New product development

In business and engineering, new product development is the complete process of bringing a new product to market. There are two parallel aspects to this process : one involves product engineering ; the other marketing analysis. Marketers see new product development as the first stage in product life cycle management, engineers as part of Product Lifecycle Management.

Types of new products

There are several types of new products. Some are new to the market, some are new to the firm, and some are new to both. Some are minor modifications of existing products while some are completely innovative. These are displayed in the following diagram.

The process

There are several stages in the new product development process:#Idea Generation#*ideas for new products obtained from customers, the R&D department, competitors, focus groups, employees, or trade shows#*formal idea generating techniques include attribute listing, forced relationships, brainstorming, morphological analysis, problem analysis, virtual prototyping, and rapid prototyping #Idea Screening#*eliminate unsound concepts#*must ask three questions:#**will the target market benefit from the product#**is it technically feasible to manufacture the product#**will the product be profitable#Concept Development and Testing#*develop the marketing and engineering details#**who is the target market#**what benefits will the product provide#**how will consumers react to the product#**how will the product be produced#**what will it cost to produce it#*test the concept by asking a sample of prospective customers what they think of the idea#Business Analysis#*estimate likely selling price#*estimate sales volume#*estimate profitability and breakeven point#Beta Testing and Market Testing#*produce a physical prototype or mock-up#*test the product in typical usage situations#*make adjustments where necessary#*produce an initial run of the product and sell it in a test market area to determine customer acceptance#Technical Implementation#*New program initiation#*Resource estimation#*Requirement publication#*Engineering operations planning#*Department scheduling#*Supplier collaboration#*Resource plan publication#*Program review and monitoring #*Contingencies - what-if planning#Commercialization#*launch the product#*produce and place advertisements and other promotions#*fill the distribution pipeline with product#*critical path analysis is useful at this stage

These steps may be iterated as needed. Some steps may be eliminated. To reduce the time the 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). Many industry leaders see new product development as an ongoing process (referred to as continuous development) in which a new product development team 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 this process typically requires both engineering and marketing expertise, cross-functional teams are a common way of organizing a development project. 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). In those industries where products are technically complex, development research is expensive, and product life cycles are short, strategic alliances among several organizations helps to spread the costs, provide access to a wider skills set, and speeds the 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 reference below.

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.

Protecting new products

When developing a new product many legal questions arise, including: How do I protect the innovation from imitators?; Can the innovation be legally protected?; For how long?; How much will this cost?. The answers are complicated by the fact that several legal concepts may apply to any given innovation, product, process, or creative work. These include patents, trademarks, service marks, tradenames, copyrights, and trade secrets. It is necessary to know which are applicable and when each is appropriate. This varies somewhat from jurisdiction to jurisdiction. The advice of a lawyer that specializes in these matters is essential.

Generally, copyrights are fairly easy to obtain but are applicable only in certain instances. Patents on the other hand, tend to involve complex claims and approval processes, tend to be expensive to obtain, and even more expensive to defend and preserve.

Fuzzy Front End

The Fuzzy Front End is the messy "getting started" period of new product development processes. It is in the front end where the organization formulates a concept of the product to be developed and decides on whether or not to invest resources in the further development of an idea. It is the phase between first consideration of an opportunity and when it is judged ready to enter the structured development process (Kim and Wilemon , 2002; Koen et al., 2001).It includes all activities from the search for new opportunities over the formation of a germ of an idea to the development of a precise concept. The Fuzzy Front End ends when an organization begins development.

Although the Fuzzy Front End may not be an expensive part of product development, it can consume 50% of development time (see Chapter 3 of the Smith and Reinertsen reference below), and it is where major commitments are typically made involving time, money, and the product's nature. Consequently, this phase should be considered as an essential part of development rather than something that happens "before development," and its cycle time should be included in the total development cycle time.

Koen et al. (2001, pp.47-51) distinguish five different front-end elements:

1. Opportunity Identification

2. Opportunity Analysis

3. Idea Genesis

4. Idea Selection

5. Concept and Technology Development

The first element is the opportunity identification. In this element large or incremental business and technological chances are identified in a more or less structured way. In the end eventually resources will be allocated to new projects which then lead to the structured NPPD. The second element is the opportunity analysis. It is done to translate the identified opportunities into business and technology specific context of the company. Here extensive efforts may be made to align ideas to target customer groups and do market studies and/or technical trials and research.The third element is the idea genesis, which is described as evolutionary and iterative process progressing from birth to maturation of the opportunity into a tangible idea. The process of the idea genesis can be made internally or come from outside impulses, e.g. a supplier offering a new material/technology, or from a customer with an unusual request. The fourth element is the idea selection. Its purpose is to choose if or not to pursue an idea by analyzing its potential business value. The fifth element is the concept and technology development. During this part of the front-end the business case is developed based on estimates of the total available market, customer needs, investment requirements, competition analysis and project uncertainty. Some organizations consider this to be the first stage of the NPPD process (i.e., Stage 0).

The Fuzzy Front End is also described in literature as "Front End of Innovation", "Phase 0", "Stage 0" or "Pre-Project-Activities".

See also

* Flexible product development
* Time to market
* Product management
* Product life cycle management
* brand management
* marketing
* Engineering
* product
* Document management
*Association of International Product Marketing & Management
* Product Development and Management Association (PDMA)
* The Stage-Gate Process

References

* Belliveau, P., Griffin, A. and Somermeyer, S. (2002) PDMA ToolBook 1 for New Product Development, John Wiley, New York, 2002.
* Belliveau, P., Griffin, A. and Somermeyer, S. (2004) PDMA ToolBook 2 for New Product Development, John Wiley, New York, 2004.
* Cooper, Robert G. (2001) Winning at New Products - Accelerating the Process from Idea to Launch, Third Edition, Product Development Institute, 2001.
* Crawford, M. (1977) Marketing research and the new product failure rate, Journal of Marketing, vol 41, April 1977, pp 51-61.
* Drucker, P.F. (1985) 'Innovation and Entrepreneurship' (Heinemann, 1985)
* Drucker, P.F. (1985) The discipline of innovation, Harvard Business Review, vol 63, May-June 1985, pp 67-72.
* Ironmonger, D. (1972) New commodities and consumer behaviour, University of Cambridge Department of Applied Economics, Monograph 20, Cambridge University Press, Aberdeen, 1972. This source is an economics book rather than a management or marketing one. It introduces the concept of new product development to the economics of consumer behaviour.
* Kahn, Kenneth B. (2004) PDMA Handbook of New Product Development, Second Edition, John Wiley, New York, 2004.
* Kerin, R.A., Harvey, M.G. and Rothe (1978), Cannibalism and new product development, 'Business Horizons' (October 1978).
* Kim, J. and Wilemon, D. (2002), Sources and assessment of complexity in NPD projects. R&D Management, 33 (1), pp. 16-30.
* Koen et al. (2001), Providing clarity and a common language to the ‘fuzzy front end'. Research Technology Management, 44 (2), pp.46-55.
* Levitt, T. (1983), 'The Marketing Imagination' (Free Press 1983)
* Lynn, G., Marone, J. and Paulson, A. (1996) Marketing and discontinuous innovation, California Management Review, spring 1996, pp. 8-37.
* McGrath, Michael E., Next Generation Product Development: How to Increase Productivity, Cut Costs, and Reduce Cycle Times, McGraw-Hill, New York, 2004.
* Peters, T.J. and Waterman, R.H. Jr (1982), 'In Search of Excellence' (Harper and Row, 1982)
* Smith, Preston G. and Reinertsen, Donald G. (1998) Developing Products in Half the Time, 2nd Edition, John Wiley and Sons, New York, 1998.
* Ulrich, Karl T. and Eppinger, Steven D (2004) Product Design and Development, 3rd Edition, McGraw-Hill, New York, 2004.
* Urban, G. and Hauser, J. (1993) Decision and marketing of new products, 2nd Edition, Prentice Hall, Englewood Cliffs, 1993.
* Urban, G., Hauser, J. and Dholakia, N. (1987) Essentials of new product management, Prentice Hall, Englewood Cliffs, 1987. ISBN 0-13-286584-X
* The idea of categorizing new products according to their "newness to market" and their "newness to the company" originated in: New Product Management for the 1980s, Booz, Allen, and Hamilton, New York, 1982.

External links

*Lean Product Development Lean Advisors Inc.
*Product Development Institute
*Business Analyst Resources
*Product Management and Product Development Resources - Articles and templates
*New Product Development Support
*New Product Development Info (Davison Design & Development)
*New Product Prototypes (The Turover Straus Group)
*Sensory matters! - Consumer Sensory Research (Sensory Solutions)
* Specialized software targeted to sensory evaluation and new product development.