The new product development process is a systematic, customer-driven process to help companies find and grow new products. There are eight steps included in this process: idea generation, idea screening, concept development and testing, marketing strategy development, business analysis, product development, test marketing, and commercialization.
This process can be clearly seen when creating food items. For example, Kellogg is a company that has many breakfast items and comes out with new ones every year. In the idea generation stage, each of their products is thought of by a particular source, internal or external, in a systematic search for a new product. The next stage is idea screening. This separates bad ideas from good ones so the company will spend less money later on in the product development stages. Thousands of product ideas are scrapped in this stage.
After the initial stages, a few good ideas may remain. This brings us to the concept development and testing, a detailed version of the new product idea that is tested with groups of target customers. For Kellogg this includes showing a few, new sugary cereal ideas to children to see how they react. If this product gets a good response, it is brought into marketing strategy development, where an initial marketing strategy is designed for the new product based on the product concept. If Kellogg finds their tested product popular, they will start planning on how to market to their target audience, set their goals for the upcoming years, plan price, distribution, and budget, and state profit goals and their marketing mix strategy. These are taken into a business analysis and a review is done of sales, costs, and profit projections to find if they satisfy the company’s objectives.
The last stages of new product development include product development, test marketing, and communication. First, if the business analysis is found to be positive, the company will start to make a physical product. Kellogg, for example, will create their best idea and give it to children and measure the responses. If it passes, the product moves onto the test marketing where it will be put in a limited real-market environment where both the product and the marketing program are tested. This may include putting the cereal in a limited number of stores to measure the real world response to it. The final step is commercialization, introducing the product to the market. For the example, Kellogg will put their product alongside their existing line and it may become a permanent addition to the product line
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