New Product Management

The Steps in the Systematic Product Development Process

Historically, the new product development process has been conceived in discreet terms with a beginning and an end. Different companies and different industries may alter this seven-step process for different products, or the steps themselves may become blurred as companies become engaged in several stages at the same time.

Bower (pp. 45-48) mentions the process begins with idea generation. For every successful new product, many new product ideas are conceived and discarded. Therefore, companies usually generate a large number of ideas from which successful new products emerge. Idea screening, the second step, considers all new product ideas in the idea pool and eliminates ones that are perceived to be the least likely to succeed. Not only should the firm's manufacturing (Bower, pp. 45-48), technology, and marketing capabilities be evaluated at this stage, but also how the new idea fits with the company's vision and strategic objectives.

The third stage, concept development and testing, requires formal evaluations of the product concept by consumers, usually through some form of marketing research (Kanellos, pp. 23-24). New product ideas with low concept test scores are discarded or revised. While the Internet is making it easier to gather consumer data, there are limitations. As people get deluged with an increasing number of surveys and solicitations, it is possible that they will grow tired of helping marketers.

The business analysis stage is next. At this point the new product idea is analyzed for its marketability and costs. After passing the first three stages an idea may be discarded once marketing and manufacturing costs are analyzed, due to limited potential for profitability or commercial success. Throughout these four stages, the new idea has remained on paper with a relatively small investment required (McGrath, pp. 111-115).

The fifth stage, prototype development, is the first stage where new product costs begin to escalate. Because of this, many companies have placed greater emphasis on the first four stages and reduced the proportion of new products that reach the prototype stage from about 50 percent to around 20 percent. At this stage the concept is converted into an actual product. A customer value perspective during this phase means the product is designed to satisfy the needs expressed by consumers. Firms may use quality function deployment (QFD) as they develop the prototype (McGrath, pp. 111-115). QFD links specific consumer requirements such as versatility, durability, and low maintenance with specific product characteristics (for example, adjustable shelves, a door-mounted ice and water dispenser, and touch controls for a refrigerator). The customer value perspective requires the new product to satisfy customer needs and meet desired quality levels at specified production costs.

Commercialization, the final stage, is when the product is introduced full scale. The level of investment and risk are highest at this stage. Consumer adoption rates, timing decisions for introduction, and coordinating efforts with production, distribution, and marketing should be considered.

The dynamics of markets, technology, and competition have brought changes to virtually every market sector and have made new product development ...