Stages of New Product Development Process - Marketing Management (#mbanotes)(#ggsipu)(#productdevelopment)(#ipumusings)
Stages of New Product Development Process - Marketing Management
Question: What are the stages of the new product development process? (GGSIPU MBA 2016)
Answer:
Building up and launching a new product shouldn't feel like you are battling in obscurity. A pre-planned approach and properly structured road-map that gives your business a clear direction to follow. Every company generally follows some methodology for product development, launch and its life-cycle maintenance. Most of these companies, follow a series of steps to bring the product from concept initiation to the marketplace. However different companies stress on different focus points e.g. some follow agile methods while others put emphasis on user experience design-based development.
Product development is not a single process. Rather it consists of many iterative and interconnected sub-processes.
By laying out the steps involved, proper planning and following a consistent, focused but flexible approach, a new product or service can be envisioned and materialised.
Common steps involved in the new product development process are:
1. Product Ideation
2. Concept Evaluation
3. Proof Of Concept and Testing
4. Business Analysis
5. Product Development
6. Market Testing
7. Commercialisation and Monetisation
8. Launch
1. Product Ideation:
In general, it is a creative process that encompasses the generation, development and communication of new thoughts and concepts.
The development of a new product starts with a concept. The rest of the steps will ensure that the concept is viable. Ideation is the mode of the design process in which you concentrate on idea generation.
Ideas can come from anyone. It could be a customer, a market research report or could be a figment of the imagination. Product ideation as a part of the formalised process brings the core team together and brainstorm. SWOT analysis (Strength, Weakness, Opportunities and Threats), current market trends, user experience, customer feedback assessment are common ways to start with. These methods can be used to intensively focus on the identification of customer and market needs, analyse the company's position and building up a road map that aligns to the business strategy. Other related activities may include competitor analysis, buyers analysis, market research etc.
2. Concept Evaluation (Idea Screening and Feasibility analysis)
Once the organization has plenty of ideas, the next step involves prioritizing and screening them. In general quantitative approach is followed that involves checklists, scoring models, Value Proposition Chart, Return on Investment evaluation, market potential, budget constraints etc. that help in identifying those ideas that have greater prospects for the future growth of the business. It also helps in avoiding product failures after good size funding down the line.
3. Proof Of Concept, Development and Testing:
In this phase, the idea is now a concept along with detailed attributes. Formal specifications are built, followed by a proof of concept. It is an iterative process involving quality checks, feedback from a selected small group of customers and course-correction. It helps in developing a foolproof plan in terms of product features, marketing, pricing etc.
4. Business Analysis:
Once the concept has been finalised, business analysis is performed. It includes a detailed marketing strategy, follows McCarthy’s 4Ps of marketing i.e. product, price, promotion and placement. This analysis evaluates whether there is a demand for the product, a full appraisal of the costs, identification of a break-even point and competitive pricing.
5. Product Development / Manufacturing:
Once the business analysis is complete and the new product is approved, it follows the development stage. A working prototype is developed and is shared with the stakeholders. Then the final product is developed against the designs, with regular checks made throughout the process. Comprehensive testing of the final product takes place to verify it meets customers and performance requirements.
6. Test Marketing:
Test marketing aims to explore consumer response to a product. Generally, a marketing campaign is made on a limited basis. Product is shared with selected consumers (part of the test group) and their feedback is collected. This ensures that product and marketing strategy is good and often helps in sorting out marketing issues and distribution channels. Alpha testing and Beta testing are the two common test marketing strategies often used.
7. Commercialisation and Monetisation
Launching your new product is your final, important step in the new product development process. It is an umbrella of activities and some are listed below:
- Product support activities that include packaging, labelling, production control, training agents and customers etc.
- Pricing support activities that cover establishing prices, discounts etc.
- Promotion and branding activities like advertisements, Direct Email, Social Media Marketing, exhibitions, webinars/seminars etc.
- Sales support activities like agents, commissions, Selling, salesforce etc.
- Inventory support activities
- Distribution related activities
- Services related activities - customer support, guarantees, warranties, tax services, IT support systems etc.
- Finance support - invoicing, collecting etc.
New product development is about converting a new and untried idea into a workable product and the above-mentioned stages ensure that developed on time, within budget, and with the appropriate level of quality.
