7 Stages of New Product Development & 4 Stages of Product Life Cycle

What is New Product Development (NPD)?

New Product Development (NPD) involves the complete process of bringing a new product to market. It is not just about invention; it is about innovation—introducing something new or modifying an existing product to open up new markets.

Why is it important?

• Survival: Companies cannot rely on the same products forever. Competitors will steal market share.

• Profitability: New products drive growth and profit.

• Consumer Needs: Customers are becoming selective. Innovation satisfies evolving needs.

• Resource Optimization: Proper planning ensures natural and human resources are not wasted on failed products.

The 7 Stages of New Product Development Process

Developing a new product is a risky and expensive journey. To minimize failure, companies follow a systematic 7-step process:

1. Idea Generation: The starting point. Ideas come from customers, competitors, company sales force, or R&D. Brainstorming is a key tool here.

2. Idea Screening: Filtering ideas to spot good ones and drop poor ones ASAP. Ideas are checked against company objectives, resources, and market potential.

3. Concept Development & Testing: Turning the idea into a concrete “product concept.” This concept is tested with a group of target consumers to gauge their reaction before actual design begins.

4. Business Analysis: A detailed financial review. The company projects future sales, costs, and profits to see if the product is commercially viable.

5. Product Development: The concept is finally turned into a physical product (prototype) by engineers. A tentative marketing strategy (price, packaging) is also designed.

6. Market Testing: Introducing the product in a small, selected market to test consumer response and the marketing mix. It reduces the risk of a full-scale flop.

7. Commercialization: The final launch. The product is introduced to the entire target market with full-scale production and marketing.

Why Do New Products Fail?

Despite rigorous testing, many products (like Hima Peas or Parle’s Big Bite) fail.

Common reasons include:

• Product Defects: Poor design or quality.

• Distribution Issues: Inappropriate channels or lack of availability.

• Promotional Failure: Wrong message or target audience.

• Pricing Errors: Too high (overestimating value) or too low.

• Competitive Reaction: Aggressive counter-strategies by rivals.

The Product Life Cycle (PLC)

Like living beings, products have a life cycle. They are born, they grow, they mature, and they die.

The product life cycle describes the four stages a product goes through—Introduction, Growth, Maturity, and Decline—from launch to decreasing sales.

The 4 Stages of PLC:

1. 1. Introduction:

      • Characteristics: Low sales, high cost per customer, negative or low profits.

      • Strategy: Create awareness and trial. Use heavy promotion. Pricing can be Skimming (High price) or Penetration (Low price).

   2. Growth:

      • Characteristics: Rapidly rising sales, rising profits, early adopters buy. Competitors enter the market.

      • Strategy: Maximize market share. Improve product quality, add new features, and expand distribution.

   3. Maturity:

      • Characteristics: Sales peak and slow down (saturation). Profits stabilize or decline due to competition.

      • Strategy: Defend market share.

        • Market Modification: Find new users.

        • Product Modification: Improve features/style.

        • Marketing Mix Modification: Lower prices, aggressive sales promotion.

   4. Decline:

      • Characteristics: Sales fall, profits drop. Customers move to better substitutes.

      • Strategy: Reduce expenditure (milk the brand) or phase out the product (abandonment).

Techniques of Product Development

To ensure product success, companies use specific techniques during development:

1. Standardization: Setting uniform standards for a product to ensure consistency and quality (e.g., standard sizes for screws).

2. Simplification: Eliminating unnecessary varieties or complexity to reduce cost and streamline production.

3. Specialization: Focusing on a specific product line or feature where the company has expertise.

4. Conjoint Analysis: A statistical technique used in market research to determine how people value different attributes (feature, function, benefits) that make up an individual product or service.

5. Automation: Using technology to streamline the manufacturing process for speed and precision.