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Improving and updating product lines is crucial for the success for any organisation. Failure for an organisation to change could result in a decline in sales and with competitors racing ahead. The process of NPD is crucial within an organisation. Products go through the stages of their lifecycle and will eventually have to be replaced. New product development has eight stages. These stages will be discussed briefly below:


New Product Development Diagram


Stage 1: Idea Generation

New product ideas have to come from somewhere. But where do organisations get their ideas for NPD? Sources include:

Market Research
Distributors and Suppliers

Stage 2: Idea Screening

This process involves shifting through the ideas generated above and selecting ones which are feasible and workable to develop. Pursing non feasible ideas can clearly be costly for the company.

Stage 3: Concept Development and Testing

The organisation may have come across what they believe to be a feasible idea, however, the idea needs to be taken to the target audience. What do they think about the idea? Will it be practical and feasible? Will it offer the benefit that the organisation hopes it will? or have they overlooked certain issues? Note the idea taken to the target audience is not a working prototype at this stage, it is just a concept.


Stage 4: Marketing Strategy and Development

How will the product/service idea be launched within the market? A proposed marketing strategy will be written laying out the marketing mix strategy of the product, the segmentation, targeting and positioning strategy sales and profits that are expected.

Stage 5: Business Analysis

The company has a great idea, the marketing strategy seems feasible, but will the product be financially worth while in the long run? The business analysis stage looks more deeply into the Cashflow the product could generate, what the cost will be, how much market shares the product may achieve and the expected life of the product.

Stage 6: Product Development

At this stage the prototype is produced. The prototype will clearly run through all the desired tests, and presented to a selection of people made up of the the target market segment to see if changes need to be made.

Stage 7: Test Marketing

Test marketing means testing the product within a specific area. The product will be launched within a particular region so the marketing mix strategy can be monitored and if needed modified before national launch.

Stage 8: Commercialisation

If the test marketing stage has been successful the product will go for national launch. There are certain factors that need to be taken into account before a product is launched nationally. These include:

  • timing of the launch,
  • how the product will be launched,
  • where the product will be launched,
  • will there be a national roll out or
  • will it be region by region?


The eight stages of product development may seem like a long process but they are designed to save wasted time and resources. New product development ideas and prototypes are tested to ensure that the new product will meet target market needs and wants. There is a test launch during the test marketing stage as a full market launch is expensive. Finally the commercialisation stage involves careful planning to maximise product success, a poor launch will affect product sales and could even affect the reputation and image of the new product.

New Product Development Lesson | Related Article - Why Develop New Products?


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