New Product Development Process: Steps, Benefits, Best Practices

One of the biggest challenges for an aspiring entrepreneur is to bring the vision for an original product to life. In the competitive world of business, those who survive the test of time are the ones with a great sense of innovation. Steve Jobs said, “The people who are crazy enough to think they can change the world are the ones who do.” 

Hey there! This blog is almost about 3900+ words long & not everyone likes to read that much. We understand that.

This is precisely why we made a podcast on the topic. Mitul Makadia, CEO & Founder of Maruti Techlabs, talks to Bikshita Bhattacharyya about his Agile implementation, strategy, and process during the nascent stages of the company.

He walks us through the challenges he faced, how the business benefited from scaling Agile, and how important is the scrum master in making Agile a success at the organizational level. Here is a small snippet from that episode. Check it out!

Collaborative developers and contract manufacturers have given rise to an era of creation unseen in history. However, products, new ideas, and systems need a proper screening before implementation in the market. It is where the new product development process comes into the picture. Without this, your new idea can cost you, both financially and reputationally.  

In this guide, we will look in depth at the new product development process (NPD) and its marketing strategies to bring your idea from concept to market in a short turnaround time. 

What is the Product Development Process?

The product development process refers to all the steps and rules required to take a product from a concept to market availability. It includes the steps to identify the market needs, conceptualize a solution, research a competitive landscape, product development lifecycle, collect feedback, etc. It also covers reviewing an existing product and introducing the old product to a new market. 

New product development(NPD) is a fundamental part of product design. It doesn’t end until the new product lifecycle ends. You can collect user feedback and update the latest versions of your product by adding new features. 

Organizations do not need any specific professional to play the role of the product developer. In every company, whether a startup or an established corporation, the new product development process or NPD process unites every department, including manufacturing, engineering, marketing, designing, UI/UX, and more. Each of these departments plays an essential role in the NPD process.

What is Agile Product Development? 

Agile product development refers to all the steps involved in delivering the product to the market by following the agile software development rules, such as rapid iteration based on user feedback. 

The benefit of the agile framework is that it allows your business to shorten the cycle of your new product development process or NPD process by actually launching the product. It is because the product team intentionally pushes out the versions of the product much quickly, with much fewer updates and improvements in each release. Also, it allows the team to enlist the feedback of the product used to make the product better. 

When we talk about agile product development, it refers explicitly to hardware products, software products, or a combination of both. That’s right! When it comes down to combination, the software is embedded in hardware or hardware that contains the software. 

For many large enterprises, the alignment of the software and hardware development process is challenging to manage in a stable, agile environment. Increasing predictability, visibility, and responding quickly to business changes are critical. For historical reasons, Agile has always been used for software development, but that can change. You can be agile in hardware development, and it is highly valuable too. 

8 Steps in New Product Development Process for Scalable Solutions

The new product development is the process of bringing an original product idea to the market. It helps companies analyze the diverse aspects of launching new products and bringing them to market. Now the question is, what are the product development process steps? 

Below are the eight steps of the new product development process for product design and development.

    1. Idea Generation (Ideation)

Every successful product starts with a fantastic idea. You can generate ideas from various internal and external sources. These internal sources include the ideas using market research which the research development team can control. However, the PricewaterhouseCoopers study indicates that at least 45% of internal creativity is attributed to the organization’s employees. 

On the other hand, you can analyze the external sources from the distributors and contributors in the market. Since the consumer is the sole person to define the success and failure of the product, a business must understand the user’s needs and desires above all. Hence, the most valuable external source of ideas for any business is the consumer itself. 

It is generally noticed that many aspiring entrepreneurs get stuck on this stage. Creating unique ideas and brainstorming the perfect product for the market is the most challenging task of the NPD cycle. Users always wait for the stroke of genius to reveal the ideal product to sell in the market. 

Remember that this phase does not suggest generating the foolproof plan of the product and implementing it. You can have unproven ideas that can be filtered later after the discussion. You can follow the below steps for your business to do the same:

1. Highlight on the customer problems 
2. Analyze each of the listed problems 
3. Identify their possible solution 
4. Come up with the final problem statement and solution

While building a product that is fundamentally “new,” your creativity and ideas result from iterating upon the existing product. Sometimes a SWOT analysis is also an essential vehicle to prioritize your ideas in the first step of the new product development life cycle. 

The SCAMPER model is the most helpful tool for quickly developing new product development processes and asking questions about the existing product. Here, each word stands for a prompt:

• Substitute 
• Combine 
• Adapt 
• Modify 
• Put to another use 
• Eliminate 
• Reverse/Rearrange 

You can create products with novel ways to transform the existing ideas and target the new audience and problem by considering these prompts. 

Getting the product concept wrong at the beginning of the NPD process wastes time and increases the opportunity cost of the product. It is the stage where the target market, target customer, and target audience are recognized. 

    2. Research (Discovery)

With product ideas in mind, you can take your new product development process to the next step of production, but it can become a mess if you fail to validate your idea first. This step is also known as a discovery which involves defining your product idea and ensuring that it satisfies the customer requirements. 

Product validation in the NPD process ensures that you’re creating a product for which people will pay, and it won’t waste your time, effort, and money. The design and the marketing team are assembled to create the detailed research of business aspects for your idea and identify the product’s core functionality. 

There are various ways by which you can validate your product idea in the new product development process. The idea generated in the above step should be validated on some key constraints like its compatibility, feasibility, relevance, risks, etc. For identifying these constraints, you can follow various procedures, for instance, 

• Taking an online survey and getting customer feedback
• Sharing your ideas with your family and friends
• Research about the market demand using tools like Google Trends
• Asking for feedback using forums like Reddit

However, when you are validating your ideas, it is essential to take feedback from an unbiased audience on whether they would buy your product or not. For this, you can run a feasibility study or assessment of whether your idea is worth investing in or not. 

Moreover, the concept designing of the product begins in this phase of the NPD process. The team visualizes the goal and tries to build the potential product to satisfy the customer requirements. 

    3. Planning 

As new product development processes can quickly become a mess, it is essential to plan your idea and production before building your prototyping. The NPD process can get complicated when you approach manufacturers and look for materials to concrete your concept, product design, and development. 

It is wise to outline the detailed planning of the product before implementation and ensure that the goal can be achieved sooner. Some of the simple steps to follow while planning phase of the new product development process are:

    a] Identify the Gain/Pain ratio

    b] Analyze the significant features of your product

    c] Build a value proposition chart

    d] Identify your competitors and their products

The best start to planning your new product development process is drawing a rough sketch or prototype to see what your product will look like. You should detail this sketch with all minute labels explaining the features and function of the product.

Remember that you do not need any professional graphic designer for this step as you aren’t submitting it for manufacturing. This step in the NPD process is for your confidence in how your product will look and work.

Also, with the components to design, you need to focus on the price and the category your product will fall into. Will the product be an item for a special occasion or an everyday item? Finding answers to these questions will fall under the planning phase and guide you through the new product development and NPD marketing. 

    4. Prototyping 

Till this step, the product exists in a 2D form on the piece of paper. But now, in this step of the new product development process, it’s time to convert your concept into 3D reality. You can achieve this by developing various prototypes of your product, representing several physical versions. 

The primary goal of the prototyping phase during the product development process is to create a finished product to use as a sample of mass production. Prototyping of the product differs depending upon the product you are developing. You can easily create the prototype for the products involved in the fashion category, pottery, design, and other verticals.

This step in the NPD process explains the business investment in developing the product by requiring the team to build a detailed business plan. Prototypes help the business to avoid the risk of putting all their eggs in one basket, as with more iterations, there are chances that at least one of those prototypes will be successful. 

You can experiment with this using any prototyping tool designed for this purpose.

However, businesses and entrepreneurs wish to work with a third party to build prototypes of their products. The fashion and apparel industry usually involves local sewists (for clothing), cobblers (for shoes), etc. 

Prototyping in the new product development process is critical because it helps to reduce the market risk for new products. It helps to perform the various market tests such as the product’s safety, durability, and functionality for the existing prototypes you can place before your customer. Software development can do these tests to ease the realistic user interface relatively. 

Apart from creating the prototypes of your product, you’ll also want to start testing a minimum viable product(MVP) at this stage of the new product development process. The MVP is a product version with enough functionality for early customer usage. It helps to validate the product concept at an early stage of your product development life cycle. It also helps the product manager to get user feedback as fast as possible to make small iterations and improvements in the product. 

    5. Sourcing

After you finish creating the perfect prototype of your product, now it’s time to gather the materials and sources you will need for production. This step is also known as building your supply chain: for instance, the vendors, activities, and materials which will help you with the new product development and get ready to sell in the market. 

As this step of the NPD process includes finding manufacturers and suppliers of your product, you may also consider the shipping, warehousing, and storage factor. 

In Shoe Dog, a memoir by Phil Knight, founder of Nike, highlights the importance of the supply chain throughout the story. You will require different manufacturers to find multiple suppliers and compare the costs of your product in the market during the new product development process. It can also be a backup plan if any of your manufacturers or suppliers don’t work. 

Remember that during the NPD process, each journey to a finished product is different. 

There are multiple resources both online and in-person for looking for suppliers. The most commonly used sourcing platform around the globe is Alibaba. It is one of the marketplaces for Chinese suppliers and factories to browse the list of finished products and raw materials. 

During this phase of the new product development life cycle, you will inevitably decide whether to produce locally or overseas. It is always a wise choice to compare the two options as they both have advantages and disadvantages. 

    6. Costing 

After completing the research, planning, prototyping, and sourcing of the new product development process, you should now have a clear picture of the cost of producing your product. Costing is a business analysis process. You gather all the information of your development and manufacturing until now and add up all your costs of goods sold(COGS) to identify the retail price and gross margin during the NPD process. 

You can come up with your product’s final price and add the initial production cost with the markup percentage. If a similar product undergoes a thorough analysis in the target market, the pricing is deduced. 

The best process in this step is to create a spreadsheet with all costs broken out as a separate line item. This category must include manufacturing, shipping, raw materials, factory setup, etc. 

Shipping costs, customer duties charges, and import fees pay significantly on your COGS, depending on where you produce the product. If you secure multiple quotes for different materials during the sourcing phase of the NPD process, you can include a different column for each line item that compares the cost. 

Once you find the COGS calculated during the new product development process, you can develop a pricing strategy and subtract the COGS from the price to get your profit and potential gross margin on each unit sold.

    7. Market Testing

This step of the NPD process aims at reducing the uncertainty present in the software product created till now. It helps to check the viability of the new product or its marketing campaign.

The basic goal of validation and testing is to ensure that the prototype works as expected. If anything in the prototype needs modification, this phase is the last chance for the team to revise it. After this product development process, the prototype is sent to the manufacturing team and implemented to build the final product. Everything in the business case and learning from the customer during the development phase came under scrutiny and tested in the “real world.” 

Below are two marketing strategies followed :

• Alpha Testing 

In this testing phase, the test engineer in the organization judges the product based on its performance. After the result is based on performance, the test engineers map the marketing mix results with the created product. 

• Beta Testing

In this testing phase, the target group or customers use the product and provide unbiased feedback. This strategy is about listening to the voice of the customer(VOC). 

If any issue is found, it is resolved by the development team before moving forward with mass production. 

The image below displays how alpha testing and beta testing differs from one another

    8. Commercialization 

This step of the NPD process, consumers are undoubtedly familiar with. During commercialization, the team realizes everything they require to bring the final product to the market, including the sales and marketing plans. The team starts to operationalize the manufacturing and customer support for the product. 

Commercialization is a methodology to introduce your product to the market. The product development team will hand the reins to the marketing team for the further product launch and NPD cycle. After this new product development process step, you can market your product over the concept and have a brand voice for your business. 

There may be a teething problem in the early stage of commercialization. It is essential to analyze the supply chain logistics and ensure that the product does not become bare. The marketing team develops the advertising campaign to make your new product familiar to the consumers. 

If you don’t have enough budget for expensive marketing advertising ads, do not worry. You can still make a successful new product development strategy by using some of the below tactics:

• Working with the influencers for affiliate marketing campaigns 
• Run Chat Marketing campaign
• Get reviews for your product from the early customer. 
• Getting your product featured in gift guides
• Sending product launch emails to your subscriber’s list.

Additional Read: Scrum For Distributed Teams

Benefits of New Product Development Process for Businesses 

To gain an edge over your competitors, you must learn about your product's sustainability in light of current market needs and its economic relevance. Such intricate insights into new product development can be best obtained by seeking assistance from a product strategy consulting service.

Here are some of the ways using which you can help your business with the benefits of new product development:

    1. Save Money

According to a report by Fundera, it is estimated that around 20% of the new businesses fail in the first year. This is due to factors such as improper market research, incompetence, and economically viable business models. The new product development process is designed to eliminate these risks from your business by testing the potential of your idea and the current market situation. 

Identifying the effectiveness of the new products in the NPD process before they get released in the market enables you to adapt your idea according to the market needs or withdraw it entirely to save your time and money. Having this information with you can help as a secret weapon to launch a disastrous business idea and keep your business financially stable for a long time. 

    2. Innovation and Idea Generation 

The new product development process is the promoter and driver of new ideas for your business. Having a framework to test your new product’s viability will naturally lead to its implementation. Developing and nurturing a culture of innovation is crucial to the commercial growth of the business and its staff. 

    3. Strengthen and Formalize the Concept Development Process

Just like a new business, you need to properly define your product concept at the beginning of the new product development life cycle. It must be done by considering the anticipated consumer, and hence you must describe the product in meaningful consumer terms. 

The common steps to be followed are:

• A product concept is pitched to senior staff or stakeholders in the business.
• The macro idea is approved or shelved depending on its merit. 
• If approved, the product is passed for development into the alternative product concepts, often branching out to target the different groups. 

You can streamline your business by laying off these frameworks and boosting staff productivity. It is a natural step to consider before concept testing in the new product development process. 

    4. Concept Testing 

The above-mentioned concept development process is best paired with the concept testing process. Once the idea is finalized, it is necessary to test it against the market condition and target it. 

It is done by testing the target consumer by market research practices. It would consist of presenting a physical representation of the product to the consumer. The picture or the description of words is often sufficient, but the better results are observed from the authentic physical representation. 

After presenting the concept to consumers, you can ask for responses and engage with them in the product discussion. The responses in this discussion are used as assets to improve the product and consumer experience. 

    5. Marketing Strategy

The new product development process can help with marketing strategies for your product.It is a natural course of action once your concept has been designed and tested. With the intel you collected in the development phase, you can turn this into a marketing strategy. This process is then simplified and accelerated. The three critical areas of your marketing strategy include:

• Identifying the target market and different ways to connect with them
• Analyzing the metrics such as product price, distribution method, first year’s marketing budget. 
• Projected long-term sales and profit margins. 

8 Best Practices for Your New Product Development Process

Most businesses repeatedly deliver successful products to the market even though all their specific approaches vary from each other. Following are some of the best practices to follow for the new product development process:

    1. Identify the needs of the target audience.

    2. Use the market research and consumer feedback for the product effectively. 

    3. Communicate across your company for more knowledgeable feedback and insights. 

    4. Make use of available frameworks for the new product development process. Never develop a new product without a system in place first.

    5. Validate your product concept soon in the NPD cycle. For some products, it might include the “soft launch” in which you test the product in small parts before full-scale market release. 

    6. Invite your cross-functional team into the brainstorming and ideation stage. Great insights for your market can come from everywhere. 

    7. Set realistic development timelines 

    8. Concentrate on the ideas your company has both the resources and the expertise to execute. 

Did you find the video snippet on What did Mitul’s journey to becoming the CEO of Maruti Techlabs look like? to be insightful? We have a ~22 min video where Mitul Makadia gets into the weeds, and we discuss about Implementing & Scaling Agile to streamline Software Development. Take a look-

Conclusion: What Will You Bring to the Market?

Each journey to the finished product differs depending on the industry usage and its unique set of quirks. If you are struggling to figure it all out, you don’t have to do it all alone. Having scalable, agile teams on demand can make your product development journey smooth and effective.

By following these steps of the new product development process, you can develop your product and break down the overwhelming task of bringing something new to the market into a more digestible phase. 

The partnership is the significant component of taking a product from the concept to market as these individuals or groups have the considerable experience needed to guide themselves. Collaborating with a company specializing in outsourced software product development services and solutions can be highly beneficial. They can assist the creator through all stages, from generating the initial idea to the first manufacturing run, and offer valuable feedback for potential improvements. 

Developing a new product can be a long and tedious process, but your journey can be easier if you have the right tools and the right partner at your disposal. At Maruti Techlabs, we use modern languages and tools to rapidly prototype the product features and help to convert your idea into reality. We provide you with the ultimate understanding of your product’s functionality, visuals, interfaces and test the prototypes with you and your customer to validate your new product. Our software product development services can help you get your idea off the ground and into the hands of your customers in a short span of time.

To get started, drop us a note here, and we will take it from there.

FAQs

1. What are the critical stages in the new product development process?

Here are 8 key stages of new product development

• Idea Generation
• Research
• Planning
• Prototyping
• Sourcing
• Costing
• Market Testing
• Commercialization

2. How do I determine if my idea is viable for development?

Here are 6 steps that you can follow to learn if your idea is viable for development.

• Analyze your target market and audience
• Study your competitors
• Validate your problem-solution fit
• Develop an MVP
• Observe analytics and feedback
• Iterate based on feedback

3. What should I include in a product development plan? 

Here are the 6 essentials of a product development plan.

• A clear vision of what you want to create.
• Reasons why you’re building it.
• A deadline for when you want to launch the product.
• Maximum budget for the project.
• Resources available and tasks to be undertaken.
• Development roadmap and strategies.

4. How do I conduct market research for a new product?

You can follow these 6 steps to conduct market research for a new product.

• Define buyer personas
• Identify the personas that can best answer your questions
• Prepare a questionnaire for participants
• List your competitors
• Summarize your findings
• Select technologies that help you automate, simplify, and share your collected data.

5. What are common pitfalls in product development, and how can I avoid them?

Below are the most common pitfalls you can avoid with product development.

• Pitfall: Unclear product development strategy 
  • Solution: Have a clear and well-communicated strategic plan
     
• Pitfall: Unclear product requirements
  • Solution: Have a prioritized list of features and requirements
     
• Pitfall: Slow decision-making due to project oversight
  • Solution: Too much or too little participation from senior management
     
• Pitfall: Under-resourced projects
  • Solution: Having personnel with essential skills on your development team
     
• Pitfall: Unclear roles and responsibilities
  • Solution: Introduce the concept of Scrum Zero so all team members are familiar with each other and clearly understand their roles and responsibilities

6. How can I effectively gather and incorporate customer feedback?

You can try the 6 below-mentioned ways to collect customer feedback.

• Surveys
• Emails
• Interviews and focus groups
• Social media channels
• Website analytics
• Free-text feedback

7. What role does prototyping play in product development?

Prototyping helps you explore the design and functionality of your product by creating its interactive and tangible version.

8. How do I manage costs and budget for product development?

You can try the steps below to manage costs and the budget for product development effectively.

• Define project scope
• Break deliverables into sub-dependencies
• Estimate costs for each dependency
• Enlist other additional resources required
• Have an emergency fund
• Allocate a specific budget for each deliverable
• Monitor your spending

About the author

Mitul Makadia

Mitul is the Founder and CEO of Maruti Techlabs. From developing business strategies for our clients to building teams and ensuring teamwork at every level, he runs the show quite effortlessly.

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