What Are The Seven Important Steps In The New Product Development Process In 2023?

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Time seems to move fast as new technological software products come with different solutions and mind-blowing features. In such a saturated space, how do you locate your micro niche and develop a product or service that stands out from the crowd?

There are phases to product development, and by following them judiciously, you’ve cut out a significant possibility of failure. The new product development process is in seven stages, from ideation to launch, and each stage comes with goals and challenges you need to overcome for your target customer.

In this article, we’ll take each stage in the new product development process and explain how to go through them successfully. Here’s an outline of the topics we’ll cover.

Table of Content

Before we dive into the stages of new product development, let’s define new product development.

What Is New Product Development (NPD)?

New product development is the process of creating a new product and introducing it to the market. There are three ways that new product development can take place. You could either develop a never-before-seen product for a new market, launch an already existing product for an existing market, or launch a brand-new product for an existing market.

New product development takes a business opportunity and turns it into a new product that satisfies current market demands and customer needs. A new product that does not meet the target market’s needs has failed in its purpose and needs to either be taken off the market or undergo changes to its features.

For a new product to be successful at launch, it must follow the stages of new product development. Product development or new product development includes processes from conceptualization, designing, testing, and launching to the market. If the development team fails at any of these steps or performs below what is required, the likely chance of market failure will increase.

Importance of New Product Development in Business

There are many reasons a business or organization would want to develop a new product. Some of these are:

Change in consumer taste

If there’s one thing that’s constant with how humans (consumers) behave, it’s that they’re constantly changing. A product can be perfect for a target market today, and in five years, they might require something new.

Apple developed new products in line with how consumer needs changed. If they had stuck with the very first iPhone without developing new products, Apple wouldn’t be the prestigious brand it is today. New product development in response to how consumer tastes change is key to how great businesses stay in business.

Increase in Competition

Every business aims to reach and remain at the top of its industry. When there’s competition, it can get more complicated. Still, to thrive amid competition, businesses must develop new products that can meet consumer needs in a more dynamic and meaningful yet profitable way.

Technological advancement

Technology enables companies and individuals to become more efficient. If your product isn’t changing along with technological advancements and either helping people to become efficient or utilizing technology to produce more efficiently, you will lose relevance.

New market opportunities

A new market opportunity can open up at any time. Whether you have a ready-made product, you may have to develop a new product to meet that specific market opportunity. 

Now that you understand why you need to create new products as a business, you might ask, “what is the process of creating new, improved products?” We’ll cover each stage in detail in the coming sections.

7 Stages In New Product Development

Your product is the most crucial part of your business. If it doesn’t meet your target market’s standards, it will likely meet its end soon enough. To save you and your team from meeting financial snags, follow these seven critical stages of new product development:

Stage 1: Idea Generation or Ideation

Ideation or idea generation is the first step businesses take in the product development process. Idea generation involves thinking about multiple ideas for a new product that can meet customer needs. 

It’s not the point where you decide which product idea goes into development. Ideas in this stage do not necessarily get to the last stage of the new product development process. You and your development team throw up any idea that comes to the table.

To have a successful ideation stage of new product development, you need to:

Gather an ideation team

Put together a small idea generation team consisting of representatives from sales, marketing, IT, and other departments that directly influence how the customer perceives the final product.

Access consumer needs and pain points

The team then assesses the needs and pain points of the target consumer. If there’s an already existing product and you want to identify improvement, the customer remains king. The key here is to put as many ideas as possible on the table.

Analyze each idea

This stage is where you conduct a simple SWOT analysis of the Strength, Weaknesses, Opportunities, and Threats of each product idea. This analysis will determine the prioritization and ranking of viable product ideas to develop. Only the most promising ideas that pass the SWOT analysis will scale through.

Aside from idea generated within this team, they can also conduct market analysis to see what their target audience think. Some ways to get information from the market are:

  • Run a user test to get live feedback
  • Data Analytics
  • Interviews
  • Feedback from focus groups
  • Conduct social media polls and surveys
  • User-generated data from social media
  • Surveys

Whatever idea is generated here, your team must never forget that the end-user is king, and you must always aim to solve their problem.

Stage 2: Idea screening

When you have completed step one, you should have a list of viable product ideas. You’ll then take these ideas to departments within your company with the expertise to ascertain marketability, technical requirements, customer benefit, etc.

Once that’s done, you should have your most viable product offering. A proof of concept from your technical team should help you solidify the decision for your chosen product idea.

This stage is also where you conduct a more detailed SWOT analysis of your most viable ideas. Here’s what SWOT means:

  • Strengths: Internal helpful attributes of the product and organization
  • Weakness: Harmful internal drawbacks to achieving the product objective
  • Opportunities: External forces in your environment that the product can explore for success
  • Threats: External forces in your business environment that could hinder the success of your product. It could be governing laws, religion, the culture of the people, etc.

Stage 3: Concept development and testing

At this stage, you develop a detailed blueprint or business plan of your idea, user details, and user story called a concept.  Your concept should contain details such as w your target market, the problem the idea will solve, features of the product, and benefits to the user.

The idea concept should also contain information regarding the costs associated with designing, developing, building, and launching the products, and finally, the proposed price of the product. This process is where your proof of concept comes in your product development process.

Test these ideas with a derivative sample of your target audience. Get their feedback on how they interacted with the product and if the product solved their problem. 

This initial testing phase is significant as there’s no use dedicating time and resources to developing a product that hasn’t been tested first. It is from the proof of concept feedback that you’ll know which of these ideas will bring in the big bucks. 

Developing your ideas into complete concepts and specifying the details is not an easy task. Get one thing wrong or omit essential information, and your proof of concept research and feedback might bring up untrue results.

Here are quick points to note when developing your idea concept for new product development:

  • Assess the gain/pain ratio from the user perspective: How much does the gain of solving the problem outweigh the pain of trying to understand and use the product?
  • Understand your competitor: Find similar products and where they need to improve.
  • Define the features: Map out the major features and how they will solve the user problem with user stories.
  • Create a clear value proposition: Provide clear answers to the questions of who the product is for, the problem, the product selling point, how your product can fix the problem, and how the product differs from others the user has tried before.
  • Test the concept with a mock-up or proof of concept and summarize your findings in a report showing critical facts about likeability, uniqueness, likeability, and initial reactions.

With the result from this rigorous stage, you’ll then choose the most viable product out of all tested. It’s time to move to the next stage.

Stage 4: Marketing strategy and business analysis

Now that you’ve chosen the product idea you’d like to develop, it’s time to hit the ground running. You’ve done all the new product development analysis and development from the user perspective, but now’s the time for the money perspective.

Your next step is to create an initial marketing strategy and business analysis of your new product in development. Your marketing strategy consists of how you plan to position, price, and promote the new product. And the business strategy refers to a review of sales, costs, revenue projections, and generally, profitability in hard cash.

Essentially, this stage is about how you intend to reach, capture, and retain your target audience while maintaining a good revenue flow. Here are factors to consider when determining your new product development marketing strategy:

Product: finalize decisions on product features and intricate details based on the report from proof of concept testing to ascertain product offerings and branding strategies
Price: how will you price your product based on licensing cost and profit margins? Will you offer discounts? What payment mode will you use?
Promotion: What strategy will you utilize to optimally reach your target market with your product’s differentiating factor?
Placement: where and how will you distribute the product? Will you serve only US audiences, or will you include other countries and go global?

In new product development marketing, pricing is a significant factor when developing new products from the owner’s end and the user’s end. You’ll need to find that sweet spot where your bottom line and the user’s pocket agree on the product’s value.

In business, there are two major pricing strategies used. They’re a market-focused and cost-based pricing model.

When you decide based on the market-focused pricing model, you’re pricing your product in consideration of the price of similar products currently in the market. You could either go above or below the price or copy the price of your competitors.

On the other hand, the cost-based pricing model involves pricing your product by adding a markup profit percentage to the cost of production. Feel free to combine both when pricing for new product development marketing.

Stage 5: Product development or design

The next step is to start the software development process itself. Your development team will take the concept you design in previous steps and create it into a prototype your business will use for internal testing.

The prototype stage is focused on designing the user interface and user experience for the product and sharing it with stakeholders. This group will then assess the design and provide feedback based on ergonomic best practices to see if it meets the conceptual vision for the look and feel of the product.

The point of this stage is for every team and the stakeholders to ascertain if this product is what the company should invest time and money into based on the prototype. Once all is confirmed, the development team can design and build a minimum viable product, an MVP.

A minimum viable product (MVP) is the version with the most basic features. The features and functionalities are just enough to attract early adopters and receive feedback from the early users for future versions.

The benefit of building an MVP first is that the business doesn’t need to spend resources developing the entire product before getting live feedback on how far they’ve gone. They can skip the significant mistake of releasing a finished product only to fail in the market due to numerous negative feedback from users.

If you want to get your product out there faster, consider which new product development methodology you’ll use. The main ones are Waterfall and Agile methodologies. Your company’s choices should depend on what they’re already used to and what this specific product requires.

Step 6: Test marketing and Deployment

Remember the marketing strategy developed in stage 4? This stage is where you implement it within a test environment to work out the kinks. As the title goes, you’re marketing and deploying your product to a select few with new product development marketing.

That means you’re releasing the final version of your Minimum Viable Product using the marketing strategy you designed earlier. In this stage, you evaluate the product via live feedback from real users.

There are two main methods for testing your MVP with your users. There’s the Alpha deployment and the Beta deployment. What do these mean?

Alpha testing or deployment

Alpha testing (alpha deployment) involves testing software build changes and how they interact for bugs and lags before releasing them to the general public.

Beta testing or deployment

Beta testing (beta deployment) involves providing the software product for users to test and explore. It aims to collect real-time data on how the users interact with the product and the software reactions used in various input scenarios.

One way to perform Beta testing is by featuring in industry events and conferences where you can have real users test out the product just before release. Since these users will be within the industry, you’ll be able to get a near-expert opinion on how your product fares against the users.

Step 7: Product launch

From ideation to screening, development, and market testing, you’ve gone through six stages of product development. Now it’s time to launch the product in full view and reception of your target market in a process called commercialization.

At this stage, all hands and departments must be on deck to launch, monitor performance, and make changes where required. Here are some points to keep in mind when commercializing and launching your new product:

Sell the idea, not the product

Selling the idea or concept of the product rather than the physical product itself is a marketing tactic. But not many people understand this in new product development. Selling to your target audience and making a particular market section choose you over the competition result from carefully executed mind games.

Your target audience doesn’t want to hear about the numerous features, operating systems, or development methodology used in creating the product. Instead, they’re more concerned about how this product explicitly targets their pain points and makes their lives more manageable than before the product release.

If you hit a snag with customers not understanding how your product works or why they should care about your work, make a switch with how you market the product. Talk about your unique selling point (USP) rather than the features.

Be relatable

When you launch your product, ensure your brand voice and personality are relatable to your target audience. It’s an error for your product to match your target market needs and yet fail to connect to them because of a disconnect in brand voice and personality.

For example, if your product targets millennials or Gen-Z, your brand voice and personality should be relatable to those sets of people. If your target is middle-aged women, your brand voice shouldn’t match that of a brand selling to teenage girls.

Organize testing events and webinars

You’re not testing the product anymore, so this would be different from testing at industry events where other products are present. Here, the aim is to organize a fun but information-packed event where you invite your target audience and educate them on the intricacies of your product.

You should talk to them about the intent and unique selling points. Also, audience-focused events and webinars are a great environment to go in-depth about the product’s features and functions.

Track performance

While all this marketing and events are ongoing, it’s easy to get carried away by the audience applauds and sales numbers. But remember to track financial and non-financial data.

You’re never indeed done with your product. You’ll need to keep testing, debugging, and improving your product, and that’s because your target market and their needs will change and metamorphose over time. If not now, you’ll need this early-stage data for the future development of new products.

New Product Development Process Pitfalls: Mistakes To Avoid

Developing a new product using the new product development process outlined above is a sure way to give your product a chance against competitors in the market. However, not every product that went through the process was 100% successful because of some mistakes. 

Some errors to avoid in your product development process include:

  • Underestimating your competition risks and threats
  • Exceeding and overusing available resources on high product development costs
  • Poor product marketing and advertising
  • Setting your product price too high
  • Inaccurate or mismatched target market definition
  • Poor product design
  • Wrong launch timing
  • Misconstrued target market problem or pain point
  • Overestimating the size of the target market

Key Takeaways

Developing and launching a new product can seem tedious at first, but once you get into it, it’s an exciting process that you and your team will learn from. In this article, we’ve described the seven stages of developing a new product. 

From the ideas generation stage to product launch, each step requires careful thought and attention to meet market demands and achieve a successful launch. Avoid product development mishaps by taking actions such as properly defining your target market and their needs and executing your product development within budget. 

In conclusion, the secret sauce is to focus on your target audience, their specific pain points, and how you can solve them by giving them the right product in the simplest form. Do this, and you’ll be on your way to becoming one of the most prominent players in the product development space.

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