Learn, Explain New Product Development: Definition, Planning, and Role!


Cost, time and quality are the main variables that drive customer needs. Aiming at these three variables, companies develop continuous practices and strategies to better satisfy customer requirements and to increase their own market share by a regular development of new products. There are many uncertainties and challenges which companies must face throughout the process. The use of best practices and the elimination of barriers to communication are the main concerns for the management of the NPD. Also learned, What is the Role of Group Influence in Consumer Behavior? New Product Development: Definition, Planning, and Role!

In business and engineering, new product development (NPD) covers the complete process of bringing a new product to market. A central aspect of NPD is product design, along with various business considerations. New product development is described broadly as the transformation of a market opportunity into a product available for sale. The product can be tangible (something physical which one can touch) or intangible (like a service, experience, or belief), though sometimes services and other processes are distinguished from “products.” NPD requires an understanding of customer needs and wants, the competitive environment, and the nature of the market.

Definition of New Product Development:

  • New Product Development is a process which is designed to develop, test and consider the viability of products which are new to the market in order to ensure the growth or survival of the organization.
  • New Product Development can be defined as the process of innovating and inventing new ideas and concepts, with a view to developing a successful new product in the anticipation of customer needs.
  • The new product development can be defined as the term used to describe the complete process of bringing a new product or service to market.
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There are two parallel paths involved in the new product development process. The first involves the idea generation, product design, and detail engineering whereas the other involves market research and marketing analysis. Basically, Companies typically see new product development as the first stage in generating and commercializing new products within the overall strategic process of product lifecycle management where it is used to maintain or grow their market share. It is important the new product which is based on current market trends should be launched so that it can give greater benefit to the customers. At the same time, it can also help them to understand what are the needs of their customers helps to increase the sales of their business in terms of maximizing the profits.

Planning of New Product Development:

New product planning has been defined by the American Marketing Association as “the act of making out and supervising the search, screening, evelopment, and commercialization of new products; the modification of existing lines; and the discontinuance of marginal or unprofitable items”.  Simply stated, product planning decides the nature and other related aspects of the articles produced and sold.  Product development is a more limited term but includes the technical activities of product research, engineering and design.  Product planning and development is the result of the co-ordinated the efforts of large number of specialists – engineers, scientists, marketers, etc.  Product planning is usually described as ‘Merchandising’ and it covers both, the existing and potential products.  This activity, therefore, must deal with the proper balance between the old and the new products.

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New product planning is a very long and complex process, and it deals with changes in:

  • The kinds of goods or services offered by a marketer for various segments.
  • The number of kinds of products, or different lines, that the company offers in various segments.
  • The width of product line offered.
  • The quality levels or levels acceptable to various classes of consumers in various target markets.
  • The degree of distinctiveness.
  • Increased societal and governmental constraints.
  • The growing shortage of new product ideas in certain areas.
  • Shorter time spans between the emergence of the idea and the physical launch of the product.
  • The costliness of the new product development process.

The following decisions are important in new product planning :

  1. Improving the existing product lines and services,
  2. Weeding out unprofitable items in the product line (simplification),
  3. Expansion of the current product line (diversification),
  4. New product development for the present customers, and
  5. New product development for new customers (diversified products).

Role of New Product Development:

Whatever may be the size and nature of operations of a firm, product planning and development is necessary for its survival and growth in the long-run.  Every product has a life cycle and it becomes obsolete after the completion of its life-cycle.  Therefore, it is essential to develop new products and alter or improve the existing ones to meet the often-changing requirements of customers.

The role of new product development can be stated in terms of :
  1. Ensuring that the product mix, matches changing environmental conditions and that product obsolescence is avoided.
  2. Enabling the marketer to compete in new and developing segments of the market.
  3. Reducing the marketer’s dependence upon particular elements of the product range or vulnerable market segments.
  4. Filling excess capacity.
  5. Achieving greater long-term growth and profit.
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Introducing new product is rather difficult as it involves long-range planning.  Customers’ need should be identified, competing and substitute products should be evaluated and, above all, the strength of the company should be examined before deciding to produce a new product.  Product failure defeats the very objectives of a firm.  In a survey conducted by Booze, Allen, and Hamilton, it was revealed that firms with well-organized product planning programmes have only 40-50 percent product failures.  When this percentage is compared with the overall industry product failures (80 percent), one could easily be convinced of the need for product planning.


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