New products are completely new in the market which were not introduced earlier. New product development is a risky process. So, the marketer takes crucial steps before launching a new product in the market by working on new product development programmer which satisfies the needs of the customers and increases the returns of the companies.
New Product Development Process
New product development passes through seven stages as follows,
1. Generating New Product Ideas
The process of new product development starts with the new ideas. New product ideas may be generated from both internal and external sources. Internal sources are the sources which are found inside the company. External sources are the outside resources or sources. Thus, the new product ideas may come from customers, dealers competitors (rivals) in company source or from research organization. Techniques such as brain storming and Synectics can be used for product idea generation. Idea generation is a continuous systematic search for new product opportunities.
2. Idea Screening
The next stage is idea screening. In this stage various new products are screened by the evaluation committees. It emphasizes on the questions like, Is the new product needed or not? Whether it is an improvement over the existing product? and What areas must be considered for improvement in order to handling the product in a better way?
3. Concept Testing
Concept testing is nothing, but product concept test. This test is conducted in order to know the reaction response of the customers towards the product. The need for introducing the product or its satisfaction levels are determined by conducting the concept testing.
Quality Gates to Screen and Pass Product Ideas
Quality gates also known as phase gates. These are the checkpoints which verifies the quality of the product.
4. Business/Market Analysis
This stage is very important is the new product development. This stage considers all the important decisions related to the growth of the product from various perspectives like financial marketing etc. It also includes investment analysis and profitability
Estimating Demand for New Products
The two methods used for estimating demand for new products are,
- Substitution Displacement method
- End use method.
5. Market Test
For marketing the new product the films selects various market segments and usually prefer full-scale manufacturer and marketing which are based on results of experimental marketing. The market test is crucial for new products. With the help of the market test the firms can determine the status of the products and if they find that the products are not achieving the expected results then the firm can make an exit from the market and switch over to the new product,
Various methods of market test are,
- Sales wave research
- Simulated test marketing
- Test marketing.
6. Test Marketing
In test marketing, the new products are launched in the market by using the selected marketing mix and are tested in few cities. This is test marketing acts as representative for the selection of the final market.
Test marketing is a lengthy process and utmost care must be taken while monitoring the market and analysis the interpreted results.
7. Commercialization
This is the last stage in the new product development process. The company commercializes its new producers only when all the six stage are successfully completed. Then the company introduces the new product with the required investment is manufacturing and marketing.