Whilst it is true that some products (those known as 'Cash Cows') are consistently popular from year to year, most products, if they're successful, will be introduced to the market, grow in popularity, peak, and then steadily decline until they become obsolete. On very rare occasions a product on the cusp of becoming obsolete, such as the vinyl record, will have a resurgence in popularity, which is what the entire vintage market is based on. For the most part, however, businesses will have to rely on the development and manufacture of new products to keep consumers happy and interested.
Falling behind on modern technology or misreading what it is that your customers want can have a devastating effect on a business' profit and market share (just ask Blackberry & Nokia), and is the reason why so much money goes into new product development. The New Product Development process is made up of 8 steps, which if followed and adhered to strictly, will result in a product that is, at the very least, viable in the industry.
The idea generating process is simple – if not a little frustrating. It demands that any idea put forward be taken into consideration, and can quickly devolve into a chaotic mess if not approached professionally, and by those who can understand their customer's needs and what their competitors offer.
Conducting a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) before idea generating is generally deemed good practice, as it will help you identify the gaps in your industry and where you might be able to excel.
Because all ideas given are considered, the next step is to weed out the poor and unrealistic ideas, so that what you have left are the ideas that you (or rather the majority) believe will have the greatest appeal, and therefore the greatest chance of success.
Remember, at this point you should not have dedicated anything other than time to the ideas you have generated. No prototypes should have been drawn up and no resources should have been dedicated. So all you have to determine which ideas should be dropped or kept is the information from the SWOT analysis, the expertise of you and your peers, and some common sense.
Idea Development & Testing
Now that the ideas have been whittled down, those remaining should be seriously considered. It is easier to do this after having dedicated some time and resources to the idea; in the form of focus groups, drawn plans, computer models, etc. It would also be prudent to check the patent databases to see if any of the ideas you have decided upon are already being worked on or are the intellectual property of somebody else (which may help you cut several more ideas from your list).
Development of new ideas should also take into consideration who the product is being aimed at, which involves taking a look at who it is marketed at as well as who it's for (e.g. a baby toy needs to appeal to parents, as they have the purchasing power – not the baby). Taking a look at how the product will benefit the user, the features it will incorporate, and how cost-effective it will be to manufacture, are other things that should be considered at this stage of the new product development process.
After you have made a decision regarding what your best ideas are, you should have an equally good idea of how much they would cost to manufacture and what price you would intend to sell them at. Now is the time in which you must be brutally honest with yourself, because if you take a product past this point and it is undesirable, or too similar to pre-existing products and yet double the price, you may be in trouble.
In essence the business analysis stage is all about seeing how viable a product will be in the market, and how well it will compete against other products in terms of price, functionality and style.
Any ideas that have made it to this point should be considered very real prospects and may be your next big seller, which is why it is now important to get the thing physically in your hand as soon as possible. Once you have it you can see where you need to make changes, and it would be a good idea to hold another focus group with a sample taken from your target market to see what changes they would make to it.
It would be foolish at this point to disregard any feedback you receive, and any point – even if it seems silly to you – that is brought up at a frequency of 20% ought to be seriously looked at. Whilst you have your focus group, it may be a good idea to run your packaging ideas by them as well, as packaging can have an impact on how the product is perceived, and also on its price.
As a final step to this stage, a limited number of the product should be commissioned and sold in small numbers to see how customers react and behave toward it when seeing it on the shelves surrounded by other products.
Assuming the market test goes well, it's time to think about how and where you're going to produce your new product effectively, and in the quantity that you will require. Logistics is another thing you will have to think about, as there is no point choosing the cheapest factory possible for production if your savings are offset by high delivery costs.
Additionally, you will also need to consider and plan for the following two possibilities:
Commercialisation & Launch
Launching a new product is exciting and terrifying, and it is by no means the end of the process. Advertisement is undoubtedly needed, which is where social media or an inflated Google Adwords budget may come in handy. Moreover, in the beginning you may want to consider selling your new product at a lower price, irrelevant of whether you are selling B2B or B2C, so that it can disperse a little and build up some hype and word-of-mouth interest.
Monitoring & Controlling
You should never stop looking at how well a recently launched product is selling, and it may be wise, if the product is not selling as well as you'd like, to alter the price accordingly and maybe consider using social media or other marketing avenues to give the product a little push. If on the other hand your new product is selling well, you may want to consider maximising the return on your investment by raising the price slightly and increasing the manufacturing volume, in order to lower your cost (per-unit) and increase your margins.
Just to be clear, if any or all of your new product ideas fall out of favour or do not meet the criteria needed to progress beyond any one of these steps, they ought to be forgotten about. After all, many products make their way successfully through the development process and barely have an impact on the market, so what hope would a flawed, lesser product have? If you reach stage 4 and all your ideas have fallen by the wayside, go back and start again from the beginning; believe us when we say that the development of a good product is well worth the time and frustration.