Product Design

The process

There are several stages in the new product development process...not always followed in order:

  • Idea Generation
  • Ideas for new products can be obtained from customers (employing user innovation), the company's R&D department, competitors, focus groups, employees, salespeople, corporate spies, trade shows, or through a policy of Open Innovation. Ethnographic discovery methods (searching for user patterns and habits) may also be used to get an insight into new product lines or product features.
  • Formal idea generation techniques can be used, such as attribute listing, forced relationships, brainstorming, morphological analysis and problem analysis.

Idea Screening

The object is to eliminate unsound concepts prior to devoting resources to them.

The screeners must ask at least three questions:

  • Will the customer in the target market benefit from the product?
  • Is it technically feasible to manufacture the product?
  • Will the product be profitable when manufactured and delivered to the customer at the target price?

Concept Development and Testing

  • Develop the marketing and engineering details.
  • Who is the target market and who is the decision maker in the purchasing process?
  • What product features must the product incorporate?
  • What benefits will the product provide?
  • How will consumers react to the product?
  • How will the product be produced most cost effectively?
  • Prove feasibility through virtual computer aided rendering, and rapid prototyping
  • What will it cost to produce it?
  • Test the concept by asking a sample of prospective customers what they think of the idea.

Business Analysis

  • Estimate likely selling price based upon competition and customer feedback
  • Estimate sales volume based upon size of market
  • Estimate profitability and breakeven point

Beta Testing and Market Testing

  • Produce a physical prototype or mock-up
  • Test the product (and its packaging) in typical usage situations.
  • Conduct focus group customer interviews or introduce at trade show.
  • Make adjustments where necessary.
  • Produce an initial run of the product and sell it in a test market area to determine customer acceptance.
  • Technical Implementation
  • New program initiation
  • Resource estimation
  • Requirement publication
  • Engineering operations planning
  • Department scheduling
  • Supplier collaboration
  • Logistics plan
  • Resource plan publication
  • Program review and monitoring
  • Contingencies - what-if planning
  • Commercialization (often considered post-NPD)
  • Launch the product
  • Produce and place advertisements and other promotions
  • Fill the distribution pipeline with product
  • Critical path analysis is most useful at this stage

These steps may be iterated as needed. Some steps may be eliminated. To reduce the time that the NPD process takes, many companies are completing several steps at the same time (referred to as concurrent engineering or time to market). Most industry leaders see new product development as a proactive process where resources are allocated to identify market changes and seize upon new product opportunities before they occur (in contrast to a reactive strategy in which nothing is done until problems occur or the competitor introduces an innovation). Many industry leaders see new product development as an ongoing process (referred to as continuous development) in which the entire organization is always looking for opportunities.

For the more innovative products indicated on the diagram above, great amounts of uncertainty and change may exist, which makes it difficult or impossible to plan the complete project before starting it. In this case, a more flexible approach may be advisable.

Because the NPD process typically requires both engineering and marketing expertise, cross-functional teams are a common way of organizing projects. The team is responsible for all aspects of the project, from initial idea generation to final commercialization, and they usually report to senior management (often to a vice president or Program Manager). In those industries where products are technically complex, development research is typically expensive, and product life cycles are relatively short, strategic alliances among several organizations helps to spread the costs, provide access to a wider skill set, and speeds the overall process.

Also, notice that because engineering and marketing expertise are usually both critical to the process, choosing an appropriate blend of the two is important. Observe (for example, by looking at the See also or References sections below) that this article is slanted more toward the marketing side. For more of an engineering slant, see the Ulrich and Eppinger reference below.

People respond to new products in different ways. The adoption of a new technology can be analyzed using a variety of diffusion theories such as the Diffusion of innovations theory.