Five Phases of New Product Development

Five Phases of New Product Development
Five Phases of New Product Development:

  1. The      New Product Idea Or New Products Inventions:

Often a result of brainstorming. Sometimes a result of customer or supplier feedback. Sometimes brand new and innovative; sometimes an extension an existing product or product line; sometimes it can be a minor change that results in a repositioning. If an idea is of interest to you and/or your team, move it to the next phase.

  1. The      New Product Idea Preliminary Review:

Ensure that you consider what’s required in marketing a new product: your marketing segmentation (for the new good or service); your target market; your potential customers (how will they benefit); your competition; product feasibility from a technical, cost/price, manufacturing perspective; profitability; sales volume (in other words do a mini-business case and sales plan for the product idea). At this stage of the product development work, I often develop a ranking scale or each of these considerations. This is the first stage of your go/no go decision. Don’t waste resources (time and money) on ideas that don’t score high at this level.

Consider the new product idea with a more detailed analysis:

    • confirm       target market and estimate market size
    • who       is the buyer
    • analyze       buyer behavior (purchase decisions, customer loyalties)
    • identify       product positioning and product differentiation, including       features, advantages and benefits (this may change later but detail it       now)
    • identify       how you will produce
    • identify       costs to market a new product: produce and launch (materials,       direct labor, overhead costs, marketing and sales costs, accounting and       administration costs, equipment costs, outside professional services such       as lawyers, trademark agents, etc., and any other related costs)
    • produce       a prototype to test – focus group testing or if the new product is to be       sold in an existing market, take to your customers and test with them       (trial runs)
    • identify       what price you could charge the market – make this part of the customer       trial (test the price along with the product and build a competitive pricing strategy to fit the product)
    • analyze       competitive reaction and build appropriate market strategies
    • use       customer feedback and production feedback to make product       improvements/changes
  1. Build      a New Product Business Case:
    • based       on prototype tests (manufacture and trial), forecast costs (including       projected capital expenditures) and selling price (if       costs high, do a projected cash flow analysis)
    • forecast       sales volume in your primary, secondary, and tertiary markets
    • forecast       profitability, financial ratios, and break-even point
    • does       the new product business case point to a go or no-go decision? Assess       risks of either decision. Run a sensitivity analysis on your financial       projections.
  2. Go      or No-Go: Not all new product development should go ahead.
    • If       no-go, close the file with lessons learned for product development: what       killed the project? What did customers tell you? What did your market       research tell you. Is this project dead forever or should you bring it       forward in a year or two? Make sure you are detailed in this part of the       closure process.
    • If       go, plan for the new product roll-out:
      • do        you need additional resources: people and equipment
      • do        you need additional cash
      • do        you need to sign-up advance customers (beta customers who might get a        discount for their first orders but who will provide you with valuable        testing and feedback)
      • do        a trial production run to determine where the economies of scale are        reached: sell that first-run to customers involved in the trials – they will        be more involved in the process and more likely to buy
      • do        you need to order in extra supplies and materials
      • do        you need to train or retrain personnel
      • do        build an implementation schedule/action plan
      • do        build a marketing mix program (product, price, promotions and place) for        the new product
  3. Review      After Initial New Product Launch:
    • do       a review; document lessons learned
    • do       look for efficiencies
    • do       assess unplanned-for events (customers didn’t react as planned,       competitors didn’t react as planned). Why? And what, if anything, can we       or should we do about it? (maybe the reactions were more positive than       planned, but if more negative, see if a change in marketing mix strategy       can help)
    • do       ensure that supply and delivery is on time for new products – keep on top       of scheduling, production, distribution
Posted in English, Knowledge & Beyond, New Great Products, Perspectives to Ponder Upon, Problematising Process, Processing Problem Soving.