Today’s marketplace has an insatiable hunger for new products and services, but the path to product innovation is not easy and is littered with the corpses of those that have gone before.
Much of this failure is due to poor planning and process. It is the equivalent of setting off to cross the Nullarbor Plains without taking proper precautions. pre thinking your journey and planning for all possible contingencies.
There is never any certainty in taking a “light globe” idea and fashioning it into a product offering but there are paths more worn and more likely to yield success.
This six (6) step New Product Development (NPD) process is one my clients and I use regularly and with great success; using this model we have adapted, changed and invented millions of dollars of “new” products and services in a timely and cost effective manner.
Step 1: Idea Generation
If we’re lucky the idea will give birth to itself, but for most of us it takes hard work. Start your search by talking to customers, suppliers, your sales people and employees, ask them what innovations they want. Continue by analysing your competitor’s offerings. Dig deeper to look at the local national and international innovations, technologies, trends, processes and thinking.
To get a better understanding of what new product you need try approaching it from one of these three angles.
The first is to work with your customers to identify your products / services problems and their possible solutions. The second is to review the product offering itself, break it down in to its various components and analyse each of these for possible improvements. The third and most common is to brainstorm and come up with a quantity of possible solutions.
Step 2: Screening
To cull back the ideas generated you need to establish company specific evaluation criteria by which to accept or reject them, these may include:
§ The marketplace’s size, projected growth and potential demand.
§ Current and future direct and indirect competitors and products.
§ Your company’s capabilities, strengths and weaknesses and current markets.
§ The ability of the idea to meet profit, break even or revenue aims.
§ Compatibility with your current production systems.
§ The product or idea does not infringe on existing patents and that if required you can receive patent or trademark protection.
§ The new product is consistent with your marketplace standing,
Step 3: Business Analysis
The remaining new product possibilities must now undergo rigorous testing; the purpose is to discount each potential product until you are left with only the better ones.
Owners and managers must now analyse whether the potential product fits the company’s short, medium and long term requirements, by reviewing
• Sales projections for the next 1 to 5 years
• Market share projection for the next 1 to 5 years
• Costs of production, distribution, sales, packaging and promotion
• Costs of capital and other investment
• Results in profit and break even analysis
• How will economic predictions of interest rates, employment and consumer spending impact on the products success?
• What market share do you have, are likely to gain
• How a competitor’s market share, decisions and presence may impact on the new product.
• What are the products development and on going costs
Step 4: Marketing Analysis
If the product has made it this far, it’s time to discover how the marketplace will react to it. The organisation needs to strategically plan the Product, Price, Place, Process, Personnel and Promotion of the remaining new product choices and develop comprehensive marketing plans for each.
This is a strategic customer focused review that will tell you whether the marketplace will accept the product and what work you will need to do to gain this acceptance.
Step 5: Prototyping
It is now time to take the remaining product choice for a “spin around the block”.
Prototyping involves building or developing the product to a stage where it can be used or tested in a real world. In an automotive sense this may involve building the car for the first time and allowing engineers and potential customers to interact with it. For a service it may involve constructing the product offering and trialling it by offering it to a few select customers.
The prototype needs to be constantly evaluated against pre defined criteria for its technical performance as well as customer acceptability.
TThese important step allows you to
§ ensure that the product / service can be manufactured or assembled as expected
§ that the end result matches your expectations, and
§ allows final feedback that can be used to further refine the product offering before it reaches the marketplace.
Step 6: Commercialisation
To market, to market.
The plans you have developed in the previous stages now require implementation and on going review.
It is now imperative that you maintain a vigilant focus on the product, the consumer, the marketplace, the competitors, your staff and the products ability to meet the penetration milestones you set for it.
There are three possibilities that may occur at this stage and you need to be prepared for each.
The first is dealing with the “Hello, is anyone out there?” scenario where consumer uptake is slow. The second is the “It’s OK” scenario – not the greatest consumer uptake, but also not bad enough to call it a failure. Neither of these should cause you to retreat. Go back to consumer testing, go back to retailers, go back to distributors and your staff and check everything; often it is something overlooked or assumed, that can then easily be remedied, keep doing this until you reach the third possibility, the
“I’m a genius” the marketplace has taken to your product and your expectations are being met
Product innovation is a difficult and costly road for a company, but in today’s fast paced and ever changing world it is commercial necessity.
Don’t wait for it to be broken before you fix it. You must take the pulse and vitals of every product or service you offer at least once a year, because when it is broke, it is far too late to fix.