What is the New Product Development (NPD) Process? | From A Business Professor

Summary

This video provides an in-depth overview of the new product development (NPD) process, detailing its seven key stages: idea generation, screening, concept testing, business analysis, product development, test marketing, and commercialization. The video highlights successful examples such as Apple's iPhone and Coca-Cola's product screenings, as well as failures like New Coke and Google Glass. It emphasizes the importance of collaboration, communication, and continuous evaluation throughout the NPD process to ensure that products meet customer needs and drive business growth.

Takeaways

• 😀 The New Product Development (NPD) process is a structured approach businesses use to bring new products or services to market.
• 😀 NPD consists of seven key stages: idea generation, screening, concept testing, business analysis, product development, test marketing, and commercialization.
• 😀 Idea generation is the first stage where ideas for new products come from various sources, including employees, customers, and competitors.
• 😀 Screening helps evaluate and filter ideas based on criteria like market potential, feasibility, and alignment with company strategy.
• 😀 Concept testing involves gathering feedback from target consumers to refine product ideas and ensure alignment with customer needs.
• 😀 Business analysis assesses profitability, projected sales, costs, and market demand to determine financial viability.
• 😀 Product development focuses on designing, engineering, and prototyping the product, requiring collaboration between different departments.
• 😀 Test marketing introduces the product to a limited market to gather real-world feedback and make adjustments before a full launch.
• 😀 Commercialization is the final stage where the product is launched with marketing campaigns, sales efforts, and distribution channels.
• 😀 Even well-established companies face risks, as evidenced by famous product failures like New Coke and Google Glass, which faced backlash due to unmet consumer expectations.
• 😀 Continuous evaluation and adaptation are essential to respond to market changes and consumer preferences throughout the NPD process.

Q & A

What is the New Product Development (NPD) process?

The New Product Development (NPD) process is a structured and systematic approach businesses use to bring new products or services to the market. It involves a series of steps aimed at identifying, developing, and launching innovative offerings that meet customer needs and contribute to business growth.

What is the first stage of the NPD process?

The first stage is 'Idea Generation'. This is the phase where the process begins, and ideas for new products or services are generated. These ideas can come from employees, customers, competitors, market research, and brainstorming sessions.

How does idea screening work in the NPD process?

In the 'Screening' stage, ideas generated in the previous step are evaluated based on predefined criteria, such as market potential, technical feasibility, alignment with company strategy, and resource availability. The goal is to eliminate ideas that are not viable or do not align with the company's objectives.

Why is concept testing important in the NPD process?

Concept testing is important because it helps businesses refine product ideas by gathering feedback from a select group of target consumers. It ensures that the product or service aligns with customer needs and preferences, as seen with Procter & Gamble's Tide Pods.

What happens during the business analysis stage of NPD?

During the business analysis stage, a detailed financial analysis is conducted to assess profitability and feasibility. Factors like projected sales, costs, pricing, and market demand are examined to determine whether the new product can generate a sufficient return on investment.

What is involved in the product development stage?

In the product development stage, businesses focus on designing, engineering, and prototyping the product or service. Cross-functional teams, including R&D, marketing, and production, collaborate to ensure that the product meets quality and design specifications.

How does test marketing contribute to the NPD process?

Test marketing allows businesses to introduce a product in a limited area or to a specific audience to assess its performance and gather real-world feedback. This helps identify potential issues and adjust marketing strategies or the product itself, as demonstrated by Netflix's international expansion.

What happens during the commercialization stage of NPD?

In the commercialization stage, the new product is launched into the market. This involves setting up distribution channels, rolling out marketing campaigns, and making sales efforts to maximize market penetration and revenue generation.

What led to the failure of 'New Coke'?

The failure of New Coke in 1985 was due to a reformulation of the classic Coca-Cola formula that consumers rejected. The company underestimated the emotional attachment customers had to the original taste, leading to widespread backlash and protests.

What were the key issues with Google Glass as a product?

Google Glass faced several challenges, including privacy concerns over its ability to record video and take pictures discreetly. Additionally, its high price and limited functionality made it unattractive to consumers, leading to the halt of consumer sales in 2015, though it still explores enterprise applications.