New Product Development – what is it?

New product development, or simply product development is the process of creating a product based on an idea and taking that into the chosen market.

There are three ways of creating a product. You can have an original idea, and via the product development process take it into production. Another way of product creation is taking an existing product and making it better by iterating it. Finally, the third way is taking an existing product, and creating it cheaper.

In a bigger context, new product development is part of something called the product life cycle, of which it is the first stage.

Overall new product development has a lot of steps, including idea generation, research and planning, and finally, a successful product launch leads into commercialisation of the product.

Table of contents:

• Why does product development matter?
• Product development & Product life cycle
• Stages of new product development
• What do you need to get started?
• Building a dream team
• Consumer & product trends 2021
• What about funding your idea?
• Patenting your idea

Let’s look why creating new products is important:

Why does product development matter?

There are many reasons why product development is important. Creating a product is not just about the product itself, but about the big picture around it.

In the early stages of product development, research is needed to show whether there even is a market for the product idea. 

This research stage, which is talked about later in more detail, helps companies ensure that there is demand for the product, and that actual value is created for the future customer. The product development process evaluates these things and if they are not found, it makes more sense to stop the process there.

When a product is well developed, it doesn’t only add value to the end-user as a product, but also creates value through employment and income generated for the company.

New product development can help companies improve their market share and drive growth, providing sustainable income streams for the company. 

Before we dive deeper into what you need to get started, let’s take a look at the bigger picture of a product’s life cycle and what part product development plays in it:

Product development as part of product life cycle

There is much more to a product’s life cycle than just its development. Product life cycle is often broken into four or five phases, of which a product goes through all at some point.

The five stages of products’ lifecycle are:

• (Development)
• Introduction
• Growth
• Maturity
• Decline

Why care about the product development cycle?

When planning the launch of a new product into the market, it is good to be aware of this product development cycle.

Understanding the life cycle helps you better plan your own business around it, as different stages of a lifecycle require different kinds of effort in management, marketing and funding for example.

New product development

The process starts with new product development, right after you have an idea. During this process, your idea develops from being an idea to a concrete, production-ready product which is ready to be taken into the market.

As your product evolves, your business plan will develop as well. In combination these two help the product to advance to the next level, which is the introduction phase:

1. Introduction

When your product is ready for the market, the introduction stage begins. In this stage you will be building your brand, promoting your product, and expanding your customer base. Brand building and promotion are essential in getting those early adopters onboard with your product and from there expanding your customer base.

During this phase in the product development cycle, you will also need to decide the pricing of your product, as well as establishing the distribution channels for it.

After your product has been introduced to the market and the pricing & distribution have been set, your product is ready for the growth phase:

2. Growth

Following a successful adoption in the introduction stage follows the growth stage. In this stage, your product will start to gain users and you can expect to start gaining some profit.

During the growth stage of the product development cycle, the demand for your product will increase and you need to work hard to keep up with the demand and expectations to gain loyal customers.

If your product has been successful, it will start having some competition right at the end of the growth stage.

3. Maturity

As your product grows, it moves on to the next stage of the new product development cycle, which is the maturity stage. This is when your product is stabilised, the sales will reach its peak and most of your customers are buying the product.

In the maturity stage, the market starts to have more options. This is natural as your competitors start to reach their own growth phases, and thus putting pressure on your original product.

This leads to the challenge of holding your market position, which can be achieved by keeping your current customers happy with inventions.

If you fail to accomplish this, your product will reach the final stage in the new product development cycle:

4. Decline

The final stage in the product development lifecycle is the decline. Failing to keep up with your customer satisfaction and increasing pressure from your competition will result in your sales starting to drop.

If your sales are starting to drop, there are two options:

Ideally, fighting the decline stage is done by innovating something new: coming up with improvements to your existing product, or perhaps making a second generation are good ways to keep up with the competition.

If your product has lived its lifecycle in the market and is no longer serving its purpose, ramping down production and eventually discontinuing the product can be a good option. Creating new products is a continuous process and you need to keep that in mind during every stage.

Earlier we briefly described the new product development phase in the product’s lifecycle, so let’s take a more in-depth look at what that process looks like:

Stages of new product development

As mentioned before, product development is the process of having an original product idea and bringing that to the market. This is part of a bigger lifecycle of a product.

Here’s a deeper look at the product development stages, explained by our Senior Specialist Jarno Leskelä:

There are several stages in the new product development process, although they could be a bit different from industry to industry.

Here are the four most important new product development stages, which all are later explained more in detail:

• Idea generation / ideation & concept (Concept study)
• Prototyping / MVP development
• Design & production (productization)
• Manufacturing & after-sales support

Before we start

Before expading on those four stages, let’s discuss a few basic terms and steps which can be part of the process to provide you with more tangible information, however they are not always necessary:

Feasibility study

A feasibility study can be called a type of reality check: it’s an independent assessment of the practicality of the product, plan, or method. In the feasibility study we will answer questions like:

Do we have, or can we create technology to do his? 

and

Do we have the necessary resources? 

It is not always necessary and therefore it is not automatically always done as part of a new product development project.

Proof of concept (POC)

A proof of concept (POC) can be built when you aren’t sure if your idea can work. The POC will not cover the entire system, but a small part of it and they’re usually built from ready, off the shelf components.

POCs are only used inside your company to clarify the development direction, but sometimes you can also consider building a POC to get the seed-stage funding.

Minimum viable product (MVP)

A Minimum viable product (MVP) is a version of a product that has just enough features to stay viable. In other words, it’s not packed with all the features and only has the core functionality. 

The purpose of building an MVP is to get the minimum version of the product to the market and see if the product will have demand. If the product proves to have value for the customers, you can start making money right away from your first customers, i.e. the early adopters, and also fill your product with the features that were left out.

Understanding these three is important, as they can help you in creating the perfect product, or even help you get funding to proceed with. 

Now let’s look at the new product development stages:

1. Concept study

The concept study is the first part of any new product development project. It will give you the initial picture of all the various stages in the development process and it describes what the problems your product will solve are, how it will solve them what the product will feel like.

A concept study is one of the most crucial steps in a new product development project and it can, for example, be a key element in securing funding for your product.

2. Creating a prototype

A ready product speaks louder than a thousand words and that is why creating a prototype is one of the most rewarding of the new product development phases.

The main purpose of the prototype is to help you make decisions concerning the product development and allow you to see possible improvements and changes you wish to make to the product.

The prototype is something you can show to investors and other stakeholders to, again, secure more funding and consolidate your idea.

 In short, it’s safe to say that having the prototype is a huge stage in the new product development process!

3. Productization

The last of the new product development stages is the one leading you into the final, ready product. Productization includes several steps, and here’s some of them listed:

Building the supply chain

Once the prototyping is ready, it’s time to find the right partners needed for the correct materials, as well as partners needed for production. Building the supply chain means finding the different vendors, activities, and resources needed to create the product and getting it ready for mass production.

In this stage, good connections and experience count for a lot, as sourcing done wrong can mean extra costs and delays in the new product development project.

Product verification

Product verification is an important part of the new product development process. In this phase, the product is fully tested and verified against the regulated environment and reliability demands.

When the product is fully tested, it can be safely released for mass production and out on the field. The more comprehensive the testing, the less you’ll get any surprises and returns on your device.

Once again, experience helps the product verification stage as an experienced partner will know which tests are necessary and help you avoid over-testing the product at the same time.

Production set-up

Once you have chosen your production partner, you’ll begin to set up the production line needed for mass production. The production line can be very simple or complex depending on the product, production volumes and the required testing to ensure the quality of the product. 

Regulatory approvals and certifications

In this stage, all the documentation that is needed for the process is collected and produced. Special devices for type approval measurements are built and the software needed is developed for type approval testing purposes.

During the type approvals and certification stage, close collaboration is needed between the product development team and the type approval measurement laboratory so that that type approval process would go as fast as possible. 

Usually, type approvals take between 4 and 10 weeks, which is important to consider when looking at the overall schedule of your new product development process.

4. Manufacturing, after-sales support & maintenance

Finding the right manufacturing partner is an important part of the Supply Chain Building stage, and during the Productization stage, you will begin working with your manufacturing partner.

Where to manufacture your product?

It’s important to know that negotiations with a manufacturing partner are often a time-consuming process, but it’s vitally important to find the right manufacturing partner for your product. 

There are many factors to consider when choosing a manufacturing location, such as production volumes, the amount of manual work needed for the assembly of your product and the price of an individual product. Things such as sustainability and changing world situations are also important to consider. 

Ramping up your product

Ramping up a product is a big effort that requires seamless co-operation between the customer and manufacturing. At the same time, the sales and marketing of your product need to be working full steam ahead.

In addition to the aforementioned stages, the following can also be considered as part of the product development stages, and are crucial in getting the business started:

• Market research
• Business plan
• Funding

So, whether you are building a wearable or an IoT device, you now understand the process, and we can take a better look at what you need to get your business and product development started:

What do you need to get started?

A product idea on its own is simply not enough for a business to get started. According to one study, only one in one thousand product ideas ever even make it to launch.

So what do you need to make your idea a reality? Let’s look at six key areas that can cause trouble and how to avoid them:

1.         Business model & market understanding

You are filling a gap in a market, and whether the idea is original, or you have a way of creating a better version of an existing product, you need a business model to fill that gap. 

Figuring out whether you want to sell towards consumers or businesses, what are your strengths, weaknesses, opportunities and threats, and the cost structure needs to be quite clear right from the beginning of the journey. 

Having market understanding by doing market research on things like what prices your customers are willing to pay and which target market areas you are going to focus on is equally important.

The chosen target market determines where it makes sense to produce the upcoming product since you might have to consider type approvals for the areas you are going to sell in. 

Watch our video on how to get started:

2.         Doing proper research

Getting a good market understanding and building a business model is all about research. From that small number of ideas that make it to market, only 5% (link) are ultimately successful. 

Believing in your idea is not enough, and therefore investing time and effort in doing proper research is only going to do your business favours. 

3.         Project management

You might assume that one of your team members can be the project manager for the new product development process. Rather quickly though you might notice that a trained project manager with proper experience is needed.

Getting an experienced project manager will help you a lot, as they are familiar with the latest strategies for guiding teams through product creation while avoiding the most common pitfalls. 

This enables your team members to focus on their specific tasks in their own areas of expertise. 

4.         Marketing

One of the biggest mistakes businesses can make in the product creation process is with marketing. Marketing needs to be a part of the entire product creation process from the very beginning. 

Marketing answers questions about product viability, market demand, pricing, differentiation for other products and eventually advertising the product. 

These are very important aspects in product creation and therefore should be included right from the beginning. 

5.         Go-to-market strategy 

It would be unfortunate to get to the end of the new product development process without some idea of how you will get your new product into the hands of customers.

Whether you want to sell directly through existing salespeople or you are creating a retail product, you need to explore options and make important decisions even before the product is ready. 

6.         Consider partnering up

It all seems a bit complex, but luckily there is a chance to use a  knowledgeable partner in your product industry. Before you get started, you might want to consider working with a firm with experience in the field, as they can help you ensure that you do it right. 

Read about the way Haltian designs products with its customers here

These are all important to understand and get right in order to fulfil your potential. However, there is one essential thing you need to get any of this started: A great team:

Building a dream team for your startup

Creating a product requires building a team, and specifically building a balanced one. Technology startups usually start with an engineering team, and it is a good idea to make sure that you have different kinds of talents in the team right from the beginning. 

Our VP of Product Development Services, Pasi Pentinpuro talks about this in our video about building a winning team:

There are four main areas of knowledge that are needed in building a dream team:

• Technological understanding

Someone needs to understand all the technological details about your product so the company can effectively create it. 

• Finance

Knowing finances help the company build the business plan, manage cashflow and costs among other things. It makes sense to have this knowledge in-house from the beginning to keep the realities of money in mind. 

• Sales & Marketing

You need a team of sales and marketing to, well, sell and market the product. Not a single product has sold itself purely on its own from the beginning, and therefore this knowledge is essential in your startup. 

Consider these factors as you build your team and acquire knowledge from the areas your team currently is not sufficient. This more diverse knowledge helps you build a better company and therefore a better product.

Now you know what the process of new product development looks like and what you need to get started. However, you might be wondering if your idea is good? Let’s take a look at a few consumer and product trends that might help you in creating the next big thing: 

Consumer & product trends in 2021

Are you still looking for an inspiration on what to create?

There are bigger business and consumer trends which directly impact the product trends. It is natural to follow these product trends in new product development.

Going early in on a trend can help you be the front-runner when others are still considering solutions. You can achieve a massive head start on your competition when going in early, and thus you should consider the following trends: 

1. Focusing on health
2. Collective empowerment
3. Virtual lives
4. Artificial Intelligence & Extended reality
5. Dealing with digital dilemmas

These consumer trends are just a few examples of what problems the modern consumer faces, and hopefully they give you an idea of what your products could help resolve.

There are three product trends, all of which are related to the consumer trends above, that we predicted to be the next big thing early last year. These three are:

1. Smart rings
2. Smart glasses
3. Smart clothing

Success stories like Oura and Rayban’s new smart glasses highlight that there is a demand for these kinds of products.

However, creating such a trendy product always needs one thing: Funding

What about funding?

Getting funding is an essential part of product development. It is obvious that without any funding you cannot proceed with your product idea. 

The actual product development is not the part that costs the most money. Setting up sales, branding, marketing, logistics and manufacturing are the more expensive actions you need to take when establishing a product business. 

It is best to know that there is good and bad news about getting funding for your product. The good news is that there are many ways to get funded. What is the bad news? Learn more about them in our article, where our VP of Product Development Services, Pasi Pentinpuro, talks about this. 

Now once you have a great team, you are funded well and your final product idea has evolved into a final product, you might wonder if others are willing to steal or benefit from it. If you think it is a real possibility, then it is best to patent your idea:

How about you patent your idea?

During your new product development process, you go from an idea to a potential mass-market product. This can raise the question of whether it is a good idea to protect your innovation from copycats while getting recognition of your hard work. 

Applying for a patent is a detailed process and therefore in our article about patenting we talk more generally about what a patent is, what are the general requirements of a patent and why you should do it.

Conclusion

Overall, new product development is a complicated process, in which you turn an original idea into a final product. 

It is the beginning of a product in its life cycle and creating a great product requires good research, even better execution and a proper team to say the least. 

Hopefully this guide has helped you figuring out your process, you can read more on how we can help you in taking the next step here: