What is a Product Development Process?
A Product Development Process refers to the entire range of activities where a company conceptualizes and realizes a new offering. An outcome concept might originate in the marketplace, or in a lab or workspace, or in the so-called fuzzy front end. Ideas come from customer requirements, too.
New product development usually follows a process divided into stages, phases, or steps, by which a company conceives a new product idea and then researches, plans, designs, prototypes, and tests it, before launching it into the market.
The 7 stages of the new product development process require strong concept development and outcome innovation to make sure the original idea can finally make it to market. This is generally achieved through encouraging design and product inventions with creative concepts and expert engineering strategies, such as:
- Analyzing the user needs by conducting a Concept Generation.
- Brainstorming ideas to address the needs.
- Addressing usability, safety, or user acceptance challenges for existing products in order to develop them further.
- Applying Ergonomic & Aesthetic Concepts
- Ranking and comparing all ideas and concepts.
Some studies show that 75% of consumer and retail products procure under 7.5 million dollars during their first year of presence. This can only be accomplished by applying the strategies above. Otherwise, the rate of success drops dramatically.
To learn more about the 7 stages of new product development, we invite you to keep reading as we discuss them and present some examples below.
What is Product Development?
Before going into the 7 stages of the new product development process, it is important to first understand what is product development. Product development is the process that any manufacturer needs to follow to bring a new product into the market or to improve existing products. Product development can also be used to make early features and systems better or more suitable for the end-user, making the outcome more human-friendly. Simply put, good product development achieves the following:
- Generating business opportunities and business growth.
- Improving productivity and profitability.
- Increasing consumers satisfaction.
Now, the new product development process (NPD) refers to the necessary stages for launching products from a raw idea to an end product or software. As it was explained above, the essence of this process is to meet the needs of the end consumers by humanizing technology.
Obviously, innovation is an important aspect of any product development process. Even more for a new product development process. However, innovation does not happen naturally. Like a plant, it requires the proper nutrients to flourish, including effective strategies and frameworks that promote divergent levels of thinking.
Clear benefits of adhering to the new product development process include:
- It helps check the technical plausibility of the idea.
- It ensures a faster time to market.
- It addresses the customer requirements.
- It increases the chances of success.
- It pays off technical debts.
Read more about Exploring The Pros And Cons of the Product Development Process.
With this clear, let’s go through each of the 7 stages of the new product development process.
Stage One: Creating an Idea
Ideas can be easily generated from brainstorming sessions. However, the critical point here is to understand the problems and needs of the customers.
Not understanding the problem in hand will make it impossible to come up with the best possible solutions. Whether it is a high-powered satellite radio or an energy-efficient clothes dryer, no technology will solve the challenge unless the people using the products are taken into consideration.
Here, the well-known method of internal and external sources for idea generation becomes relevant.
Internal sources involve team working in the organization: management-related staff and others. Indeed, their ideas merit consideration since they are experts in their field. According to a study, about 55% of all fresh outcome ideas originate from internal sources. Along these lines, companies like Toyota have organized incentive programs for their employees to think of workable ideas.
On the other hand, external sources essentially incorporate distributors, retailers, and end-users. Practically, 28% of novel product ideas originate from watching and paying attention to customers. It is important to look at technology from the perspective of the person who will be using it.
At this point, directing a survey or surveys to list good ideas that arise from this source is recommended. These ideas are shortlisted later.
Stage Two: Shortlisting/Screening the Idea
The next stage in the new product development process (NPD) is idea screening. This consists in filtering the ideas obtained from both the internal and external sources in order to keep the ones that can actually be applied. There is no reason for focusing on an idea that is not technically plausible to develop.
In addition, the new product development idea must also be unique and special, with the goal of persuading people to pay for it without needing a big investment.
Consequently, a wise strategy here is to go to the experts in the field with all the ideas collected earlier. Other aspects to consider at this point include:
- Making a cost-benefit analysis to avoid massive financial losses after the product’s launch.
- Analyzing all the strengths, weaknesses, opportunities, and threats (SWOT analysis) that the products might have.
- Analyzing whether the products are marketable and have a competitive advantage over similar products. It also implies whether there is easy access to distribution or not.
- Estimating the pricing of the products and where to introduce the products.
- Analyzing the national and international economic situation, as well as the financial situation of the organization. Asking questions like, is it possible to sustain all the stages of NPD, including extensive resources and investment?
Stage Three: Concept Development and Testing
In the 7 stages of the new product development process, understanding the consumer perspective is critical. However, for the concept development and testing stage, that importance even doubles.
It is necessary to establish a clear and detailed version of the chosen idea from the consumer’s viewpoint. This can be done by:
- Quantifying the gain and pain ratio.
- Conducting a competitor analysis.
- Enlisting the significant result features.
- Confining the main principles of the products while creating its concept.
Afterward, the product development team can refer to surveys to craft and test more than one concept to shortlist the concept to the best option.
Here, going through the feedback collected in the surveys and making changes to the final concept is essential. Focus groups or stakeholders are the best sources to finalizing and testing a clear concept.
Stage Four: Marketing Strategy / Business Analysis
Many companies conducting product development focus mainly on the products and the technology behind it. However, forgetting about marketing strategy and the business side of the new product development is a mistake.
Good new product development examples which followed this approach are Betamax and Google Glass. While the technology behind these products was amazing in their moment, the development process was conducted with no connection to a target audience, and the result was a failure.
Therefore, marketing strategy and business analysis are tied in with drafting an approach to reach out to and connect with a targeted audience and must be considered a key step in the 7 stages of new product development process.
This step will help with the decision on whether the new product development endeavors merit the financial investment or not. In other words, it will answer the following question: will it generate a continuous value stream?
This phase of the new product development process involves McCarthy’s 4Ps of marketing:
- Production: branding and level of services.
- Price: payment mode(s) and discount policies.
- Promotion: the best medium.
- Placement: defining product scope.
Stage Five: Development of the Product:
This is the new product development stage where all the essential work regarding the idea, research, marketing strategy, and business analysis has been performed.
Subsequently, here is where the features of the product are finished. It means deciding which elements need to be incorporated into the products and which ones will not be part of it. It is the stage where the actual cost of production is calculated, and cost-effective ways of production are identified.
Finalizing the user interface and user experience design is essential in this stage of the new product development process.
Also, producing a prototype must take place at this point. These prototypes go to the focus group or stakeholders to gain a gist of views and opinions regarding the new product development with hands-on testing.
The minimum viable product (MVP) might be launched and dispatched into the market with minimal features for iterative and incremental development. Of course, the iterations are based on the underlying response from the customers through proper communication and collaboration.
As indicated by Gartner, numerous organizations trust in including customers at the beginning phase of the new product development process. This puts them in a better position to manufacture the product, meeting ergonomics best practices.
Stage Six: Marketing Testing and Validation:
This step aims to reduce the vulnerability swirling around the accomplishment of the results. It alludes to analyzing the feasibility of the new product or its marketing effort.
There are two market testing methodologies, including:
- Alpha testing: the test engineers analyze the product according to its performance. They record the marketing mix outcomes with the product made. In the event of any issues, the modifications are planned and executed before the last thumbs up.
- Beta testing: the customers consume the product and provide their feedback to the company. It is tied in with paying attention to the voice of customers. In the event of any issues, they are sent back to the development team for modifications.
Stage Seven: Commercialization:
It is the final of the 7 stages of the new product development process. Here are a couple of things that matter the most:
- Incorporating the timing to launch the production.
- The region where the product will be launched.
- How to convince the customers to buy.
The best idea would be to emphasize the concept rather than the product features. For example, when Hubspot was launched, the target audience did not know the original concept. But later, when the company improved its marketing strategies and marketed its unique selling point, its business became successful.
Apart from that, it would help if to analyze where the competition stands. If the national or international economy is not in a good condition, it might be better to wait until the following year.
Whether launching the product regionally, nationally or internationally, it is also important to look for separate ways to target distinct markets.
New product development examples:
There are plenty of good new product development examples in different sectors to mention all of them. Here is a shortlist of some of the most relevant ones and the sectors they belong to:
- Amazon (technology) – customer-oriented product development.
- Coca-Cola (consumer) – they claim to have an “all about the voice of the consumer” strategy.
- IKEA (consumer) – low cost, stable level of quality.
For more examples of good new production development examples, click here.
With the fast market changes thanks to technological development and modernization, it is crucial for everyone to refer to the 7 stages of the new product development process. Substantial financial losses can be the consequence, as it was for the failure examples mentioned above.
To avoid the latter, we at Porticos strive to work hand-in-hand with our clients when designing their products to develop a technical requirement specification supported by research into existing products and key technologies that will be required. We do this through creative problem solving and asking questions that lead to big-picture thinking. Our innovative industrial design sketches are created focusing on aesthetics and ergonomics.
If you are ready to develop your new products and would like to get our expert help, Contact Us. We look forward to hearing from you.