The process of new product development starts with the search for new ideas. Abstract ideas are moulded in such a way to suit the market needs. Business persons who want to capture a major share of the market have to think out of the box, to tide over the competition. Small things can make a big difference. Monotonous pattern of thinking will not help you in the long run to survive and sustain in the market.
The objective is to obtain ideas for new products, new attributes for the existing products and new usage for the existing product line. Why do you think so much of investment goes into research and development? The fruits of such R and D activities are reflected in the form of improved sales turn over. Market updates on a daily basis also gives you an excellent feedback about the new products that throng the market. Think about this, it is not possible for every organization to invest such huge sums in R and D which demands technically qualified personnel to carry out the research activities and it is next to impossible that each and every firm in the market can establish the necessary infrastructure for the purpose of research.
What might be the solution? Companies generally rely on internal sources, customers, competitors, distributors, suppliers and others for new product ideas. The sales force of a firm can provide excellent inputs as they meet customers on a regular basis. Through SWOT analysis, a company can make a conscious, deliberate and systematic effort to identify opportunities that can be profitably exploited. Top management should encourage the employees to think more imaginatively to create a niche market for its product range. The management has to prioritise its objectives first and channelise the efforts of employees accordingly.
Steps to be followed in new product development.
- Generation of new product ideas
- Screening of ideas – It serves the purpose of reducing the large number of ideas generated, to spot the good ones and drop the bad ones.
- Concept development and testing – An inherent idea must be developed into a product concept, should include the customer, the major customer benefits and the features defining it.
- Development of marketing strategy – This is helpful in launching the product at the right time and right place to the right people.
- Business analysis – A review of cost versus profit analysis, estimated size and growth rate of the market segment, estimated sales and market share for the new product in the light of financial feasibility.
- Development of the product – If the business analysis gives a satisfactory report as to the rate of return on investment and pay back period, the R and D department goes ahead with manufacturing the prototype which is the preliminary version of the final product.
- Test marketing – It provides an opportunity to understand market response to the new product and its proposed marketing programme in a more realistic market environment than in simulated conditions.
- Commercialization – The product is released into the market, distribution channels are established, thus initiating its life cycle.
The success of new products can be attributed to two aspects, one is creativity and the other being quality.