Compiled by Galynn Nordstrom, Janet Preus, Chris Tschida and Susan Niemi
Dennis Paris of Tangerine Strategies LLC, business and marketing consultants, defines new product development as the creation of a product that will generate value for your customers vs. the competition. Revolutionary products change market behavior; evolutionary products add benefits or quality to the market.
Businesses considering new products should answer questions based on their particular markets: Have they declined, sustained or grown over the past two years? What gaps, needs or opportunities exist? What capabilities do you have to fill these gaps?
Before implementing a new product development process, a strong business plan is necessary to set the strategy for launching it, explaining how the product will go to market and determining the logic behind these decisions. The plan acts as an execution blueprint, which details the steps toward implementation and specifies performance expectations.
Successful new product development is the blending of strategic marketing, engineering, efficient production, sales, process management, decisiveness and a cohesive, committed team. Market response will define its success.
A culture of innovation
When considering innovation development, a business must think like a customer, align customers into market segments, and identify problems that the new product solves. Throughout the development process, it’s important to be decisive about the way you want to go. Paris stresses taking time up front to do the work, which makes the process easier and allows for a “fail fast, fail cheap” model.
The biggest stumbling block can be the culture of the company. Determine a process that is right for the business, get everyone on board, and don’t go live until everyone in the organization has bought into it.
A supportive new product development culture fosters innovative ideas by all employees and encourages employee recognition of problems and solutions. A strong culture also ensures that ownership and senior management are 100-percent committed to the process, and allows the management team to participate in process set-up.
According to Paris, a sound new product development business case and plan integrates eight strategic marketing assessments and strategies:
- Market assessment. Strength of the market, actual or potential customers, the Internet, news sources, knowledge of the market, and competitive presence.
- Competitive assessment. There will be competitors. If competition is minimal, you may need to make a market.
- Reassess. Circle back to reassess your product or service’s strengths.
- Select an “Overall Strategy Objective.” An attractive market and a strong product means heavy-up in marketing. An attractive market and a weak product mean investing in strengthening the business. A weak market and a strong product mean balancing marketing with alliances. A weak market and a weak product mean running the other way.
- Create your “generic” strategy, which leads the way for all of your marketing.
- Select a pricing strategy, influenced by income requirements and objectives for long-term market control.
- Select a promotional strategy for products or services. Two basic promotion strategies, PUSH vs. PULL, influence how much time and effort you put into business development.
- Position your product and communication strategies. A focused product strategy says, “Hey, over here, watch what I can do.” A product comparison strategy says, “I’m better than he is.” A product family strategy says, “If you like my family, you’re gonna love me.”
The more a project costs to develop and the more it stretches from current business strengths, the riskier it becomes.