Following are the stages in the process of development of new product:

Stage # 1. Idea Generation:

First step is basically involved in the systematic search for new product ideas. A company has to generate many ideas in order to find one that is worth pursuing. The major sources of new product ideas include internal sources, which include marketing managers, workers, technicians, product experts etc.

The external sources include inventors, customers, competitors, scientists, distributors, marketing research firms, commercial laboratories etc. Most of new ideas are generated by the internal sources.

Stage # 2. Idea Screening:

In second step screening of these ideas took place, the purpose of idea screening stage is to select those ideas that are really worth pursuing. Different methods are adopted for doing this from product review committees to formal market research. It is helpful at this stage to have a checklist that can be used to rate each idea based on the factors required for successfully launching the product in the marketplace and their relative importance.

Views of marketing experts and technicians are evaluated before any decision. Top management of organization calculate the revenue-cost relationship as well as social-cost benefit relationship to take a decision whether to go ahead with the plan of launching the product or not. Finally, the management can obtain an overall rating of the company’s ability to launch the product successfully.

Stage # 3. Concept Development and Testing:

After finalization of concept of idea next stage is to develop and test the product, the basic objective of testing is to check how a new product satisfies the needs and requirements of customers. In this stage the ideas earlier screened has to be developed into a product concept. A product concept is a detailed description of the idea stated in meaningful consumer terms as opposed to a product idea that is an idea for a product that the company can see itself marketing to customers.

Once the concepts are developed, these need to be tested with experts either symbolically or physically. In this stage a virtual or original shape is given to the concept of idea and adaptability of product is measured by the marketing experts.

Stage # 4. Marketing Strategy Development:

After testing and selecting a product concept for development, marketers have to develop a suitable marketing strategy. It consists of three parts- the first part describes the target market, the planned product positioning and the sales, market share and profit goals in short period of time. The second part consists of the product’s planned price, distribution, and marketing budget for the first year. The last part of the marketing strategy statement describes the planned long-run sales, profit goals, and the marketing mix strategy.

Stage # 5. Business Analysis:

After finalization of the marketing strategy, feasibility of the business proposal is evaluated by the top management, it involves the review of projected sales, costs – profits analysis. Marketing objectives should match with the objective and goals of and organization if they do, the product can move to the product development stage.

Stage # 6. Product Development:

In this stage the research and development department and production team of the company, develops the product concept into a physical product. It requires team effort of different specialists. A prototype is finalized, when the prototypes are ready. It must be tested in laboratory and market, it should be safe and convenient to use.

Stage # 7. Test Marketing:

After product development, next step is test marketing. It gives the marketer an opportunity to launch the product in a selected market, so that in case of negative feedback of the customers regarding the product, the goodwill of the company may not hamper. The amount of test marketing varies with the type of product. Costs of test marketing can be huge.

The test marketing is of following types:

i. Simulated Test Marketing:

In this type of test marketing, the product is tested in a simulated shopping environment to a sample of customers. Then on the basis of their feedback about the performance of the product, a hypothesis is formulated regarding the prospective response from the whole population.

ii. Controlled Test Marketing:

A product is tested in a few selected retail outlets, products are displayed the feedback from customers are collected and evaluated by the marketing experts.

iii. Standard Test Market:

In this of test marketing, product is launched only in one or few samples of cities, opinion of customers are collected form the market then product is modified if required.

Stage # 8. Commercialization:

This is the final stage of product planning. Marketing programme begins to operate and products flow from production unit to the market for the sale. Marketer begins to execute their marketing strategies related to marketing mix with objective of profitability and customer satisfaction.

Reasons for Failure of New Products:

(i) No perceptible benefits

(ii) Mismatch between product offering and customer’s needs

(iii) Poor product positioning

(iv) Wrong pricing policy

(v) Inadequate channels of distribution

(vi) Poor product promotion

(vii) Poor quality of the product

(viii) Poor market segmentation and product targeting

(ix) Failure of product development

Reasons for Success of New Products:

(i) Uniqueness of product

(ii) Right positioning of product

(iii) High product quality

(iv) Proper product mix

(v) Niche marketing

(vi) Adequate product promotion and pricing policy

(vii) Adequate channels of distribution