NEW PRODUCT DEVELOPMENT PROCESS

1.IDEA GENERATION : New ideas can come from a company¶s own

sales or production staff, middleman, competitors, consumer surveys,
IDEA DEVELOPMENT
SCREENING
IDEA EVALUATION
DEVELOPMENT
COMMERCIALIZATION

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or other sources ± such as trade associations, advertising agencies or government

agencies. Analysing new and different views of the company¶s markets helps spot
opportunities that have not yet occurred to competitors ± or even to potential
customers.Basic studies of present consumer behavior point up opportunities, too. When
looking for ideas, the consumer¶s view point is all important. It may be helpful to consider
the image that have of the firm.
2.SCRE E NI NG: It involves evaluating the new ideas with the product ± market screening
criterion. The criterion includes the nature of the product ± market the company would like
to be in as well as those it wants to avoid. The qualitative criterion includes the statement
that helps the company select ideas that will allow it to lead from its strengths and avoid its
weakness. Ideally, the company matches its resources to the size of its opportunities. A
³good´ new idea should eventually lead to a product that will give the firm a competitive
advantage ± hopefully one that will last.
ROI IS A CRUCIAL SCREENING CRITERION.

Getting by the initial screening criterion does not guarantee success for the new idea.But it
does show that at least the new idea is ³in the right ballpark´ for this firm. If any ideas pass
the screening criterion, then a firm must set priorities for which ones go on the next step in
the process. This can be done by comparing the ROI (return on investment) for each idea ±
assuming the firm is ROI oriented. The most attractive alternatives are pursued first.
3.IDEA EVALUATION: When an idea moves past the screening step, it is evaluated more carefully.
Note that no tangible product has yet been developed ± and this can handicap the firm in
getting feedback
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from customers. For help in idea evaluation, firms use concept testing ± getting reactions
from customers about how well a new product idea fits their needs. Concept testing uses
 market research ± ranging from informal focus groups to formal surveys of potential
customers. Idea evaluation is more precise in industrial markets, potential customers are
more informed about their need ± and their buying is more economical and less emotional.
Further, given the derived nature of demand in industrial markets, most needs are already
being satisfied in some way. So new products are µsubstitutes¶ for existing ways of doing
things.
4.DEVELOP M ENT: Product ideas that survive the screening and idea evaluation step must now
be analysed further. Usually, this involves some research and development and engineering
± to design and develop the physical part of product. Input from the earlier efforts helps
guide this technical work.But it is still desirable to test models and early versions of the
product in the market. This process may have several cycles ± building a model, testing it,
revising product specification based on the tests and so on.
5.COM ME RCI AL I ZAT I ON: A product idea that survives this far can finally be placed on the
market. First, the new product people decide exactly which product form or line to sell.
Then, they complete the marketing mix ± really a whole strategic plan. And top
management has to approve an ROI estimate for the plan before it is implemented. Finally,
the product idea emerges from the new product development process ± but success
requires the co-operation of the company. Putting a product on the market is expensive.
Manufacturing facilities have to be set up and enough products have to be produced to fill
the
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channels of distribution. Further, introductory promotion is costly ±
especially if the company has to develop new channels of distribution