audience. Necessary strategies, such as product profitability and marketing mix will be determined. To do so, the following strategic areas must be defined:
- Your target market,
- Your new product’s planned value proposition
- Sales, market share and profit goals for the first few years following your new product’s launch
- Planned development, marketing, sales and distribution budgets
- Planned long-term product goals
Stage 5: Business & financial analysis
Before diving into the development of your new product, it is important to analyze the remaining viable new product concepts for business and financial potential and implications. You need to ensure you can afford to implement the business and marketing strategies you just defined. To do so, a detailed list of factors such as cost projections, demand projections, relevant competitors, minimum required investment, profitability and more must be considered and a system of input and output metrics to monitor progress, such as the average time your team spend in each NPD stage and the value of launched products, sales data and other valuable feedback information should be employed.
It is recommended that your team examines the sales history of similar products and surveys the current market to determine current trends and truths and assess the range of risk involved in your new product’s development.
The more thorough your analysis processes are, the easier it will be for you to decide which marketing, branding, and other business strategies you can afford to adopt.
Stage 6: Product development
Following the approval of all relevant business, marketing, financial and de
velopment strategies, the product concept is development into an actual tangible product in this sixth stage of new product development. The main actions involved in the product development stage include:
- Product construction
- Usage testing
- Product positioning
A physical prototype or limited production model is built and branding (and other strategies) are tested and applied. This is meant to ensure that the product idea can indeed function as a safe, effective and workable market offering. As such, it might take your R&D department (or external firm) days, weeks, months or even years, to complete this NPD stage, depending on the product and prototype methods used. Often actual consumers are brought in to work with and evaluate prototypes and pre-release products. They can inject an unbiased perspective to the NPD process, leading to successful development results.
Stage 7: Test marketing
Unlike concept testing, test marketing involves placing an actual finished product for sale in one or multiple sample market settings and observing how well (or how poorly) it sells under the pre-determined marketing plan. Here again, customer feedback is crucial, this time relying on actual observed customer behavior, as opposed to making inquiries about interest in a proposed concept. As such, it can be implemented in the form of further suggested changes to the new product, as required. The goal of the test marketing stage of the NPD process is to validate the entire concept behind the new product before the full investment is made and ready the product for its imminent commercial launch. The actual amount of test marketing needed can vary quite substantially with each new product.
Stage 8: Commercialization
Congratulations! You made it to the commercialization stage of new product development. Your product and all associated marketing strategies are ready for launch. Now it’s time to implement a full marketing plan and production process.
Craft is a revolutionary SaaS product management platform that gets teams working together and collaborating on workflows that meet each project’s individual requirements. The single and agile place for goal-driven teams to create products together, Craft gives product management teams a unified place to create and follow through on NPD strategies, manage products, track tasks, collect market feedback and utilize the best possible software product. That way, they can focus on achieving their business goals and completing tasks like product management pros.
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