In business and engineering, new product development (NPD) is the complete process of bringing a new product to market.
New product development is described in the literature as the transformation of a market opportunity into a product available for sale and it can be tangible or intangible. A good understanding of customer needs and wants, the competitive environment and the nature of the market represent the top required factors for the success of a new product. Cost, time and quality are the main variables that drive the customer needs. Aimed at these three variables, companies develop continuous practices and strategies to better satisfy the customer requirements and increase their market share by a regular development of new products. The use of best practices and the elimination of barriers to communication are the main concerns for the management of NPD process.
There have been a number of approaches proposed for analyzing and responding to the marketing challenges of new product development. Two of these are the eight stages process of Koen and a process known as the fuzzy front end.
A. The eight stages
1. Idea Generation
· Ideas for new products can be obtained from basic research using a SWOT analysis (Strengths, Weaknesses, Opportunities & Threats). Market and consumer trends, company's R&D department, competitors, focus groups, employees, salespeople, corporate spies, trade shows, or ethnographic discovery methods (searching for user patterns and habits) may also be used to get an insight into new product lines or product features.
· Lots of ideas are generated about the new product. Out of these ideas many are implemented. The ideas are generated in many forms. Many reasons are responsible for generation of an idea.
· Idea for new product can come from many sources, such as customer, scientists, competitors, employees, channel member, and top management.
· customer need and wants are the logical place to start the search.
· Idea Generation or Brainstorming of new product, service, or store concepts – idea generation techniques can begin when you have done your OPPORTUNITY ANALYSIS to support your ideas in the Idea Screening Phase (shown in the next development step).
2. Idea Screening
· The object is to eliminate unsound concepts prior to devoting resources to them.
· The screener should ask several questions:
· Will the customer in the target market benefit from the product?
· What is the size and growth forecasts of the market segment / target market?
· What is the current or expected competitive pressure for the product idea?
· What are the industry sales and market trends the product idea is based on?
· Is it technically feasible to manufacture the product?
· Will the product be profitable when manufactured and delivered to the customer at the target price?
3. Idea Development and Testing
· Develop the marketing and engineering details
· Product Idea – It is an idea for a possible product that the company can see itself offering to the market.
· Product Concept – when idea is developed in every aspect so as to make it presentable, it is called a concept.
· Product Identity It is the way business perceive an actual or potential product.
o Investigate intellectual property issues and search patent databases
o Who is the target market and who is the decision maker in the purchasing process?
o What product features must the product incorporate?
o What benefits will the product provide?
o How will consumers react to the product?
o How will the product be produced most cost effectively?
o Prove feasibility through virtual computer aided rendering and rapid prototyping
o What will it cost to produce it?
· Testing the Concept – Random people belonging to the target group are chosen to test the concept. Information is provided and questions are asked. Their answers and reactions are noted for further improvement of concept.
4. Business Analysis
· Estimate likely selling price based upon competition and customer feedback
· Estimate sales volume based upon size of market and such tools as the Fourt-Woodlock equation
· Estimate profitability and break-even point
5. Beta Testing and Market Testing
· Produce a physical prototype or mock-up
· Test the product (and its packaging) in typical usage situations
· Conduct focus group customer interviews or introduce at trade show
· Make adjustments where necessary
· Produce an initial run of the product and sell it in a test market area to determine customer acceptance
6. Technical Implementation
· New program initiation
· Finalize Quality management system
· Resource estimation
· Requirement publication
· Publish technical communications such as data sheets
· Engineering operations planning
· Department scheduling
· Supplier collaboration
· Logistics plan
· Resource plan publication
· Program review and monitoring
· Contingencies – what-if planning
7. Commercialization (often considered post-NPD)
· Launch the product
· Produce and place advertisements and other promotions
· Fill the distribution pipeline with product
· Critical path analysis is most useful at this stage
8. New Product Pricing
· Impact of new product on the entire product portfolio
· Value Analysis (internal & external)
· Competition and alternative competitive technologies
· Differing value segments (price, value and need)
· Product Costs (fixed & variable)
· Forecast of unit volumes, revenue, and profit
These steps may be iterated as needed. Some steps may be eliminated. To reduce the time that the NPD process takes, many companies are completing several steps at the same time
B. Fuzzy Front End
The Fuzzy Front End (FFE) is the messy "getting started" period of new product engineering development processes. It is in the front end where the organization formulates a concept of the product to be developed and decides whether or not to invest resources in the further development of an idea. It is the phase between first consideration of an opportunity and when it is judged ready to enter the structured development process. It includes all activities from the search for new opportunities through the formation of a germ of an idea to the development of a precise concept. The Fuzzy Front End phase ends when an organization approves and begins formal development of the concept.
Although the Fuzzy Front End may not be an expensive part of product development, it can consume 50% of development time and it is where major commitments are typically made involving time, money, and the product's nature, thus setting the course for the entire project and final end product. Consequently, this phase should be considered as an essential part of development rather than something that happens "before development," and its cycle time should be included in the total development cycle time.
Koen et al. distinguish five different front-end elements (not necessarily in a particular order)
1. Opportunity Identification
In this element, large or incremental business and technological chances are identified in a more or less structured way. Using the guidelines established here, resources will eventually be allocated to new projects.... which then lead to a structured NPPD (New Product & Process Development) strategy.
2. Opportunity Analysis
It is done to translate the identified opportunities into implications for the business and technology specific context of the company. Here extensive efforts may be made to align ideas to target customer groups and do market studies and/or technical trials and research.
3. Idea Genesis
It is described as evolutionary and iterative process progressing from birth to maturation of the opportunity into a tangible idea. The process of the idea genesis can be made internally or come from outside inputs, e.g. a supplier offering a new material/technology or from a customer with an unusual request.
4. Idea Selection
Its purpose is to choose whether to pursue an idea by analyzing its potential business value.
5. Idea and Technology Development
During this part of the front-end, the business case is developed based on estimates of the total available market, customer needs, investment requirements, competition analysis and project uncertainty. Some organizations consider this to be the first stage of the NPPD process (i.e., Stage 0).
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Source : Wikipedia