Isn’t bringing the vision for an original product to life frequently one of the biggest hurdles for aspiring entrepreneurs? New product development (NPD) is the process of bringing a new product to the marketplace. Your business may need to engage in this process due to changes in consumer preferences, increasing competition and advances in technology.
Innovative businesses thrive on understanding what their market wants, making smart product improvements, and developing new products that meet and exceed their customers’ expectations.
So, keep on reading to find out what makes a product successful just in a matter of a six-step process.
Developing a product is no easy job! In fact, according to Pivot International, new products have a failure rate of 25% to 45%—which indirectly means NPD requires an abundance of preparation and a full load of strategies to survive in the market.
New products can be:
- Products your business never sold but others have
- Innovative products brought to market for the first time; they might be completely original or existing products you’ve modified
What Makes a Product Successful?
The fundamental step for NPD is to define your products into two different categories: producer goods and consumer goods. Producer goods are produced for other businesses to use and are bought to help with the production process whereas consumer goods are consumed by people and can’t be last long, for instance, food and clothing materials.
Defining the type of product the business is producing is important when deciding how the product will be developed. Moreover, marketing and producing the right product at the right price is an important part of the NPD process.
The successful product needs to:
- Satisfy existing needs and demands of customers.
- Be the right quality so the price is what customers are willing to pay.
- Design – performance, reliability, and quality should all be consistent with the product’s brand image.
- Capable of simulating new wants from the customer.
- Has something very distinctive that makes it appear different.
Sounds promising, doesn’t it?
Before moving to strategies, it’s essential to mention the pros of developing a new product and they are as follows:
- Diversification for the business, therefore it gives a better range of variety to sell.
- It allows the business to expand into new markets and well as the existing markets.
- USP (Unique Selling Point) will mean the business when developing new products. These are with the new product.
With a well-considered new product development strategy, you can avoid wasting time, money and business resources. An NPD strategy will help you organize your product planning and research, capture your customers’ views and expectations, and accurately plan and resource your NPD project. In order to stay successful in the face of maturing products, companies have to obtain new ones by a carefully executed new product development process.
But they face a problem: although they must develop new products, the cons weigh heavily against success. Of thousands of products entering the process, only a handful reach the market. Therefore, it is of crucial importance to understand consumers, markets, and competitors in order to develop products that deliver superior value to customers. In other words, there is no way around a systematic, customer-driven NPD process for finding and growing new products.
There are many tasks involved in developing a product that is appropriate for your customers. The nature of your business and your idea will determine how many of these steps you need to take. As a result, the following six steps are developed to improve the new product’s marketability and team’s productivity once you have a product idea. After each stage is complete, you must decide whether or not to continue.
The 6-Step Strategy to NPD
Let’s have a look at the 6-step-strategy for a New Product Development:
1) Generate Ideas
The development of a new product or service usually starts with an initial idea which can be attained by the employees, research and development department, customer suggestions or competitors’ products. There are many ways to come up with an idea. To begin with, you can ask yourself the following questions:
- Are there any changes to be made in the existing products?
- What is currently popular in the market?
- Can you use customer’s feedback to enhance your existing products or services?
- Can you identify a need for a particular service or product that nobody else provides?
Generating ideas is the foundation step for product development. Typically, a company generates hundreds of ideas, maybe even thousands, to find a handful of good ones in the end. Review your customer research and market research, and plan further market and customer surveys if you identify research gaps.
What are your customers telling you they’re looking for? Talk to manufacturers, retailers and sales reps to capture their knowledge of your products and thoughts for improving them. And make sure you have a comprehensive understanding of existing products available in your market which further leads to the next step.
2) Select the ideas for Further Research
In this stage, it’s required to decide which ideas to abandon and which to research further. Some products perhaps be too expensive to manufacture other products would probably not sell well. Hence, it’s necessary to contemplate regarding what its potential appeal is to the market. How would you price it? What are the costs in bringing it to market and the marketing potential of the idea. However, there are many other things to consider in this stage such as:
- Based on the information you have gathered to date, list the features and benefits of your proposed product from highest market importance to least. Research and determine your target audience
- Conduct focus groups and target audience thorough market research.
- Consider resources required for designing, manufacturing and delivering the product.
- Study it from your customers’ point of view
3) Decide if the company will be able to sell enough for the product to be a success
This stage is basically an “analysis” for your idea. The department looks in detail at the remaining ideas.This analysis will also help you eliminate inappropriate ideas and avoid unnecessary costs by reviewing your market and competitor research and your feedback from customers to determine the selling price of your product which is done through the use of your recent sales figures and industry sales figures to help you identify the current level of market activity and interest in products in the same line as your new.
They assess how large they think the sales would be and the likely size of the Market Share. A “break-even analysis” is carried out which is a very important idea for any business it indicates to the owner the minimum level of output that must be sold so that total costs of production are covered. In fact, the “quicker” a newly manufactured product can reach the break-even point the more likely it is to survive – and go on to make a profit. So get a fully-detailed explanation on break-even analysis with just a simple click on the link above.
4) Develop a prototype
Prototype testing is one of the most rewarding phases of NPD.
- It allows the operations department to see how a product could be manufactured.
- Allows them to foresee any problems with the manufacturing process as it gives you the opportunity to make the necessary adjustments your product needs to function as intended.
- Gives you the chance to test and evaluate the performance of various materials by using for instance, try-and-refuse method where you can switch in developing a prototype and budgeting costs. Furthermore, you may discover that a different material may provide much better performance and be worth the extra expense.
- Will give an impactful impression to the investors as your approach to potential investors or retailers with a prototype you will be taken much more seriously with a thought-out purpose and a marketable idea.
Moreover, prototyping allows you to bring your product to life for the first time and test it in the market, which can be done by asking your product development manager to maintain a practical, informative schedule and project plan which consists of the steps involved in developing your prototype and running your market testing.
Your investment in market testing your prototype will help you prepare your product for market entry. And not to mention, many large companies use computer simulations as part of this process.
5) Launch the product in one part of the country to test the market
Here, the product is launched on to one small part of the market. This allows the company to see how well the product sells without committing large amounts of money for a national launch, pretty smart, huh? If the product does not sell well, it can be altered or scrapped without exorbitant harm to the company.
6) Go to a full launch of the product to the whole market
The product is launched on the main market and needless to say, introducing a new product into the market is a significant business achievement. Launching your new product is your final, important step in the new product development (NPD) process. This will probably be the national market, to begin with, later it could be exported.
But as they say, “You can’t sell anything if you can’t tell anything” – Beth Comstock.
So, here your marketing strategy and marketing plan will direct your product launch and help you make the most of your business and product exposure opportunities consequently commercialize your product with different marketing strategies by tackling questions such as:
- What methods of promotion should be used to attract target market?
- What methods do competitors use?
- What budget is available for promotion?
- Where to launch the product
After research, planning, prototyping, and sample launching are done, you should have a clearer picture of what it will cost to produce your product. Costing is the process of taking all of the information gathered thus far, and adding up what your cost of goods sold (COGS) will be so that you can determine a retail price and gross margin.
However, it’s always a good idea to opt for penetration pricing which is when the price is set lower than the competitors’’ price to ensure the sales are made and the new product enters the market. Click on the link to get an elaborated explanation of penetration pricing.
Plan and book your advertising well ahead to support your launch you can create a product brochure and point of sale posters to draw attention to the new product. Analyze where your target market customers get their product information and blow them away!
Developing a new product is simply not a piece of cake neither it’s a single-step process! With commitment and dedication, what is not achieved? Anyhow certainly, in all of these steps of the new product development process, the most important focus is on creating superior customer value. Only then, the product can become a success in the market. Only very few products actually get the chance to become a success.
During product development, each journey to a finished product is different and every industry has its own unique set of quirks involved in creating something new. If you find yourself struggling to figure it all out, remember that every product that came before yours had to overcome the same challenges.
By following these steps as you undergo your own product development process, you can break down the overwhelming task of bringing a new product to market into more digestible phases. In this guide, we’ve covered the idea that a quality product shouldn’t alienate your customer base, and that it’s better to have a quality product than a fast-to-market product.
No matter what you’re developing, by putting in all the necessary preparation—through researching, planning, prototyping, sourcing and costing—you can set yourself up for a successful final product.
All in all, having a summarized chart at hand could give a visual representation and helps to break down large chunks of information mentioned above: