A new product is a product that is new to the company. When we launch a product in the market, the most important thing as marketers to be kept in mind is to plan out the development of that product in the market. Product development is the next step after product planning. It includes some critical decisions like whether it would be feasible or not to product that product, keeping in mind all internal and external consequences. The most important decision to be taking in the new product development process is whether the product will be profitable to the organization or not.
New product development requires a lot of market research. Before a company develops a product, it is advisable for them to carefully segment the market, choose their target customers, identify the needs and determine their position in the market. The marketing team plays a vital role in this process.
The new product development process is classified into 4 basic categories:
- New to the world: This category represents innovative new creations that have been brand new to the world. The products that are now used regularly were once new to the world. For example, the microwave ovens, telephones, etc.
- New to the company: When a company adds new products to their offerings to the market, they fall in this category. These products might already be there in the market, but they are new to the company. For example, Micromax started as a phone manufacturing company, but later they added televisions to their offerings.
- Addition to the product line: With the everyday changing scenarios of the market, companies often have to add new products to their current product line to survive in the market amongst their competitors and to meet the changing demands of their customers. For example, Sony introduced a new model to its mobile phone line, Sony Xperia Z2, which they promoted as the ‘best phone ever’.
- Product improvement: Improved products are also considered new because of their innovations and changes that have been made in them. These are linear improvements to a product. For instance, Maruti launched its cars with new K Series engines that delivered superior fuel efficiency.
The new product development process involves the following 8 steps:
- Idea Generation: This stage is the first step towards the development of the new product. It involves a pool of ideas gathered from both internal and external sources if the company.
- Idea Screening: Once a large pool of ideas is generated, the second important step is to filter out the pool and screen down the ideas that would work for the company.
- Concept development and testing: The concept is a presentable version of the product idea which takes into consideration the potential target audience, product usage and the potential value propositions. So this third step in the process involves the developing concepts based on the filtered ideas and testing them to check their feasibility.
- Marketing strategy development: Once a promising concept is finalized, the next step is to develop a marketing strategy for the concept. The marketing strategy involves 3 basic elements, the detailed description of the target market, an outline of the pricing strategy and the marketing mix strategy.
- Business analysis: It is very important to evaluate the attractiveness of the business and the proposed product. This step includes the evaluation and forecasting of sales, costs and the profit projections of the new product.
- Product development: Once the business analysis is done, the new product which only existed like an idea or prototype is now handed over to the research and development team to develop the actual product. This step takes a lot of time as it involves many testing process.
- Market testing: Once the actual product is ready, it is then sent out with the brand label as a pilot project to test out the market’s response. This step involves the testing of both the product and the major marketing strategies involved.
- Commercialization: The market step stage gives the company a clearer path on the way to launch the product. This stage is the most costly yet the most important stage in the whole process and it is very important to launch a new product the right way in the target market at the right time in the right place. This stage involves a lot of sales promotions and campaigns.