Research and study should be carried out to get information about customers’ wants and interests to produce new goods and face different competitions in markets. Only then the task of development of new goods should be started. Some important process should be fulfilled to develop new products as demanded by target market. This can be presented in the figure as follows:
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| Development Process of New Product |
1. Idea Generation
Imagination about new product is called idea generation. Quality, features and utility of new products can be achieved from the idea. Development of new goods starts from idea generation. Idea generation becomes very important for any business company. If generation of ideas for new products is to be achieved, every situation should be studied properly. When the situation appears to get many ideas, the best idea should be selected. Such different ideas can be collected from various sources. These sources can be classified into two categories.
- Internal sources: The sources which remain under control of company are called internal sources. Such sources also can generate ideas. Specially, sales forces, managers, engineers, planning department, board of directors, research department etc. are internal sources. The force involved in sale of products or services is called sales force. This is also one of the sources of idea generation. Dealers, agents, retailers etc. are included in this source. Useful ideas can also be obtained from these sources to develop new products.
- External sources: Business Company or firm can collect ideas from external sources. After ideas have been collected, the best among the ideas should be selected considering customers’ wants, interests, needs etc. Customers, organizations, technical publications, advertising agencies, competitors, suppliers, universities etc. are included in external sources. In order to develop new goods, it is also equally necessary to generate ideas from collecting ideas from external sources. Ideas can be collected also from government agencies. The ideas got from government agencies may be very useful for the business firm.
2. Idea Screening
Ideas are collected from several sources in the process of developing new products. The task of giving priority to the collected ideas is called screening of ideas. This is really evaluation system. The ideas should be evaluated on the basis of the objective of firm, technology, capacity, resources etc. Responsibility to evaluate and select the best idea can be given to any group of manpower. While giving such responsibility, authority, right and duty should also be fixed for the group. If done so, the group performs its responsibility easily and completely. Generally, the ideas can be classified into three groups by screening them. They are mentioned as follows:
- Prominent ideas: As such ideas become very important, they should correctly and properly evaluated.
- Marginal ideas: Such ideas may be useful to the company in future. So, they should be kept stored for future.
- Reject ideas: If some ideas are not possible to be useful to the company, such ideas should be discarded/ rejected.
3. Business Analysis
A lot of information should be collected by the company from markets for analysis. For doing so, marketing expert should carry out researches and study. Only then valuable opportunities for business company can be identified. Such analysis is called business analysis. This makes sure whether a certain product becomes marketable or not. This analysis also gives knowledge about the possible economic benefit to be earned in future. Mostly, the analyst of each firm pays attention to the following things.
- Estimated sales,
- Features of the product,
- Competition of the market,
- Expected rate of return and profitability,
- Estimated cost,
This type of business analysis may be affected by the means and resources of the company. Even if there is such situation, it is necessary to analyze the main concern/ subject. For analyzing such subjects, risk analysis, break-even analysis, capital budgeting, proportion analysis etc. model can be used. Ideas should be made to develop new product only after finding positive result from the analysis.
4. Product Development
At this stage design, feature and sample of the new product are prepared. Size, shape, weight, materials, performance etc. are given emphasis in the process of determining the form of the product. While developing new product, important decision should be taken on brand, name, packaging, model, price, promotion mix, distribution, market situation etc. After the product model has been prepared, technical and laboratory test should be done to determine whether it becomes better to produce the new goods in huge quantity or not. While testing the product, the following methods should be used.
- Functional testing: Under this quality, size, durability feature etc. of the product are tested. This type of testing provides certainty about secure functioning and effectiveness of the product.
- Consumers testing: For testing the consumers, sample of the new product should be distributed to the target consumers, and reaction of the consumers should be collected. This test is called consumer testing. Consumers interest, want, needs etc. are tested under this testing.
5. Test Marketing
The task of testing the effectiveness of new product by supplying it to certain market is called market testing. This type of testing is done specially for measuring the ability, understanding capacity and getting clear reaction of the customers. For this purpose, only certain fixed quantity should be produced and distributed to the targeted geographical area. Such sale is called test marketing. Details about price, quality, promotion, distribution channel and other necessary matters also can be understood through test marketing. Decision can be taken whether to start mass production or modify the product through test marketing.
6. Commercialization
After going through test marketing, the new product is supplied to different geographical areas. This stage is the last stage of the product development. At this stage, preparation of mass production and marketing programs are prepared. In fact, the new product is distributed to different market segments for commercial purpose. While doing so, marketing expert should consider various things. Market competition, product price, distribution channel, sellers’ access etc. should be specially studied. Only after collecting the important information, product distribution can be made effective. The business firm should be paid attention to the following things:
- Timing: Time should be given importance while taking any decision. New products should be brought to market in proper time. If product is supplied to market in wrong time, it cannot give expected return. If timing is not properly considered, commercialization program cannot get success.
- Place: While commercializing a new product, proper place decision should be made. One of the best alternatives from the available geographical area/ place should be selected. If wrong place is selected, distribution cost may go high due to which there arises difficulty in market competition.
- Market segmentation: New products may be useful for many geographical segments. Among them only the best segments should be selected. This task is called market segmentation decision. So, any one or more market segments should be selected by considering the popularity and utility of the new products.
- Strategy: Strategy should be formed by studying the ability/ capacity and competition of market. Proper short term strategy should be adopted to supply new products to market according to the same strategy which can help new product hold the market.
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