New Product Development
Every product idea goes through different testing and planning stages: idea stage, concept stage, product development stage, test marketing stage, and commercialization stage. This is also known as the “new product development process.” A company obtains product ideas from many different sources. How it screens all the possible ideas to find the right one is a measure of how good the company is at defining and determining future growth areas in the market. Once an appealing product idea is found, the company needs to develop the right product concept and a tentative business plan. If this stage is passed with promises, the company can develop a prototype for testing in the laboratory, and perhaps also with potential consumers. Once the product development stage is passed, the new product can be tested in the market to assess consumer acceptance in real markets. Finally, at the commercialization stage, the new product can be launched in a small market with a specific marketing plan. It can take many years (at least10 and sometimes as many as 30 years) to develop and
Fig. 3.1 Product development process Source: Hisrich and Peters (1991)
test new product ideas selected from thousands. The company’s investment in a single feasible product idea increases when the idea reaches commercializable marketing entity status (see Fig. 3.1).
At each stage of the new product development process, the company needs to understand the competitiveness ofthe ideas and innovations, their compatibility with future marketing activities, and production costs for various quality levels, screening and eliminating anything inappropriate. If the company cannot find or develop the right fit needed and demanded by markets, the new product development process ends in failure. In reality, new product failure rates are very high (80% to 90% in some industries). If marketing mistakes are made during and after the new product development stages, few ideas can be adapted by consumers, so the new product may be stillborn. The lack of marketing planning at both the product development and product launch stages can eventually shorten the life of the product.