The New Product Development Process
If the development of a new product is being considered, the following steps are suggested as guidance:
Generate new product ideas. Search for ideas for new products.
Screen new product ideas. Make sure the product fits the target market and the overall mission of the business.
Develop and evaluate new product concepts. Develop product concepts and determine how consumers will view and use the product.
Perform a product business analysis. Calculate projected business costs, return on investment, cash flow, and the long-term fixed and variable costs. Long-term fixed costs are production costs that do not vary with the number of units produced (e.g., annual rent). Long-term variable costs are production costs that vary with the number of units produced (e.g., selling more hot dogs will require more hot dogs, ketchup, mustard, and relish).
Design and develop the product. Develop a product prototype. A product prototype is an exact match to the product description developed in the concept development and evaluation stages. It is a sample.
Test market the product. Introduce the product to a market to find out how the product will be received when it is introduced for real. The test market should be as close as possible in terms of characteristics (e.g., demographics) as the target market. For a small business, an appropriate test market might be a few select customers.
Launch the product or the service. The product is introduced to the full marketplace.
