7 Stages of The New Product Development Process

9/26/23, 5:15 PM 7 Stages of the New Product Development Process
Summary: New product development is about converting new and untried ideas into workable products. The rule of
thumb for New Product Development is to focus on innovating while delivering value.
According to Statista’s survey (n= 544), 29% of tech companies planned to focus on new product development post the
onset of COVID-19. Considering the impact of COVID-19 on businesses, the R&D efforts around new product
development have increased. While some tech companies focused on launching new products, others improved the
existing digital products.
The secret sauce for new product development’s idea success is simple — focus on product discovery and address
the pain points of the target audience. This is why it is essential to gather customer insights through customer
surveys, interviews, monitoring social media interactions, and ethnographic research.
Moreover, product discovery should be an ongoing process. It should continue over the product life cycle stages, i.e.,
idea generation, idea validation, validating PoC and prototype, MVP development, pre-launch, and post-launch. In other
words, product discovery should continue throughout the product’s lifetime.
What are the new product development stages? This piece is a detailed walkthrough of the process.
What is New Product Development (NPD)?
Expand
New product development is the process of converting an idea into a workable software product.
The New Product Development (NPD) process is about grabbing the market opportunity that revolves around customer
needs, checking the idea’s feasibility, and delivering working software.
https://www.netsolutions.com/insights/everything-about-new-product-development/ 1/11
On the other hand, Product Development is an umbrella term that sticks to the six stages of software development
lifecycle and works on launching products that already have a Proof of Concept (POC). The New Product Development
approach revolves around working on an entirely new idea, where the uncertainty around its development and
subsequent adoption is high.
Some of the successful New Product Development examples include — Trello for task management and tracking,
Zoom for video communication, Dropbox for cloud storage, Figma for designers working remotely, Airtable for relational
data management, and so on.
Here is an insight into each of these stages for understanding how to develop a new product:
Seven Stages of New Product Life Cycle

Development Process
Building new products and services can be a process filled with uncertainty. However, following the systematic New
Product Development process can help businesses gain clarity and confidence in what they are building.
Stage 1: Idea Generation
The goal should be to generate many worthy ideas that can form the foundation for the New Product Development
strategy. The major focus for stage 1 should be to arrange brainstorming sessions where solving customer problems is
given precedence.
This phase is not about generating foolproof ideas that are ready for implementation. Instead, raw and unproven ideas
that can be shortlisted later should be discussed.
Here’s how a business can do that:
1. Emphasize on Customer Problems
The problem that is well described is a problem half-solved. Here’s how to identify the issues that the target audience is
facing:
a. Personal Problems
It is a good idea to look at problems the business is facing to come up with the idea. All a business needs to focus on
that specific problem and build a solution that can be tagged as a “one for all” solution to the common problem.
To start with, a business needs to understand the human story behind digital offerings.
For instance, Jeff Lawson, the founder of Twilio, has an interesting story behind its communication-based software
product launch.
He was associated with three business companies in the past, and all of them lacked one thing — Productivity.
When he was driven to start again with something of his own, he knew that he needed to cover up the communication
gaps as these were, in his experience, the biggest hurdles on the path to productivity.
That is when product innovation happened in the form of Twilio. The product building and launching had their ups and
downs, but his conviction to have this product led to a great business idea.
Here is an inspiring extract of his speech from the Web Summit.
b. Qualify Each of the Listed Problems
This step helps check the feasibility of the shortlisted problems and their solutions based on the 4U approach by
Michael Skok, the founder of Startup Secrets. The 4U stands for:
Taking a deeper look at each of these aspects in detail will provide greater clarity.
Unworkable: Figure out whether the brainstormed product concepts will address some real problems. Will the
product be able to fill the existing customer experience gaps and will the product achieve product-market fit?
Unavoidable: Is the problem the product will address unavoidable to the extent that it becomes mandatory to
comply? It is necessary to find out whether solving that problem is a choice or a compulsion.
Urgent: Is the problem urgent and is a solution highly demanded by the target market? If the answer is
affirmative, this could be a chance to cover the white space in the market with the original product.
Underserved: Are there no available products that address the existing user problems? Look for the whitespace
in the market and hold on to the idea that looks promising.
c. Coming Up With Possible Solutions
If a problem has been identified, it’s time to look for possible solutions. For every user problem, there ought to be
potential New Product Development opportunities.
Here’s the workflow that starts with a problem and ends with strategizing around the solution.
In all, no matter how common or uncommon the problem is, the solution should be unique. Even if a product already
exists, ensure that the product can solve problems differently.
For instance, Slack and Zoom are both SaaS products that focus on promoting communication and collaboration.
Zoom, however, does this differently by also enabling the conducting of webinars. In other words, webinars are their
unique selling point (USP).
d. Narrowing Down Problems + Solutions
Create a comparison chart that lists all the shortlisted problems and solutions. Circulate the findings across the
organizational structure to develop a viable problem set.
If the stakeholders are not convinced regarding the shortlisted idea, try the Replicate, Re-Purpose, and Upgrade
approach.
Replicate: This focuses on creating a similar product as that of a competitor but launching it in new market
conditions. When done with launching the minimum viable product (MVP), the strategy should be to expand the
business by introducing out-of-the-box and unique features later on.
Re-Purpose: This focuses on rewiring an existing business model. For instance, LinkedIn introduced LinkedIn
Learning, an e-learning platform for professionals. This product was similar to an e-learning platform for students.
However, they built new opportunities for expanding the target audience and market share.
Upgrading: This concept of New Product Development revolves around introducing a new business model that is
better than existing solutions. Better could mean improved performance, better speed, addressing the challenges
that a competitor is facing, or introducing added functionalities.
Stage 2: Idea Screening
This New Product Development stage revolves around choosing the one idea with the highest potential for success. Put
all the ideas available on the table for internal review. That is, turn to people with industry knowledge and experience in
the field for idea screening.
A proof of concept (POC) should hold precedence for a new product development idea as it helps check the idea’s
feasibility. There is no point in zeroing in on an idea that is not technically feasible to build.
Consult the Agile Development team. Their expertise can help with understanding the technical side of things, which, in
turn, can assist with shortlisting ideas worth building a PoC for.
SWOT ( Strengths, Weaknesses, Opportunities, and Threats) analysis can be another good practice to consider when
shortlisting New Product Development ideas.
In a SWOT analysis, the Agile Development team, the product owner, the scrum master, and the product manager
conduct a detailed analysis of the idea to identify an idea where strengths and opportunities overpower threats and
weaknesses.
Conducting a SWOT is relatively simple. Getting started only requires a simple 2×2 grid:
In conclusion, the New Product Development idea should be unique so that people do not need to be convinced to pay
for it.
Stage 3: Concept Development & Testing
Before starting the New Product Development process, building a detailed version of the idea and the user stories
should be prioritized.
This value proposition evaluation is the first step towards concept development and testing. At the very least, it ensures
that problems in the approach are discovered sooner and the team can course-correct earlier. That helps to ensure that
technical debts will not accumulate.
There is a 17% chance that [your] startup’s idea fails, just because it was a poor product. — CBI
Insights
The easy-to-follow concept development steps include:
1. Quantifying Gain/Pain Ratio
A business needs to create an insightful picture of the product from the user’s perspective. This can be achieved by
calculating the gain/pain ratio, where:
Gain = Benefits of the product for the customer. What is in it for them?
Pain = The efforts made by the customer to understand and use the product.
2. Conducting a Competitor Analysis
Knowing about existing market players is a critical strategic step to consider. Understanding the competition makes it
easier to infer:
Where the competitor lacks
Where is the scope for improvement
Existing white space in the market
3. Enlisting the Major Product Features
The user stories involved in the New Product Development software project will make or break a business. When
creating a list of such features, it is imperative to know — how is it an innovative feature, and how is it going to
solve a problem?
4. Create a Value Proposition Chart
Even after being convinced of the wisdom & the utility of an idea, being able to state it clearly to the end-user, in their
context, is quite a different story altogether. The end-user needs to be given a clear picture of what the new product is
capable of doing.
This clean & presentable fashion can be best represented in the form of a value proposition chart. The format of which
should include:
5. Concept Testing
Once the value proposition is ready, it is time to present it to the set of selected customers. How they perceive the idea
is the test of the efforts so far. If the idea doesn’t look promising, it is wise to repeat the idea screening steps to develop
a new product.
Meaningful insight can be gained by focusing on four critical aspects:
Identification of the focus group, i.e., people who would benefit from the new product under development.
Assessment of other alternatives that can be presented to the focus group.
Development of a foolproof plan for the New Product Development that includes all stages from feature
development, marketing, pricing, and distribution.
Positioning of the product’s unique features into the customers’ minds to enhance findability and discoverability.
The concept testing report would look something like this:
Stage 4: Market Strategy/Business Analysis
Marketing strategy is all about drafting a way to reach out to the targeted audience. Perhaps the best and most
straightforward method is to follow McCarthy’s 4Ps of marketing for a New Product Development project.
Category Meaning Purpose
Product Finalizing the software Product Design

product based on the
Branding Strategy
concept testing report
Level of services offered
Price Strategizing around product Pricing Strategy

licensing cost, estimating
Discounting Policies
profit margins, and creating
an unbeatable marketing Payment Modes
strategy
Promotion Distinguishing the new Balancing advertising,

solution from others by marketing, and public
highlighting the hero point or relations strategy
unique feature
The mediums to reach out to
the target audience
Maintaining a fair to-and-fro
customer communication
frequency limit
Placement Communicating how it Finalizing product

solves the key problems of distribution strategies
the customer
Defining the product’s scope,
i.e., local vs Global
This business analysis will help to determine whether the New Product Development efforts are worth the financial
investment or not (i.e., will it create a continuous stream of value)?
It is important to strategize in an informed way about the selling price by identifying the base price of the product. The
best way to identify the base price is:
1. Cost-Based Pricing Model
Here, the initial production cost is added to the markup percentage to come up with the new product’s final price.
Applying the cost-plus pricing formula:
Production cost = Technology cost + development cost + licensing cost = $100
Markup% = 50%
Price = $150
If a business analysis team applies the psychological price trick (i.e., ending the final price with 5 or 9 digits) chances of
conversions increase.
So, if the psychological pricing is to play, the $150 price will become $149.9.
2. Market-Focused Pricing
This pricing is inferred after a thorough analysis of the pricing model of similar products in the target market.
The market-oriented pricing follows the trajectory:
The factors to consider when selecting a competitive price:

Price Above Market: A higher price is suitable when proceeding with New Product Development initiatives that
solve an urgent problem of the customers.
Copy Market: Selling the new product at the same price as the competitors can initially be a safer move.
However, marketing efforts would have to be ramped up to score better than the competitor.
Price Below Market: A lower price bracket than the competitor is recommended to attract customers that can be
converted into loyal ones over time, even if the new product solves things differently.
Stage 5: Product Development
When the New Product Development idea is in place, the market strategy is documented, and the business analysis is
completed, it is time to move on with the product life-cycle development process.
The New Product Development starts with developing the prototype followed by MVP.
1. Prototype
This focuses on creating the UI/UX for the product, which is then shared with the stakeholders. This helps in visualizing
how the product will look and whether it complies with ergonomics best practices.
2. Minimum Viable Product (MVP)
This focuses on working on the user stories in Agile for the New Product that will set it apart from others. Once the
design, development, and testing are done, the MVP is launched in the market with minimal features. The future
iterations depend on the initial response.
The best way to approach New Product Development is to rely on Agile Product Development that focuses on
incremental and iterative development while promoting collaboration and communication.
This is better than the waterfall approach as it allows for to-and-fro movement across the product development cycle as
new user requirements emerge. Though the development stages of Waterfall and Agile are similar, these software
development methodologies differ.
The advantage of Agile is that it speeds up the software development process while maintaining communication and
synchronization across the development teams.
Stage 6: Deployment
Once the MVP is ready, efforts shift from development to deploying the product in the live environment. This process
involves embracing the DevOps culture and implementing the CI/CD pipeline.
The different stages of implementation include:
a. Commit
This stage involves:
The newly developed features are integrated with the code for the existing features
Quality assurance team ensures that the integrated code works fine
CI/CD tools such as Jenkins run automated unit tests and sanity tests to check code’s efficacy
b. Build
Developers push the software artifacts into the registry using Docker tools such as Gradle, Packer, AZK, etc.
c. Alpha Deployment
Developers test the performance of the new builds and the interactions between those builds.
d. Beta Deployment
Manual testing of the new product to validate its overall performance and efficiency of output considering all input
scenarios.
e. Production Deployment
The product is pushed into the live environment, i.e., the product is available and ready to use by the end-users.
From idea to launch in under 180 days. Partner

with us.
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Stage 7: Market Entry/Commercialization
Commercialization is an umbrella term that entails varied strategies to ensure the success of the new product. Here is
what commercialization includes:
If all the mentioned strategies fall right in place, nothing can stop a product from getting attention and being a product-
market fit.
Here are some must-do marketing activities that will help the product gain traction:
1. Marketing the Concept Over Product
The idea here is simple: talk about the concept and the product’s intent instead of endlessly boasting about the product
features. In short, answer how the product will make the customer’s life easier.
When HubSpot, a marketer’s product, was launched, it was not much of a success. Sadly, their customers did not
understand the intent of the now successful product.
So, how did they change the game?
They chose to market their unique selling point instead of marketing and promoting the entire product. That unique
selling point was inbound marketing.
They started to create awareness around inbound marketing and instantly became a recognized leader in the software
product industry. Sometimes the right marketing is all a product needs for the magnet effect.
2. Having a Brand Voice
A unique mindset and a unique voice always gain an all-ears audience. This is where the marketing team plays a
significant role. They need to establish an effective communication style that represents the brand in the best manner.
Be it blogs, emails, or even the website content, all of these elements need to be well thought out and clear in their
message. In the end, these elements should hold the power to intrigue the target audience.
3. Conducting Intriguing Webinars
Webinars are one way to attract quality leads. Conduct webinars that talk about how the new product will benefit the
audience and describe the features that are being introduced.
Webinars can also help promote findability and discoverability:
Findability: It is easy to find and use features that the customer is aware of.
Discoverability: It is easy to find and use features that the customer has no knowledge about.
Now that remote work is gaining traction, webinars are an even more effective way to reach a target audience. Talk
about the product, describe its features, and witness a positive impact on the bottom line.
Benefits of the New Product Development

Process
Here are some of the benefits of sticking to the New Product Development process:
Helps check the technical feasibility of the idea
Ensures faster time to market
Effectively addresses the customer needs
Multiplies the chances of success
Reduces technical debt
Better management of the feature creep
Negates the opportunity cost

7 Stages of The New Product Development Process

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7 Stages of The New Product Development Process

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9/26/23, 5:15 PM 7 Stages of the New Product Development Process

What is New Product Development (NPD)?

Seven Stages of New Product Life Cycle

Stage 1: Idea Generation

Here’s how a business can do that:

1. Emphasize on Customer Problems

Here is an inspiring extract of his speech from the Web Summit.

b. Qualify Each of the Listed Problems

c. Coming Up With Possible Solutions

d. Narrowing Down Problems + Solutions

Stage 2: Idea Screening

Stage 3: Concept Development & Testing

The easy-to-follow concept development steps include:

1. Quantifying Gain/Pain Ratio

2. Conducting a Competitor Analysis

Where the competitor lacks

Where is the scope for improvement

Existing white space in the market

3. Enlisting the Major Product Features

4. Create a Value Proposition Chart

Meaningful insight can be gained by focusing on four critical aspects:

Assessment of other alternatives that can be presented to the focus group.

The concept testing report would look something like this:

Stage 4: Market Strategy/Business Analysis

Category Meaning Purpose

Product Finalizing the software Product Design

Price Strategizing around product Pricing Strategy

Promotion Distinguishing the new Balancing advertising,

Placement Communicating how it Finalizing product

1. Cost-Based Pricing Model

Applying the cost-plus pricing formula:

Production cost = Technology cost + development cost + licensing cost = $100

The market-oriented pricing follows the trajectory:

The factors to consider when selecting a competitive price:

Stage 5: Product Development

2. Minimum Viable Product (MVP)

The different stages of implementation include:

This stage involves:

This stage involves:

This stage involves:

This stage involves:

This stage involves:

From idea to launch in under 180 days. Partner

Stage 7: Market Entry/Commercialization

1. Marketing the Concept Over Product

So, how did they change the game?

2. Having a Brand Voice

3. Conducting Intriguing Webinars

Webinars can also help promote findability and discoverability:

Benefits of the New Product Development

Helps check the technical feasibility of the idea

Ensures faster time to market

Effectively addresses the customer needs

Multiplies the chances of success

Reduces technical debt

Better management of the feature creep

Negates the opportunity cost

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