What is New Product Development (NPD)? Definition and Process

What is New Product Development (NPD)?

New product development (NPD) is the process of generating a new idea, turning that idea into a new & usable product, and introducing it to the market. Usually, NPD follows a series of steps before introducing a new product to the market that satisfies the market’s needs and wants.

What is the new product? A new product is seen and understood differently by people and business organizations. Generally, an innovative product in the eyes of people that is first time developed and introduced in the marketplace is called a new product.

However, the new product has a wider meaning in marketing. For marketers, the new product may be an innovative product, an imitating product, or a modified product.

Innovative Products

An innovative product is a product that is developed and introduced in the market for the very first time, and that product is never been before sold by any firm. It is a purely new product in the market. There is a very high cost, risks, and time required in the development of innovative products. However, when innovative products are developed – can change the dynamics of the industry. A popular example may be, when the first mobile was introduced, the first computer, medicine invented to cure cancer, etc.

Imitating Products

Imitating products are those products that are copied from competitors’ products but that are to some extent improved. These are also termed “copy products” and the firm may simply want to capture part of an existing market with these “me too” products. Maybe the production of the Gulsar bike is a prime example of new product development via imitation.

Modified Products

Modified products are those in which the features or attributes of the existing products are changed. Product modification is done by the product-producing firm to capture the existing market that seeks change. Modified products are not imitating products, these require minor innovations to change or replace the product attributes or features.

Need for New Product (Innovative Product)

It is a well-known fact that the market never stops changing. Every year thousands of new products are introduced into the market by manufacturers or marketers. The main reason behind this is that every product has its life cycle, after a certain period the products become unable to adapt to the changed situation of the market due to various forces mainly due to external forces.

Thus, those types of situations compelled the manufacturers to develop and bring a new product into the market over time to meet the changes in need, want, taste, and preferences of the consumers, and the changed requirements of the markets.

There are main two essential reasons for the need for product innovation:

  • For Company’s Growth: To sustain in the long run, and generate more revenue and profit innovation of a new product seems necessary. It is so because the existing product after a certain period becomes obsolete and may not be able to support the company.
  • To Meet Customers Changed Expectations: The needs and preferences of the consumers are not the same as time passes their expectations also change. As such the existing product may satisfy consumers’ needs at one point in time but after a certain time, it may not. Thus, to meet such changing expectations innovation of the new product is essential.

Read More: An Ultimate Guide to Product Life Cycle (PLC) Strategies

The New Product Development Process

After understanding what are the new product, its development, and its needs, let’s move on to its process of development. The new product development process includes generating new product ideas and processing them to make them available for commercialization.

New product development processes differ from organization to organization and with the nature of the products. If the product is convenient it may need less time and cost to introduce to the market while if the product is luxurious it may require high cost, time, and involvement. However, the new product development process involves at least six steps, which are as follows:

New Product Development Process

Generate New Product Ideas

The first and foremost essential step in the new product development process is the generation of new product ideas. Ideas are what can be turned into something useful.

The marketer or business firm should try to generate as many as possible new product ideas about the products to be produced in the future. For this, the firm can collect new product ideas from various sources mainly the market opportunities that are most to consider.

Following are the useful sources from where the marketer can collect new ideas for the product:

  • Consumer’s complaints
  • Marketing research
  • Brainstorming
  • Investors
  • Market trends
  • Competitors
  • Company’s sales representatives, middlemen, engineers, scientists, employees, etc.

Sometimes, the internal people of the firm have a great idea about the present condition of the market which significantly enhances the ability to generate a profitable new product idea. In this stage, the marketer’s task is to generate as many new product ideas as he can.

Read More: Decision-Making Process

Screen and Evaluate New Product Ideas

In the first step, various new product ideas are generated. In this stage, the generated various ideas are screened and evaluated. The main purpose of this stage is to reduce the number of collected ideas to a few attractive ideas.

The screening is possible through the evaluation of the collected ideas. And, the effective evaluation of the collected ideas depends upon the manager’s judgment and experience. The marketer aims to evaluate the various new product ideas and come up with the few that have the most opportunities in the market.

Usually, after screening and evaluating the business firm selects the most appropriate product idea from all. The appropriate product idea is one that relatively costs less expenditure in development but ensures long-term return, and at the same time makes the firm capable of realizing its goal and objectives.

Business Analysis

Once the product is filtered through the screening stage the study of various potential marketing opportunities for the product is done. The main purpose of this stage is to do a thorough study of the feasibility of the new product idea.

In doing so, the marketer can consider the answer to the following questions, Is the selected product idea feasible or not? Does the product have commercial value in the market? Does the new product match the anticipated sales, revenue, and profits? If the product is produced does it recover the investment? How much risk is associated with the new product? Does the new product match the firm’s goal, objectives, and resources?

And, after the study of various business and product opportunities, if it is anticipated to meet, the following stage appears.

Read More: Types of Products

Product Development

In the product development stage of the new product development process, the actual product development activity takes place. Here, the marketer’s main task is to translate the product idea into a technically and commercially feasible physical product.

Most importantly the marketer has to do – develop product design, packaging, and branding, conduct preference tests, and test technical quality.

This stage ended with the development of some actual physical products to make the testing task of the product achievable.

Test Marketing

After developing a technically and commercially feasible product, the product is tested before commercialization. The purpose of this stage is to test the product to know whether the product is viable for sales purposes in the long run.

For this purpose, the marketer needs to fulfill two basic tasks,

  • Produce limited products, and
  • Test in the selected market areas to determine whether the sales meet the company’s expectations.

The basic aim of test marketing is to examine the performance of the product in a “pilot” experiment and highly controlled market areas and monitor results. If the product is successful in meeting the company’s expectations, it is forwarded for commercialization.

But, if the product does not meet the company’s expectations, the product is sent back for modification or redevelopment. However, test marketing should pave the way toward finalizing the plans for a successful launch.


The last stage of the new product development process is commercialization. Once the purpose of the test marketing is over, the business firm is now ready to produce products on a mass scale for commercial use. Simply, here the new products are available for the use of consumers and are marketed in various ways to attract potential consumers.

However, the firm should consider applying appropriate marketing tools and strategies to meet its desired objectives. As such, it should make perfect timing for market entry, carefully study geographical areas to launch the new product – decide whether to cover a local market, regional, or national level market and target the market where the company desires to enter, etc.

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