New Product Development 2

A Workflow

Companies need to organize their workflow efficiently to move quickly through the new product development process and beat the competitors to market – that is, get to market first with a successful product launch. Efficient product development processes increase the chance of doing well, or likelihood of success. The amount of time a new product or service in the development pipeline – or how long it takes to develop – is referred to as time to market.

During the process, the project team, made up of a project leader and the people needed to complete the project, completes key activities (for example, carrying out market research) to advance the project and collects information to manage risk – to make decisions that will reduce the risk of failure in the future. Prioritization decisions are made to identify the most important things to do next and resources are allocated to the best projects. An action plan, a list of what needs to be done next, is defined.

B Product Development and Optimization

Many product concepts exist only as a description – a drawing, or a very basic model known as a mock-up. For example, car makers prepare clay models of new car designs. Product modeling uses CAD (computer aided design) to turn ideas into 3D representations. The R&D team creates a prototype, a first example of the product, to test its functionality and to eliminate product flaws. Prototyping helps cut costs and allows for marketer testing.

For software, the first stage is an alpha test, where the program is tested by company employees to remove any errors, or bugs. Then the software is sent for external testing; this is known as beta testing.

Product optimization studiesare carried out to improve the product or service as it is being developed. They may include sensory research to evaluate how a product smells, tastes or feels.

C Test Marketing

The next step is to collect information on how the proposed product or service will perform in the marketplace. The company tests the product and its marketing plan on a small test market before a full launch. This allows the company to forecast or predict sales, uncover problems with the product, and to fine-tune, or adjust, the marketing plan. The amount and type of testing depends on the costs and risks of introducing the product.

D Commercialization

Commercialization, also known as market introduction, is the final stage in the new product development process. The distribution network and marketing communications action plan must be ready by the launch date or commercializationdate – the date the product goes on sale. The company may launch the product simultaneously in all markets or prepare a step-by-step market rollout in different cities and countries.

Comprehension questions:

1. Why do companies need to organize their workflow?

2. What is beta testing?

3. Why do companies test the product on a small test market?