New Product Development Process (NPD) Stages

Dive into the comprehensive exploration of the New Product Development Process (NPD) - a strategic journey from ideation to market launch. Discover key stages, innovative methodologies, and a real-world case study showcasing successful product development, guiding modern marketers and entrepreneurs towards effective strategies and market relevance.

Of 30,000 new products launched yearly, 95% fail (HBR). Only 20% of the new products that are launched are able to survive more than two years (Gitnux). 

Whether it is a startup or established company, introducing a product in a high-competition market without planning, development, testing, competitor analysis, resourcing, and marketing does not help. 

When developing and marketing a new product, there should be a strategy to connect all these activities, which are multi-departmental. They should be interdependent and focus not just on the product launch and company revenue. The outcome of these collective activities should also meet or go beyond the expectations of the target market, so the customers forget the competitors. 

As standard terminology, product management and marketing folks term it the new product development process – from generating an idea to commercialising it.

There are different stages in the new product development process that we will explain in this blog. 

What is New Product Development Process?

New product development (NPD) is the process of converting a product or service concept into reality, which brings success to the organisation by satisfying the target market and outbeating the competition. The new product development process involves seven to eight successive stages that help in achieving the desired product or service outcome. The NPD process which the product owner or product manager leads, includes a joint effort of different departments - engineering, UI/UX design, marketing, research and development, etc.  

Stages of the New Product Development Process

There are typically seven to eight stages, but they can vary depending on the company’s needs. 

Idea Generation

The first stage of the new product development process involves a couple of brainstorming sessions about what the product can do and solve. It is not necessary to come up with proven ideas, but it should involve a healthy discussion of opportunities for the company. 

The customer should be a part of this brainstorming stage. Most importantly, their pain points. Once they are defined, looking into how the product can solve the problems is important.  This is presented as a pitch.

One of the most common concepts that you will learn across most product management courses regarding NPD is the design thinking approach. Using this structured approach, product teams can empathetise with the customer that helps in finding genuine innovative solutions that will help. They need to take interviews or any means that will help them understand the customers on a personal level to truly make an impact. The design thinking mindset is vital as it helps teams understand what truly matters to the audience by learning their pain points.

The goal of the idea generation stage in the new product development process should be to come with a solution that is not visible on the surface. 

This ideation stage in NPD should also directly look at the outcome of providing the solution. The Hasso Plattner Institute of Design at Stanford mentions about various idea generating techniques, such as mindmapping, bodystorming, and sketching. You can get more insights on to them when you go through Managing the New Product Development Process on Coursera. 

Idea Screening

After the solutions are decided and the idea is pitched, the teams’ experts screen it. The idea should be backed by evidence. 

This phase of the new product development process aims to see how the product can solve the customer’s pain point. The product should be marketable too, and while screening the pitch, it should be clear how the product will fit in the market. 

The stage of idea screening covers quantitative and qualitative data through marketing research. It also entails if the business is equipped to create the product. And if it is, can it be distributed properly around the business’ location? This also involves figuring out what the competitors are through SWOT or PESTEL analysis. 

Companies generally simulate the idea screening stage. 

Here is how. 

• The product idea is listed as assumptions, covering how it meets customers’ needs, market demands, and technical feasibility. All of this is generally computer-run for a group of stakeholders or customers. 
• With a realistic simulation that provides accurate outcomes, the data gathered can guide the next stage. 

Concept Development 

After passing through the screening process, it’s time to start developing the concept. The idea is more elaborate and detailed during this phase, where the involved parties are sure what the product concept should entail through the prescribed simulation. 

The concept also considers who will buy the product, aka the consumers, through emphasising a value proposition. It is a concept development stage because it looks into the company, consumer, and market sides individually. 

All these aspects are termed prototyping, which is an important phase strategy. 

Marketing Strategy

The marketing strategy is product-focused. Concepts such as exploring the marketing environment, using the 4Ps of marketing etc., need to be worked on.

With these aspects, marketing teams can figure out where the product should be marketed for optimal revenue, the competition, and so on. 

Business Analysis

While the marketing strategy gives a broader perspective of the marketing funnel, business analysis gets down to the brass tacks. Here, sales and suitable pricing strategies are considered. 

Product Development

This is when the real product is developed according to specified technical requirements. The process is continuous and iterative, guided by agile project management approaches. Some products can also take on a waterfall approach but most modern products go through the agile process. 

Testing the Market

Once the product prototype comes through, it is important to test it. This is done through setting up focus groups, sending market surveys, or conducting webinars.  

Products are also introduced at trade shows to test the market, where consumers can come, test, and provide feedback. 

Commercialisation

If the market testing goes well, meaning the test groups accept the product, it is time to launch it in the mass market. Now all the brainstorming that went into strategise about marketing, pricing, and so on comes into play. 

How Product Development Has Evolved

The world of product development has come a long way since the days of the assembly line and the sequential "waterfall" model. Today, a dynamic landscape of methodologies emphasises agility, iteration, user-centricity, and rapid learning. These are fuelled by factors like demanding customers, rapid technological advancements, and cut-throat global competition.

Here's a timeline highlighting key milestones. 

1950s - 1980s: The Era of Traditional Models

1. 1950s: The waterfall model reigns supreme, with its linear stages of planning, design, development, testing, and deployment. While structured and efficient, it lacks flexibility and can lead to costly late-stage errors.
2. 1960s-70s: Concurrent engineering emerges, emphasising parallel development of different product components to shorten lead times.
3. 1980s: Quality management takes center stage, with methodologies like Total Quality Management (TQM) focusing on continuous improvement and defect prevention. 

You may also want to explore the popular 7 QC tools to get a grasp on the shift in developing products. 

1990s - 2010s: The Rise of Agile and User-Centric Approaches

1. 1990s - 2000s: Agile methodologies gain traction, with iterative cycles of development, testing, and feedback replacing the rigidity of the waterfall model. Do read up on Agile Values to see how this approach changed the game!
2. 2000s: Design Thinking puts human needs at the core, with empathy, prototyping, and iteration driving the development process.
3. 2010s: Lean Startup takes root through Eric Ries, advocating for building Minimum Viable Products (MVPs) and rapid experimentation to validate ideas and reduce risk.

2020s and Beyond: Embracing AI and Open Innovation

Artificial intelligence (AI) enters the scene, with tools like machine learning and natural language processing automating tasks, analysing data, and personalising the development process.

Open Innovation becomes increasingly popular, leveraging the collective wisdom of external stakeholders, including customers, suppliers, and even competitors, to generate ideas and accelerate development.

Case Study of EasyPack Leveraging the New Product Development Process

We want to present you with a case study from the International Journal of Engineering, Science and Technology focusing on the food packaging industry of a brand, EasyPack in Italy which patented the Easysnap packaging. 

The Easysnap Context 

• The food packaging industry has seen active and intelligent packaging innovations to improve food quality and safety.
• Packaging innovations are often driven by changing consumer preferences and needs.
• The single-dose packaging segment using Form-Fill-Seal (FFS) technology has grown.

What is the Easysnap Product?

It is a single-dose sachet that is easy to open with one hand via a unique opening mechanism. The product provides benefits, including controlled flow, intact packaging material, and long shelf life. All that requires engineering of the film material and specialised packaging machines.

NPD Process of Easysnap

• Idea generation was based on competitor analysis and market research to identify needs.
• Partnership with a plastic supplier was key in developing the film technology.
• Multiple technical solutions were considered before the final selection.
• Pre-testing with customers provided feedback for improvement.
• Launch involved a cross-functional team and new hires to support market introduction.

What were the Success Factors?

1. Differentiation from competitors - Unique opening mechanism and long shelf life.
2. Voice of customer - pre-testing allowed incorporation of feedback.
3. Market launch planning - resources dedicated and patents filed.
4. Innovation protection - patents in Italy and internationally.
5. Faster time-to-market - launched in 18 months.

Outcomes of Using NPD

• Generated significant revenue growth within 2-3 years after launch.
• Allowed expansion into new geographic and product markets.

Learning New Product Development Process 

Any modern marketer, entrepreneur, or product manager should take advantage of learning the new product development process. On Shiksha Online, check out courses such as Certificate Programme in New Product Development and Management IIT Delhi offers. This is a 5- month programme for graduates from any technical or non-technical background. At the same time, do go over the top product management courses to excel in other areas pertaining to your experience level.