Success Factors for New Product Development

To develop a new product idea and successfully bring it to the market is the dream of any new entrepreneur. To make this happen may seem quite simple and strait forward. For a company to successfully implement a new product idea or even reinvigorating existing products, the strategy, processes, tools and leadership to make the new product a marketing reality is more complicated than first meets the eye.

It is a fact that many companies depend upon the success of newly introduced products to ensure there continued success. The reality is that the new product success rates are rare. In his book Marketing Management Philip Kotler estimated that the success rate of new packaged consumer products is less than 20%. These failed products consume a significant share of the financial, management and technical resources of ny organization.

New Product Failure

There may be multitude of explanations for the potential failure of products. These include macro-economic changes that are not anticipated as well as technological, industrial, customer and competitive transformations that could impact on the success of the product.

It is difficult to determine the correct starting point to ensure success. Adding to the difficulty some implementation teams try to satisfy a tight budget with solutions that can only add complexity to the process. As a result the race is normally on to save time and cut costs while at the same time trying to rescue a newly introduced product.

A company that is in a rush to get the new product to market for whatever reason often fails. . When a company does not take the necessary care, attention and time to get a new product to market correctly from the outset, it almost always finds time to correct it later. This correction is frequently at excessive cost in order to not only rectify the original problem but also to conduct damage control of lost market share.

The companies that are achieving the highest level of success normally approach new product development in a different manner that those infamous for new product failure. The successful companies focus strongly on strategic and technology alternative that is driven by customer needs.

Determine Customers Needs

The traditionally way that companies determined the needs of customers depended on the data obtained from sales, distribution channels, customer support and existing or newly formed focus groups. The information is than rated and combined, often in a graphical manner. In this process it is normal for companies to have extensive exchanges with end users, buyers and decision makers to confirm the needs of all the role players in the buying process. The assessment teams normally tries to establish any problems that any role player may have encountered or identify any inefficiency in the manner that the existing offerings is managed that can be improved. The determination of the needs is clearly focused current customers and their existing needs.

Successful companies not only focus on the current needs but try to anticipate the evolution of the current needs into definable future needs. This has been determined as an important factor in sustainable new product success. As a company becomes aware of a product that will fill a particular unique niche, the company must constantly be ready to act on changing customer needs. The moves that competitors make to their product range can often be an indicator of changing customer needs that may impact on the company's own product range. With the advent of social media most companies successful with new product development will utilize social networks like face book and twitter to assess emerging trends in customer needs. In addition they will conduct periodical usage and attitude survey, product panel reviews and product perception mapping research to mention but a few techniques in use.

No company can afford to incur costly product development failures as part of the normal course of business. Product development failure risks can be mitigated by the implementation of prudent marketing strategies.

The quickest way to fail with a new product is to introduce the product without being able to completely deliver on the benefits that are promised. In order to ensure that this type of failure is limited the product should be assessed against defined target market, demographically and by lifestyle to ensure the needs are matched. The new products should also be screened against the company's sales and profitability minimum requirements to ensure alignment. As a final check the new products concept should be submitted to key customers and buyers to establish their expectations from the particular product. These expectations should then be compared with realistically achievable experiences with the product.

Another aspect that needs to be assessed before serious resources are committed to the new product idea is to establish the size of the potential market. It should be clear that if the maximum size of the market is small, the product's potential may be limited. In addition, products with a small margin will require a larger market to make it feasible.

The product idea should also be assessed in terms of the homogeneity of the needs of the potential customers. No company wants to end up with a lot of semi-satisfied customers as they eventually end up being dissatisfied.

Conclusion

A number of these problematic issues can be prevented if an ordered and structured process is followed. One such process is the stage gate process where resources are allocated in accordance with a predetermine formula based on the level of confidents that the development team has in the success of the new product.

© Carl Marx