In the cutthroat world of business, those who survive the test of time are the ones with the good sense to innovate. In the words of Steve Jobs, “The people who are crazy enough to think they can change the world are the ones who do.” In effect, becoming stagnant is the enemy of a successful business. (1)
However, new ideas, products, and systems need proper screening before implementation. Without this, your new idea can cost you, both financially and reputationally. This is where the new product development process comes in, and here, we look at how it can benefit your business.
What exactly is the new product development process?
Markets feature maturing products alongside perpetual technical innovation. As a company, your ability to retain your competitive edge requires you to balance the necessity and difficulty of producing new products. The reality that only a handful out of thousands of products actually make it to market is a sobering thought.
This is where the new product development process comes in. What this does is test the suitability of the product for the market, as well as its economic viability. It is a crucial step in the pursuit of understanding consumers and the market conditions required for your product to be successful. Below are ways in which this process can help your business.
- Your business can save money
Around 20% of new businesses fail in the first year. This is often due to factors that include improper market research, economically unviable business models, or incompetence. The new product development process is designed to alleviate, or eliminate, these risks from your business. It does this by testing the potential success of your idea compared to the current market conditions under which it will enter. (2)
Properly testing the effectiveness of certain products before they hit the market means that you can adapt your idea accordingly, or withdraw it entirely. By having this information up your sleeve, you have a secret weapon against launching a disastrous business idea, and you can keep your business financially stable for longer.
- Innovation and idea generation
The new product development process is a driver and promoter of new ideas for your business. By having the framework to test the viability of new ideas laid out, it’s only natural that this will lead to its implementation (as opposed to more ad hoc methods of idea creation that have higher likelihoods of failure). Developing and nurturing a culture of innovation is crucial to individual and commercial growth of staff and the business. (3)
- Formalizing and strengthening concept development processes
Just like with a new business, you need to properly and accurately define your product concept. This should be done in a way that takes into consideration the anticipated consumer, and hence, the product should be described in meaningful consumer terms. This can be done in different ways, but will often follow these steps:
- A product concept is pitched to an audience of senior staff or stakeholders in a business.
- The macro idea is approved or shelved based on its merit.
- If approved, the product is developed into alternative product concepts, often branching out to target different demographic groups.
Having this framework laid out can streamline your business processes and boost staff productivity. It is the natural step to take before concept testing.
- Concept testing
The above listed concept development process is best paired with a subsequent concept testing process. Once the idea is developed, it should be tested against market conditions and the target market.
How this is done is by testing it against target consumers through market research practices. This would consist of presenting a physical or symbolic representation of the product to consumers. Sometimes a description in words, or just a picture, will be sufficient, but better results will come from an authentic physical representation.
After presenting the concept to groups or individuals, they will be asked to respond to questions or engage in discussions. The responses in these sessions will be used to assess the consumer appeal and assigned value to these concepts. By doing this, your business can ascertain how exactly your ideas fit into the broader consumer market and place you in a position to adapt accordingly.
- Marketing strategy
The new product development process can help formulate your marketing strategy for the products you intend on releasing. This is the natural course of action once your concept has been designed and tested, and from a time perspective, would make sense during the production phase.
With the intel you collected in the developmental phases, you can turn this into a marketing strategy. With much of the research having been done already, the process is then simplified, and accelerated. Three key areas of your marketing strategy include:
- Identifying the target market and how to connect with them.
- Outlining metrics such as the product’s planned price, distribution method, and first year’s marketing budget.
- Projected long-term sales and profit margins.
- Develop an effective business analysis
The business attractiveness of a new product can be formulated after its suitability for the market has been determined. This can include cost projections and profit predictions, and how the company’s overall objectives will be met by the release of this new product. These should be compared against data of products released in the past, whether by the company or competitors. A new product development process can help make this happen.
- You can avoid common pitfalls
This kind of product testing and analysis presents your business with an ability to avoid common problems and adverse situations that are endemic to new products. Identifying problems early means that action can be taken to mitigate the impacts of negative influences before they happen. This can include issues like not meeting customer’s minimum expectations, unforeseen development costs, overpricing, ineffective advertising, and smaller market size than previously estimated.
The new product development process can be hugely beneficial for any innovative and forward-thinking business that intends on being effective rather than short-sighted. Using the new product development process can help a business to save money, innovate, formalize its processes, test its concept, and avoid common pitfalls. This places your business in a strategic position to roll out new products as efficiently and as cost-effectively as possible.
- ““The people who are crazy enough to think they can change the world are the ones who do.” — Steve Jobs”, Source: https://medium.com/@kirirom_instituteoftechnology/the-people-who-are-crazy-enough-to-think-they-can-change-the-world-are-the-ones-who-do-187d2e08a0a8
- “The True Failure Rate of Small Businesses”, Source: https://www.entrepreneur.com/article/361350
- “An Innovative Culture Makes An Organization More Effective Business Essay”, Source: https://www.auessays.com/essays/business/an-innovative-culture-makes-an-organization-more-effective-business-essay.php
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