6 Stages of New Product Development- Checklist for Businesses
New product development is the comprehensive process of bringing a new product to market. During product development, entrepreneurs must consider a wide variety of factors ranging from competitor business analysis to customer needs evaluations.
The 6 Stages of New Product Development
Whether developing a new product or improving an existing product, there are fundamental stages of new product development that all business professionals should understand.
The 6 stages of new product development consist of-
The first step in product development is ideation. Oftentimes, this is the stage that entrepreneurs spend the most time in.
A common misconception about the ideation stage is that it is reserved for completely new product development when in actuality, most great product ideas are improvements to existing products.
The SCAMPER model is a frequently used acronymic tool for developing iterations of preexisting products and stands for substitute, combine, adapt, modify, put to alternative use, eliminate, and rearrange. The primary objective of the SCAMPER model is to prompt entrepreneurs to discover new ways to improve an existing product or alternative target market to sell products to.
Useful tools for developing new products range from online marketplace business analysis to reinventions of historical trends. The ideation stage seamlessly leads to the next stage of product development, the research stage.
The research stage of product development undertakes deep competitor business analysis and product validation techniques. Product validation is essential to avoid draining massive amounts of labor, money, and energy into a null product idea that does not have real-world potential.
Validation techniques used to understand if a product concept will result in the development of a successful product include-
- Online survey administrations
- Focus group interviews
- Crowdfunding campaign creation
- Feedback requests regarding customer needs
- Informal discussions with friends and family
Competitor business analysis is also crucial during the research stage of product development. There are many creative methods to accomplish competitor business analysis ranging from requesting customer feedback about existing products to marketing plan insights gained through signing up for email address correspondences.
Product validation and market research of the competition will supply clearer insight on demand, pain points, and any customer needs unmet by existing products.
Product development is complex but proper planning can simplify it. Best practices for this step include sketching a new product idea or existing product improvement.
Hand-drawn sketches must be very detailed and accompanied with written text explanations of product components. Entrepreneurs can easily hire illustrators from freelance websites if they are not confident in their personal drawing skills.
At this stage, it is wise for entrepreneurs to contemplate both the appropriate pricing of the product and its assigned usages. For example, will the product be used for specific occasions or is it an everyday staple item?
Creating a finished product sample is the primary objective of the prototyping stage. The full scale finished product will then be referenced when mass production efforts are initiated.
The prototyping phase is generally complicated as it is rare to develop their finished product prototype on the first try. Usually, various improvements are made on different prototype versions until a final sample completely satisfies the entrepreneur.
While some new products can go through the prototyping phase with no outside assistance, others will require outsourcing. In fact, a large majority of prototyping efforts necessitate third party help.
There are many best practices used when locating a third party for prototyping. Many universities have internal job boards to reach out to students and contractors can always be located on freelance websites.
For do-it-yourself entrepreneurs who prefer to limit their outsourcing, online tools can be utilized to create 3D models. If access to 3D printing equipment is not realistic, vendors can use their own equipment to print and send a finished product prototype directly to the entrepreneur.
The sourcing stage is when an entrepreneur builds their supply chain including the suppliers and resources needed to not only create products but deliver them to customers. As such, beyond locating manufacturing services, supply chain components ranging from storage to shipping must be taken into consideration.
Best practices for the sourcing step of product development include supply chain diversification. Benefits of supplier diversification include an increased likelihood of securing a lower cost and contracting with backup suppliers to avoid future customer demand issues.
An important real-world consideration for the sourcing stage is the decision to undertake large scale production of a new product locally or overseas. Deciding whether product production will occur domestically or internationally is a lofty decision for many entrepreneurs due to the morality and cost benefits associated with each decision.
For local production, trade shows are a great starting place due to the multitude of vendors available for entrepreneurs to interact with. For international production, sites like Alibaba are suitable to locate overseas suppliers and factories.
The final stage of product development is costing. The costing step requires an analysis of all previously gathered information in order to formulate a cost of goods sold figure.
Cost of goods sold, commonly abbreviated as COGS, incorporates costs ranging from raw materials to any applicable import fees. COGS is then used to determine a retail price and gross margin.
- The new product development process consists of ideation, research, planning, prototyping, sourcing, and costing.
- Failure to complete these stages of the development process can result in product failure or wasted resources.
- From concept development to costing, many activities occur during the development process including test marketing and product innovation through prototyping.