A successful product development requires a total-company effort. The most successful innovating companies make a consistent commitment of resources to product development, design a new product strategy that is linked to their strategic planning process, and set up formal and sophisticated organizational arrangements for managing product development process. The product development process for finding and growing new products consist of eight major steps as explained below;
• Idea generation
• Idea screening
• Concept development and testing
• Marketing Strategy Development
• Business analysis
• Product Development
• Test marketing
• Commercialization
We shall briefly describe these steps:
Idea Generation: It is a systematic search for new product ideas. A company has to generate many ideas in order to find good ones. The search for new products should be systematic rather than haphazard. Top management should state what the products and markets to emphasize. It should state what the company wants from its new products, whether it is high cash flow, market share or some bother objective. To obtain a flow of new-products ideas, the company can tap many sources. Major sources of product ideas include internal sources like customers, competitors, distributors and suppliers. It has been found that more than 55 percent of all product ideas come from internal sources.
Idea screening: The purpose of idea generation is to create a large number of ideas. The purpose of the succeeding stages is to reduce that number. The first reducing stage is idea screening. The purpose of screening is to spot good ideas and drop poor ones. Most companies require their executive to write up the new product ideas on a standard format that can be reviewed by a new product committee. The write up describes the product, the target market, the competition and makes some rough estimate of market size, product development time and costs, manufacturing costs and rate of return. The committee then evaluates the idea against a set of general criteria.
Concept Development and testing: Customers do not buy product ideas, they buy the product concepts. The concept testing calls for testing new product concepts with a group of target consumers. After being exposed to the concept, consumers then may be asked to react to it by asking a few questions.
Market strategy development: The next step is market strategy development, designing an initial marketing strategy for introducing the concept to the market. The market strategy statement consists of three parts:
• The first part describes the target market; the planned product positioning, market share and profit goals for the first few years.
• The second part of the marketing strategy statement outlines the product planned price, distribution and marketing budget for the first year.
• The third part of the marketing strategy statement describes the planned long-run sales, profit goals, and marketing mix strategy.
Business Analysis: Once management has decided on its product concept and marketing strategy, it can evaluate the business attractiveness of the proposal. Business analysis involves a review of its sales, cost, and profit projections for a new product to find out whether they satisfy the company‘s objectives.
Product development: If the product concept passes the business test, it moves into product development. Here, R&D or engineering develops the concept into a physical product. The R&D department will develop one or more physical versions of the product concept, R&D hopes to design a prototype that will satisfy and excite consumers and that can be produced quickly and at budgeted cost. When the prototype is ready it must be tested. Functional tests are then conducted to make sure that the product performs safely and effectively.
Test Marketing: If the product passes functional and consumer tests, the next step is test marketing, the stage at which the product and marketing program are introduced into more realist marketing setting. This allows the marketer to find potential problems so that these could be addressed.
