Most companies today are structuring their new product development process to accelerate results and control costs.
Step 1 Corporate strategy and innovation A corporate plan should make provision for research and development of new ideas. The innovation will be orchestrated by senior management and will dictate the resources made available to new development.
Step 2 New product ideas Lots an lots of ideas are needed. After 50 new ideas maybe number 51 will be the winner. Many innovations are small improvements and line extensions and not complete breakthroughs. The team should focus on projects that are consistent with overall strategy.
New ideas can originate from: * Employees - front line people are the closest to the customer. Toyota receives 2 million suggestions per annum. * Customers - innovative customers are opinion leaders are generally willing to talk their requirements. * Research and Development - scientists play a pivotal roll in hi-tech business. * Competitors - systematic comparison of products and a search for best practice. * Distributors - They know the end user and competition which can be valuable ally. * Psychologists and market researchers - to find new gaps in the market * Outside sources - ideas are bought
Step 3 Screening To select the maximum available number of ideas that are compatible with the firms objectives.
Step 4 Concept development The idea is developed as a consumer preposition and tested on potential customers. Customer buy solutions to their problems and not products. It is important to distinguish between a product idea and its positioning concept. The product is the new physical good an\d its positioning concept is the choice of target market and benefit proposition.
Testing alternative position concepts is essential to the new product development process. It involves alternative benefit proposition to different potential customers. Managers then research the following: * Communicability * Believability * Need gap * perceived value * Usage
Step 5 Business analysis A substantial investment have to be made in developing the product and creating an infrastructure to manufacture it. A few areas to consider: Faith in the profit projections Assessment of the commercial risk The required investment Other strategic issues involved in the decision.
Step 6 Brand development To build brand equity and to establish a barrier for competitors to enter the market. The product characteristics should be an effective product with a distinct identity and added values to the customer. To build the brand the first step should be that the quality must be maintained so the customer has faith in the brand and so building brand loyalty. The firm should have augmented products surrounding the product for added benefit to the customer - such as warranties, customer care line, delivery service, free installation etc.
Rapid feedback systems should be put into place and monitored to evaluate the performance of the product.