This article may require cleanup to meet Wikipedia's quality standards. Please improve this article if you can. (October 2006)

In business and engineering, new product development (NPD) is the term used to describe the complete process of bringing a new product or service to market. There are two parallel paths involved in the NPD process : one involves the idea generation, product design, and detail engineering ; the other involves market research and marketing analysis. Companies typically see new product development as the first stage in generating and commercializing new products within the overall strategic process of product life cycle management used to maintain or grow their market share. Image File history File links Broom_icon. ... In economics, a business is a legally-recognized organizational entity existing within an economically free country designed to sell goods and/or services to consumers, usually in an effort to generate profit. ... Engineering is the applied science of acquiring and applying knowledge to design, analysis, and/or construction of works for practical purposes. ... Illustration of a physical process: a geyser in action. Process (lat. ... For the magazine, see Marketing (magazine). ... This article is about managing the life of a product in the market. ...

Types of new products

There are several general categories of new products. Some are new to the market (ex. DVD players into the home movie market), some are new to the company (ex. Game consoles for Sony), some are completely novel and create totally new markets (ex. the airline industry). When viewed against a different criteria, some new product concepts are merely minor modifications of existing products while some are completely innovative to the company.

• Changes to Augmented Product
• Core product revision
• Line extensions
• New product lines
• Repositionings
• Completely new

These different characterizations are displayed in the following diagram.

Types of new products

Image File history File links TypesOfNewProducts. ...

The process

There are several stages in the new product development process...not always followed in order:

1. Idea Generation (The "fuzzy front end" of the NPD process, see below)
   • Ideas for new products can be obtained from customers (employing user innovation), designers, the company's R&D department, competitors, focus groups, employees, salespeople, corporate spies, trade shows, or through a policy of Open Innovation. Ethnographic discovery methods (searching for user patterns and habits) may also be used to get an insight into new product lines or product features.
   • Formal idea generation techniques can be used, such as attribute listing, forced relationships, brainstorming, morphological analysis and problem analysis
2. Idea Screening
   • The object is to eliminate unsound concepts prior to devoting resources to them.
   • The screeners must ask at least three questions:
     • Will the customer in the target market benefit from the product?
     • 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
   • Develop the marketing and engineering details
     • 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?
   • test the concept by asking a sample of prospective customers what they think of the idea
4. Business Analysis
   • Estimate likely selling price based upon competition and customer feedback
   • Estimate sales volume based upon size of market
   • Estimate profitability and breakeven point
5. Beta Testing and Market Testing
   • 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
   • New program initiation
   • Resource estimation
   • Requirement publication
   • 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)
   • 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

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. User innovation refers to innovations developed by consumers and end users, rather than manufacturers. ... A focus group is a form of qualitative research in which a group of people are asked about their attitude towards a product, service, concept, advertisement, idea, or packaging. ... Open Innovation is a term promoted by Henry Chesbrough, a professor and executive director at the Center for Open Innovation at Berkeley. ... Ethnography ( ethnos = people and graphein = writing) is the genre of writing that presents varying degrees of qualitative and quantitative descriptions of human social phenomena, based on fieldwork. ... Look up brainstorming in Wiktionary, the free dictionary. ... Morphological analysis (or General Morphological Analysis) is a method developed by Fritz Zwicky (1967, 1969) for exploring all the possible solutions to a multi-dimensional, non-quantified problem complex. ... Target market may be defined as a market which an organisation sets its views on, either because it is witnessing an increasing demand for the product produced by the organisation, either because it represents a blue ocean for the organisation to exploit before its competitors get there, so as to... Concept testing is the process of using quantitative methods and qualitative methods to evaluate consumer response to a product idea prior to the introduction of a product to the market. ... Packaging is the enclosing of a physical object, typically a product that will be offered for sale. ... In economics, factors of production are resources used in the production of goods and services, including land, labor, and capital. ... Engineering is the applied science of acquiring and applying knowledge to design, analysis, and/or construction of works for practical purposes. ... Look up Logistics in Wiktionary, the free dictionary. ... “Advert” redirects here. ... Promotion may mean: Promotion (chess), a term used in the game of chess Promotion (marketing), a marketing term Promotion (rank), an increase in position in a hierarchy Promotion (academic), German academic degree that is roughly equivalent to the Ph. ... Wikibooks has more about this subject: Marketing Distribution is one of the 4 aspects of marketing. ... In project management, path analysis (also known as critical path analysis) is a technique to analyse events. ... In commerce, time to market (TTM) is the length of time it takes from a product being conceived until its being available for sale. ...

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. Although the development of a new product naturally involves change from what came before it, the business processes and project management methodologies usually used for product development are not designed to accommodate change. ...

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. In business, a cross-functional team consists of a group of people working toward a common goal and made of people with different functional expertise. ...

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.it include economical support of social serctor Diffusion is the process by which a new idea or new product is accepted by the market. ... The study of the diffusion of innovation is the study of how, why, and at what rate new ideas spread through cultures. ...

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 and is knowledgeable with your corporate philosophy regarding IP protection is essential. For other uses, see Patent (disambiguation). ... “(TM)” redirects here. ... It has been suggested that this article or section be merged into Trademark. ... A trade name, also known as a trading name or a business name, is the legal name of a business, or the name which a business trades under for commercial purposes. ... Not to be confused with copywriting. ... A trade secret is a formula, practice, process, design, instrument, pattern, or compilation of information used by a business to obtain an advantage over competitors within the same industry or profession. ...

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. Not to be confused with copywriting. ... A patent is a set of exclusive rights granted by a government to an inventor or applicant for a limited amount of time (normally maximum 20 years from the filing date, depending on extension). ...

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 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 through the formation of a germ of an idea to the development of a precise concept. The Fuzzy Front End ends when an organization approves and begins formal development of the concept.

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, thus setting the course for the entire project and final end product. 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 (not necessarily in a particular order):

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. Using the guidelines established here, resources will eventually be allocated to new projects.... which then lead to a structured NPPD (New Product & Process Development)strategy. The second element is the opportunity analysis. It is done to translate the identified opportunities into implications for the 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 inputs, 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 whether 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
• Social design
• Product management
• Requirements management
• Product life cycle management
• brand management
• marketing
• Engineering
• product
• Document management
• Industrial Design
• Association of International Product Marketing & Management
• Conceptual economy

Although the development of a new product naturally involves change from what came before it, the business processes and project management methodologies usually used for product development are not designed to accommodate change. ... In commerce, time to market (TTM) is the length of time it takes from a product being conceived until its being available for sale. ... Social design has many definitions and the term is put to very different uses across the globe. ... This article or section does not adequately cite its references or sources. ... This article does not cite its references or sources. ... This article is about managing the life of a product in the market. ... The discipline of brand management was started at Procter & Gamble PLC as a result of a famous memo by Neil H. McElroy. ... For the magazine, see Marketing (magazine). ... Engineering is the applied science of acquiring and applying knowledge to design, analysis, and/or construction of works for practical purposes. ... Originally, a document management system was a computer program (or set of programs) used to track and store images of paper documents. ... Industrial design is an applied art whereby the aesthetics and usability of products may be improved for marketability and production. ... The Association of International Product Marketing & Management (AIPMM) is a professional association for product managers. ... Infosys Bangalore, driving outsourcing to India Conceptual economy is a term describing the contribution of creativity, innovation and design skills to economic competitiveness, especially in the global context. ...

Notes

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.
• Lehmann R. Donald and Russell S. Winer (2004), Product Management, 4 edition, McGraw-Hill/Irwin, New York
• 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) Design 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

• Product Development and Management Association (PDMA)