Understanding New Product Development Stages

Aug 27, 2024

Business School 101: New Product Development Process

Introduction

  • New product development (NPD) process is structured and systematic.
  • Aims to bring new products/services to market.
  • Involves identifying, developing, and launching innovative offerings.
  • Key questions: stages of the process, examples of successes and failures.

Section 1: The Process

Stages of New Product Development

  1. Idea Generation

    • Initial phase; ideas sourced from:
      • Employees
      • Customers
      • Competitors
      • Market research
      • Brainstorming sessions
    • Example: Apple iPhone - a combination of phone, iPod, and internet device.

  2. Screening

    • Evaluation and filtering of ideas based on predefined criteria:
      • Market potential
      • Alignment with company strategy
      • Technical feasibility
      • Resource availability
    • Example: Coca-Cola screens beverage ideas based on market research.

  3. Concept Testing

    • Development of product/service concepts presented to target consumers.
    • Collects feedback and assesses interest.
    • Example: Proctor and Gamble's Tide Pods - concept testing validated consumer interest.

  4. Business Analysis

    • Detailed profitability and feasibility analysis.
    • Examines:
      • Projected sales
      • Costs
      • Pricing
      • Market demand
    • Example: Tesla Model 3 - extensive analysis on sales and production costs.

  5. Product Development

    • Designing, engineering, and prototyping the product.
    • Cross-functional team collaboration is crucial.
    • Example: SpaceX Falcon 9 - rigorous development for reusability.

  6. Test Marketing

    • Limited geographic introduction to assess performance.
    • Helps identify issues and adjust strategies.
    • Example: Netflix's international expansion with test markets in Canada and the UK.

  7. Commercialization

    • Official market launch involving distribution and marketing strategies.
    • Example: McDonald's McFlurry - launched after successful test marketing in Canada.

Section 2: Failed Examples

  1. New Coke (1985)

    • Attempted to reformulate classic Coca-Cola.
    • Encountered strong negative consumer reaction and backlash.
    • Underestimated emotional attachment to original flavor.

  2. Google Glass (2013)

    • Aimed to provide augmented reality experiences.
    • Faced privacy concerns, high price, and limited functionality.
    • Halted consumer sales in 2015; continued exploring enterprise applications.

Section 3: Summary

  • NPD process involves seven key stages:
    1. Idea Generation
    2. Screening
    3. Concept Testing
    4. Business Analysis
    5. Product Development
    6. Test Marketing
    7. Commercialization
  • Effective communication and collaboration among departments are critical.
  • Continuous evaluation and adaptation are essential for market responsiveness.

Conclusion

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