New product development (NPD) covers the complete process of bringing a new product to market. It is described broadly as the transformation of a market opportunity into a product available for sales. The products can be tangible or intangible.
New product development requires an understanding of customer needs and wants, the competitive environment, and the nature of the market. Cost, time and quality are the main variables that drive customer needs. Aiming at these three variables, companies develop continuous practices and strategies to better satisfy customer requirements and to increase their own market share by a regular development of new products.
The process of new product or service development,moving from idea through to successful products or services,is a gradual process of reducing uncertainty through a series of problem-solving stages, moving through the phases of scanning and selecting and into implementation,linking market and technology-related streams along the way.
In order to easily analyse, we adopt a simplified four stages model which we believe is sufficient to discriminate the various factors that must be managed at different stages.
1. Concept generation
Much of the marketing and product development literatures concentrate on monitoring market trends and customer needs to identify new product concepts. In this section, companies should identify the opportunities for new products and services.
2. Project assessment and selection
This stage includes the screening and selection of product concepts prior to subsequent progress through to the development phase. Two costs of failing to select the ‘best’ project set are: the actual cost of resources spent on poor projects and the opportunity costs of marginal projects which may have succeeded with additional resources. Marketers should screen and choose projects which satisfy certain criteria.
3. Product development
This stage contains all the activities necesary to take the chosen concept and deliver a product for commercialization. It is at the working level, where the product is actually developed and produced, that the individual R&D staff , designers, engineers and marketing staff must work together to solve specific issues and to make decisions on the details. And companies should translate the selected concepts into a physical product.
4. Product commercialization
In this section, the tasks of organisation are testing, launching and marketing the new product. Apart from, they should identify factors which influence directly the process of new product development.
The following factors will influence the success of the product development:
1. Product advantage - for example, unique features or higher quality
2. Market research proficiency -- such as the market segments, trends and competing products
3. Concept development and evaluation -- development and screening
4. Market information -- such as the customer needs and competitors intelligence
5. Technological and marketing synergy -- such as adequate skills and resources
Apart from the benefits, there are also many uncertainties and challenges which companies must face throughout the process. For example, the new product development and the process development. Because in most organisations, new products or services development is rather unusual and infrequent requirement, so the first decision is what sort of team to put together to do this.