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NPD Process

NPD Process

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Habib Sheikh
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111 views3 pages

NPD Process

NPD Process

Uploaded by

Habib Sheikh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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The process

1. Idea Generation is often called the "fuzzy front end" of the NPD process
o 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.
o

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
o

The object is to eliminate unsound concepts prior to devoting resources to


them.

The screeners 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. Concept Development and Testing


o

Develop the marketing and engineering details

Investigate intellectual property issues and search patent data


bases

Who is the target market and who is the decision maker in the
purchasing process?

What product features must the product incorporate?

What benefits will the product provide?

How will consumers react to the product?

How will the product be produced most cost effectively?

Prove feasibility through virtual computer aided rendering, and rapid


prototyping

What will it cost to produce it?

Testing the Concept by asking a sample of prospective customers what


they think of the idea. Usually via Choice Modelling.

4. Business Analysis
o

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 breakeven point

5. Beta Testing and Market Testing


o

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
o

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)


o

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 (referred to as concurrent engineering or time to market). Most industry
leaders see new product development as a proactive process where resources are
allocated to identify market changes and seize upon new product opportunities before
they occur (in contrast to a reactive strategy in which nothing is done until problems
occur or the competitor introduces an innovation). Many industry leaders see new
product development as an ongoing process (referred to as continuous development)
in which the entire organization is always looking for opportunities.
For the more innovative products indicated on the diagram above, great amounts of
uncertainty and change may exist, which makes it difficult or impossible to plan the
complete project before starting it. In this case, a more flexible approach may be
advisable.
Because the NPD process typically requires both engineering and marketing expertise,
cross-functional teams are a common way of organizing projects. The team is
responsible for all aspects of the project, from initial idea generation to final
commercialization, and they usually report to senior management (often to a vice
president or Program Manager). In those industries where products are technically
complex, development research is typically expensive, and product life cycles are
relatively short, strategic alliances among several organizations helps to spread the
costs, provide access to a wider skill set, and speeds the overall process.
Also, notice that because engineering and marketing expertise are usually both
critical to the process, choosing an appropriate blend of the two is important. Observe
(for example, by looking at the See also or References sections below) that this article
is slanted more toward the marketing side. For more of an engineering slant, see the
Ulrich and Eppinger, Ullman references below.[1][2]
People respond to new products in different ways. The adoption of a new technology
can be analyzed using a variety of diffusion theories such as the Diffusion of
innovations theory.
A new product pricing process is important to reduce risk and increase confidence in
the pricing and marketing decisions to be made. Bernstein and Macias describe an
integrated process that breaks down the complex task of new product pricing into
manageable elements.

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