If you’ve ever seen the TV show Shark Tank, you know it is filled with aspiring entrepreneurs trying to convince a panel of investors that their new product is worth backing. They usually start by explaining a problem they had, how they developed a product to solve it, and end with a vision for selling the product to customers.
Investors and entrepreneurs know the second step, the new product development process, can mean the difference between success and failure. Here’s how you can use the product development process to jumpstart a new venture or incorporate it into your existing business.
Table of contents
What is new product development?
The new product development process is the cycle of getting a new product into the hands of customers. A product development strategy provides a disciplined approach to evaluating ideas and turning the best ones into profitable products. This process helps keep new product development on track and lets entrepreneurs and their teams make adjustments along the way.
Strategic product development is critical because entrepreneurs face considerable odds. Half of all new products fail to meet expectations, according to global management consulting firm McKinsey & Company. By devoting careful attention to every stage of the process, you help improve your odds of success.
Stages of the new product development process
- Idea generation
- Idea screening
- Product concept planning
- Prototyping
- Test marketing
- Commercial launch
New product development generally goes through these six key stages:
1. Idea generation
Typically, idea generation starts with brainstorming, where you explore as many ideas as possible. You could start by imagining something entirely new, or by considering a new twist on an existing product. This is a good stage to put all the ideas on the table. You never know where an entirely new idea may lead you.
For example, television producer and former surfing instructor Lindsay McCormick had an idea for a line of dental hygiene products that didn’t contain additives or use plastic.
“I started looking into toothpaste and the way it comes in a plastic tube, and there’s a bunch of harsh chemicals, artificial flavors, ingredients that come in it,” Lindsay says on the Shopify Masters podcast.
Her solution: Bite, a brand offering chewable toothpaste tablets and bamboo toothbrushes.
“I was like, I could make something that’s better for the planet, better for our body. And I just went into making it.”
2. Idea screening
At this product development stage, evaluate specific product ideas and consider which has the best chance of success. Idea screening involves conducting market research, getting preliminary customer feedback, exploring technical feasibility, and estimating the production cost.
As you begin your business analysis, think about your target market. Who do you expect to buy your product? How would it satisfy customer’s needs and align with their lifestyles? Does it align with market trends?
For example, Lindsay figured the target audience for Bite products would be environmentally conscious customers who want to avoid plastics. She thought she could tap a niche in a market dominated by large consumer product companies.
“If there’s something that you think you could do better or that is being done in a way that you can improve upon, who’s to say that you aren’t the one to do it?”
“We found people in the zero-waste space who believed in my mission, who wanted to support it, who understood the problem with plastic and wanted to be part of the solution. And it grew from there,” she says. “If there’s something that you think you could do better or that is being done in a way that you can improve upon, who’s to say that you aren’t the one to do it?”
Market research should include competition analysis, showing whether the market is open to new entrants or is it already saturated with similar products.
3. Product concept planning
During the concept development phase, create a sketch of the product. Provide details of the product’s features, and list the necessary materials and components for production. You can revise the sketch based on feedback and analysis from your development team; the product design will probably go through several iterations as the process moves forward.
Concept development planning lets you spot any flaws in the product idea and make necessary changes. This helps to avoid problems later in the concept development process, when changing your product could be more complicated and costly.
4. Prototyping
A prototype is the first version of the physical product. You or your product development team may hire a prototyping company to create it. Continue to assess the product’s feasibility as you calculate the necessary materials, labor required, and time to make the product, using the prototype as the basis for later full-scale production.
Read more: How To Find a Manufacturer or Supplier for a Product
5. Test marketing
The test marketing stage—sometimes called a soft launch or beta testing—involves trying out your finished product with a sample market of your target audience for final feedback before a full product launch. The goal of this stage is to understand what appeals to customers and what to improve before a hard launch.
Test marketing usually requires several key steps. First, you want a sample of customers to accurately represent your target market based on criteria such as age group and purchasing power. Next, you must determine how long you are willing to conduct test marketing, and at what cost. Results from testing can help fine-tune your marketing and pricing strategy. This will help shape your value proposition, which is a concise message that conveys the value you’ll deliver to customers.
6. Commercial launch
Once you have yourmarketing plan, sales tactics, and customer support in place, you’re ready to share your new product with the world. You may aim to get your product stocked in retail stores or start your own online store. Use early sales results and customer reviews to adjust your marketing strategy as needed, and be prepared to make further product refinements.
Lindsay decided to sell Bite directly to customers online instead of through retail intermediaries. This ecommerce-only approach helped her maintain a strong connection with customers and receive payments quickly.
“Selling online is a really helpful way to go because of that quick tight cash loop. You truly own your customer channel, and you have that direct relationship with them,” she says.
New product development process FAQ
What are the benefits of using the new product development process?
Following a structured new product development process gives you a roadmap for bringing an idea to fruition and helps you avoid misfires such as flawed product design or incorrect consumer targeting.
How do you know if your new product will be successful in the market?
Conduct market research, beta testing, and user surveys to increase the likelihood of a new product succeeding. Soft launch your product to a small audience and gather feedback before launching to the broader target audience.
What are the typical reasons a new product fails?
There are many possible reasons a new product doesn’t catch on with customers. Among the most frequent are inadequate business analysis or market research, resulting in misunderstanding the target market and customer needs; poor product design or quality that leads to dissatisfied customers; higher prices than customers are willing to pay; and lack of innovative features.