Development of new products refers to the designing, creation and introduction of a product or service in consumer market. The modification of an existing product or changing its features is also regarded as product development. Companies emphasize on consistent development of newer products in order to cope up with the changing demand of consumers and ensure sustainable growth.
Need for new product development
Entrepreneurs generate competitive advantage and stay ahead of their rivals by launching new products in the industry. No business can achieve growth and long term sustenance with the same old and unchanged products.
Companies should be in continuous process to develop newer products in regular intervals to improve their sales rate and productivity.
The demand of new developed products depends on the newer features and innovation implemented into it. Innovation is essential in order to make a new developed product better than the existing one. Consistent development of newer products introduces innovation within the industry. Moreover, innovation is essential to gain competitive advantage against the potential rivals in industry.
The needs of consumer continuously changes with time. Companies develop teams and individuals for newer products and services to address their changing needs. Fulfilling consumer demand is essential to gain strong base of potential customers. Strong base of potential customers determines the future of companies.
Companies strive to introduce newer products in market with the focus to attain target market and lead the industry. With the advancement in technology, majority of companies are emerging with products with superior features. Consumers are prone towards accepting products that would facilitate them with the latest benefit. Such an attitude encourages high competition within the industry. Needless to say innovative and quality products are developed in such a competitive scenario.
Eight phases of new product development (NPD)
1. Generation of Idea
- Ideas of new product development are gathered by conducting SWOT Analysis i.e. by evaluating the strength, weaknesses, opportunities and threats of the upcoming product. SWOT Analysis helps to predict the success and sustenance of the upcoming product.
- By researching on market trend, needs and demand of consumers, potential products of competitors, price policies of competitors etc.
- A lot of ideas and concepts are generated among which the most productive ones are filtered.
2. Screening of idea
The irrelevant ideas of product development are eliminated by the following screening processes:
- Evaluate the various benefits of products that would help the target audience
- Determine the size and growth of target market
- Observe the expected and current competitive pressure on the product idea
- Judge the technological feasibility of manufacturing the product
- Evaluate the market trend and rate of acceptability of the product idea
- Determine the rate of profit gained even at delivering the product to consumer at a fair price
3. Development of concept and testing
- The selected idea of product is developed by implementing series of processes
- Set the target market for the developed idea of product
- Incorporate significant features on the product to make it more attractive to the consumers
- Determine the benefits that will make the product unique from the rest and existing ones
- Implement best techniques to make the product demandable
- Budget the cost of manufacturing the product
- Incorporate innovative manufacturing processes to produce it cost efficiently
- Testing of the generated idea of product may include
- Survey with consumers to evaluate their opinion on the product
- How they react with the facilities installed in the product
- Price they are ready to pay for the product
- Rate of usability of the product
4. Analysis of business
- Based on the present competition in industry and feedback of consumers, approximate selling price of the upcoming product is estimated
- Based on the size of target market, the rate and volume of sales is estimated
- Based on the entire research work on target consumers and market industry, the graph of profitability and break-even point is estimated
5. Marketability and Beta Testing
- A product sample or replica of the product is created
- Implement replicate packaging to determine its presentation
- The sample product is analyzed and tested in typical situations of usage
- The sample products are introduced in trade shows for its promotion. This is mainly done to determine consumers reaction and their opinion on the sample products
- Necessary changes and alterations are made
- In order to determine the acceptance rate, the product is sold in a test market initially
6. Product development with technicalities
- Initiation of the new product development programs
- Implementation of quality management programs
- Estimation of necessary resources to manufacture the products
- Publication of requisition
- Data sheets are published to enhance technical communication
- Planning of engineering and technological operations for the development of new product
- Allocation of departments for significant product development operations
- Development of collaboration with the supply chain in order to reach the product at remote places
- Planning of logistics for transportation of developed goods
- Monitoring of the product development programs and review of the entire process
- Identifying the various contingencies arising in the product development process
- Taking of appropriate measures to minimize errors
- This include the post NPD processes
- Launching of the newly developed product
- Implementation of promotional strategies by advertising the product through media, newspapers, social networking sites, press releases, hoardings etc
- The product distribution pipeline is packed with the new developed item.
- This stage essentially involves the analysis of critical path in order to increase the distribution and efficiency of the newly launched product
8. Pricing of new product
- On revising the efficiency of newly launched product, further improvements are made post NPD
al and exte
al analysis of product value
- Analysis of competitive price of the alte
ative products by competitors
- Segmentation of fixed and variable cost of the product
- New developed products is introduced to the target market at the introductory price
- The product price is increased significantly at the stage of product growth and maturity
Risks associated with new product development
Numerous risks are associated with the concept of new product development. Thus, it is mandatory to identify the major risks of product development in order to make the effort worthwhile.
1. Analysis of market risk
- The volume of sales and acceptance cost of the product should be analyzed in order to estimate the profit and avoid considerable loss
- It is important to evaluate the growth or shrinkage of the target market to avoid minimum retu
- The significant changes taking place within the industry should be identified in order to avoid failure of the launched product
- The existing alternatives of the newly developed products are analyzed to identify any blocks to the introduction
- The strengths, weaknesses, threats and opportunities of the newly developed products are analyzed in order to determine its sustenance
- Evaluate the existing products and develop the new products with advanced and unique features to avoid its breakdown
2. Analysis of technical risks
- It is important to determine the technical feasibility of the product before investing on its manufacturing
- Implementation of appropriate equipments and technologies to produce the new products efficiently
- Determination of technological budget to avoid expensive investment
3. Miscellaneous risks
- Product designs and development programs should be protected to avoid risks of product imitation
- Encourage participation of consumers and collect their feedback to avoid loss of time and money
- Investigate on recent developments of products or products about to hit the market in order to avoid overlapping
Drawbacks of new product development
Development of a new product and its launch in market cannot guarantee success. There are a number of drawbacks that might prove fatal for the companies who are planning to introduce new products in market. Some of the consequences are listed below:
- A product cannot be sold at the volume or price which will necessarily bring profit to the entrepreneur. Most importantly, a new product is launched to the target market at the rate and volume acceptable by the consumer.
- Imitation of the newly developed product is another fatal risk that hampers the market and return investment. Competitors are likely to introduce pirated versions of your huge invested product and sell them at a lesser cost to beat your market and sales.
- Developing an effective route to reach the target market is mandatory. Even if your product is the latest development in the industry, it will lead to complete failure if there is no effective route to reach the target group of customers.
- An over-ambitious product may incur major hassles to settle down in market. Development of such a product requires auxiliary settings to mature, hence it is difficult to flourish and considered over-ambitious.
Problems encountered by students while preparing their NPD assignments
Preparing assignments on new product development (NPD) requires in-depth knowledge of the concept of product, background information of market, analysis of consumer demand etc all at one go. Such assignment topics are more relevant to the practical implications than theoretical concepts. In order to carry out the assignment on NPD, students have to conduct survey and primary research with consumers to be acquainted with their verdict. This data collected through primary and secondary research are jotted down in assignments to make it practical and presentable. It is evident that the entire process is time-consuming which the students cannot afford after attending long hours of university lectures. Professional assignment writing help is the only way to get rid of these contingencies.
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