New Product Development

There are several general categories of new products. Some are new to the market (ex. DVD players into the home movie market), some are new to the company (ex. Game consoles for Sony), some are completely novel and create totally new markets (ex. the airline industry). When viewed against a different criteria, some new product concepts are merely minor modifications of existing products while some are completely innovative to the company.

• Changes to Augmented Product
• Core product revision
• Line extensions
• New product lines
• Repositionings
• Completely new

These different characterizations are displayed in the following diagram.

There are several stages in the new product development process...not always followed in order:

1. Idea Generation (The "fuzzy front end" of the NPD process)
   • Ideas for new products can be obtained from customers (employing user innovation), designers, the company's R&D department, competitors, focus groups, employees, salespeople, corporate spies, trade shows, or through a policy of Open Innovation. Ethnographic discovery methods (searching for user patterns and habits) may also be used to get an insight into new product lines or product features.
   • Formal idea generation techniques can be used, such as attribute listing, forced relationships, brainstorming, morphological analysis and problem analysis
2. Idea Screening
   • The object is to eliminate unsound concepts prior to devoting resources to them.
   • The screeners must ask at least three questions:
     • Will the customer in the target market benefit from the product?
     • Is it technically feasible to manufacture the product?
     • Will the product be profitable when manufactured and delivered to the customer at the target price?
3. Concept Development and Testing
   • Develop the marketing and engineering details
     • Who is the target market and who is the decision maker in the purchasing process?
     • What product features must the product incorporate?
     • What benefits will the product provide?
     • How will consumers react to the product?
     • How will the product be produced most cost effectively?
     • Prove feasibility through virtual computer aided rendering, and rapid prototyping
     • What will it cost to produce it?
   • test the concept by asking a sample of prospective customers what they think of the idea
4. Business Analysis
   • Estimate likely selling price based upon competition and customer feedback
   • Estimate sales volume based upon size of market
   • Estimate profitability and breakeven point
5. Beta Testing and Market Testing
   • Produce a physical prototype or mock-up
   • Test the product (and its packaging) in typical usage situations
   • Conduct focus group customer interviews or introduce at trade show
   • Make adjustments where necessary
   • Produce an initial run of the product and sell it in a test market area to determine customer acceptance
6. Technical Implementation
   • New program initiation
   • Resource estimation
   • Requirement publication
   • Engineering operations planning
   • Department scheduling
   • Supplier collaboration
   • Logistics plan
   • Resource plan publication
   • Program review and monitoring
   • Contingencies - what-if planning
7. Commercialization (often considered post-NPD)
   • Launch the product
   • Produce and place advertisements and other promotions
   • Fill the distribution pipeline with product
   • Critical path analysis is most useful at this stage