Production Management

The Science of New Product Development Process

How do New Product Development Process starts

The new product development process starts with a search for good ideas. Where do new product ideas come from? – is an important question. The sources of new ideas are many. First of all company’s own research and development department may produce new ideas taking direction from customer requirements or needs, uncovered through marketing and other research.

Some companies, such as Unilever Lever Limited, also carry on basic research and come up with products that were not specifically sought. Others get ides from brainstorming sessions of management and other personnel and from suggestions from salesmen, production people, engineers and others. Still other ideas come from outside sources, both solicited and unsolicited.

Few generalizations are valid concerning the relative merits of tapping external and internal sources of new product ideas. Each idea, regardless of its source,  should be evaluated on its own merits, considering both market need and opportunities and the company’s capabilities. However, it can be said that ideas originating outside the company often are unique, since they represent thinking undulled by close association with established products.

Technical developments have also created numerous opportunities for the development of new products and improvement in existing ones. Hence, a good company should gather ideas from all sides and evaluate them carefully.

No certain way exists to evaluate a proposed product’s productive feasibility, marketability or profit potential. However, the experience of many firms shows that a new product development process contains of six steps that can be fairly well defined :

    • (1) Exploration,
    • (2) Screening,
    • (3) Specification,
    • (4) Development,
    • (5) Testing; and
    • (6) Commercialization.

Because most new products logically go through these steps, they may well serve as planning mileposts and control points.

New Product Development Process

(1) Exploration— This is the search stage in which ideas for new products are sought. In this stage of product development, careful attention is paid to developing products that meet company needs, fit within overall company policies and meet company objectives. The exploration for a new product may be done through (a) consumer’s requests, (b) letters to producers, (c) competitive products, (d) market research, (e) capacities of plant, (f) policies of state and (g) objectives of customers, etc.

(2) Screening— This is the another step of New Product Development Process. Screening consists of a preliminary evaluation to deter-mine whether the idea has possibilities and should be further pursued, or should be dropped. In this phase of preliminary evaluation questions such as the following should be asked about product-

    • (a) What is the approximate market for this new product in units and in rupees ?
    • (b) Can this product be sold by the existing sales force, agents, or dealers?
    • (c) Are any serious difficulties foreseen in producing, e.g., additional equipment, new process, unusual skills, costly operations
    • (d) Are there any important patterns, licensing agreements, or other legal restrictions which affect either the manufacture or sales of this product ?
    • (e) Will there be any serious difficulty in obtaining raw material, personnel, and so on ?
    • (f) How much money will be needed for the production and distribution of this item ?
    • (g) Can financing be obtained and at a reasonable cost ?
    • (h) What is the estimated cost of Production, selling price, and gross margin ?
    • (i) What effect will production and sales of this item have on existing suppliers, customers, employees, investors, and management ?
    • (j) Are there any unusual features inherent in this situation that need special analysis ?

(3) Specification— If the proposed product passes the screening test, it is expanded into a realistic recommendation. In this step, a more thorough analysis is made of the marketability of the product, the features that consumers may desire, and competitor’s probable actions. Finally a schedule and budget are established for prototypes or models.

(4) Development— This step of Science of New Product Development Process consists of transforming an idea for a product, into an actuality. Prototypes of the new product are build so that they can be shown and demonstrated.

(5) Testing— This is a critical stage where the worth of the original product idea and the judgement about its feasibility are proved or disproved. Sample product are market tested, and user reactions are analyzed. In addition, faults and flaws in the design of the product, as well as the way it is made, are studied. When a final agreement is reached on the exact specifications for the product, the design is “frozen”, that is no additional design changes are made. The product is then ready to be produced.

(6) Commercialization— This is the final step in the New Product Development Process and is the one with which we are most familiar. Commercialization consists of all the actions involved in full scale production of the product, advertising and selling the product, and pledging that the company with its resources will stand behind and guarantee the new product.

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