Stages in Developing New Product

>> May 8, 2010

Before describing the stages in developing the new product in marketing mix, we will define the product with following way

Definition of Product

Product is the tangible and intangible things which satisfy the needs of consumers. It means not only physical things which we purchase are the products but all the services of other persons are also product. For example TV, computer, watch, food, house and Taxi driver's services are also products which we can purchase and satisfy our needs.

Following are the seven stages or steps in development of a new product

Ist stage

Idea generation

Idea generation is the first stage of product development. For developing a product, company takes the idea from his internal and external sources.

internal sources of idea generation

a) basic research on google b) idea from production department c) sales men's idea d) top management's idea

external sources of idea generation

a) business magazine b) competitors c) necessity of consumers c) inventor's idea


Idea should be helpful for satisfying consumer's need, other wise drop the idea. For taking second step ask from yourself, is it worth considering - if yes, then take second step

2nd Stage

Idea Screening

It is the second stage or step of development of new product. After collecting large number of idea for making new product, company will analyze them with his technical screening system or team and drop bad idea. Idea screening is helpful

a) to reduce the chance of development of product on the basis of poor idea.

b) to reduce the chance of not developing the product on the basis of very good idea.


Technical base of idea screening

Company can enumerate his employees to make check list for idea screening.

value of idea

basis of screening

good idea - should be selected

bad idea - should not be selected

3rd Stage

Laboratory Test

This is the third stage of development of new product. In this step, we test the product's development with in company before actual launch in the market for following purpose.

a) To know

whether our buyer will buy it or not?

b) To know

whether it will be suitable for consumer according to their need of product?

* Company can also use computer for lab testing.

4th Stage

Marketing strategy development

In this stage, company makes following planning for good product development

a) first year market budget - cost

b) estimate first year profit

c) value of sales and profit after one year.

5th Stage

Business Analysis

This is the fifth stage of development of new product. In this stage, company calculate his overall return on investment, if company will launch the product. If it is profitable, company will produce it otherwise, drop his plan because company's money is not money of one man or employee but this money is invested by large number of investors. So, board of directors can not waste it by unprofitable production of new product. For calculating this, they will analyze

a) demand b) cost c) profitability

6th Stage

Actual Product development

After this, company's R and D department produces one or two sample of products and check it.

7th Stage

Market Test

In this step or stage, company launches product in very small part of market as market test and for knowing the interest of consumers, dealers and retailers. If consumers' reaction are good, company will take the next action.

8th Stage


In this step, company manages large scale production, marketing and commercialization of new product with following marketing strategy.

a) when to produce - fix the time

b) where to produce - fix the geography

c) to whom to sell - target marketing strategy

d) How  - Brand Strategy.

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