PRODUCT+DESIGN+and+DEVELOPMENT

__** NEW PRODUCT DEVELOPMENT **__
====Thousands of new products are introduced by businesses each year. Only a limited number are "new to the world." New-to-the-world products are being offered for the first time and have never been seen by consumers. When the first personal computer was introduced, it was new to the world, as was the first television set. New-to-the-world products often are widely publicized because they are innovative and unique. For example, the personal transporter is a two-wheeled mobile transportation device developed by Segway. It has been featured in various news articles on television and in magazines since its introduction in 2003.====

====Most new products are "new to the company." New-to-the-company products are offered for the first time by a company but are familiar to consumers. When Sony introduced its first cellular telephone and Handspring offered its first personal digital assistant (PDA), each of the products was a new model of already-existing technology familiar to many consumers.====

** New Product Success **
====The success rate for new products is low. As few as ten percent of new products introduced ever become profitable. The cost of new product development is high. It is not unusual for a company to invest several million dollars to develop a new product and bring it to market. Those millions are lost if the product is not successful. Companies search for ways to improve the chances of new product success.====

====Companies face increasing time pressures to develop and market new products. In the past, companies may have taken several years to study and plan for a new product introduction. Today, companies must complete new product development activities in well under a year. Otherwise, they will risk losing out to competitors who are able to get the new product to consumers much faster. Speed must be balanced with attention to quality. If consumers pruchase a new product and find it to be problematic, they will likely turn to a competitor for their next purchase. It is important for companies to follow a product development procedure that will result in a successful new product introduction in a timely fashion.====

** Product Development Procedure **
Product development is a complex process involving all aspects of a business. Once a product idea is developed, the company needs to determine if it can be produced. If production is possible, the company must gather the resources needed and develop financial and marketing plans. The company must then coordinate all of the activities and people involved.

A product development procedure should be in place to ensure that proper steps are coordinated and completed. The procedure should include checkpoints when the project is assessed. At those times, decisions are made whether to continue development or stop the process before additional time and resources are used. The major steps in the new product development procedure are:


 * 1. Generate Innovative Ideas.** New product ideas come from many sources. The two primary sources of ideas are research conducted by scientists and engineers within the company and input gathered from currect and prospective customers. Businesses can also study competitors' products to obtain new ideas.


 * 2. Develop a Product Concept.** Not all ideas become products. It may not always be possible to develop an actual product from the research of scientists or the needs of customers. Moving from an idea to an actual product requires a combination of creative planning and engineering planning.


 * 3. Create a Prototype.** When a product concept has been approved, a prototype or product model is created. Creation of a model allows the company to determine the actual design, materials, and production processes required. The prototype is tested to determine its quality and durability. It may be used in consumer research to determine customers' reactions to the new product.


 * 4. Prepare a Business Case.** Before going forward with production, a company needs adequate evidence that the product can be financially successful. Company experts in production, marketing, and finance must work together to prepare a business case. A business case is an objective analysis that determines if projected sales and profits justify the estimated expenses of the new product.


 * 5. Market Test the Product with Limited Production.** Prior to full-scale production, the company may market test the new product. The actual product is produced in limited quantities. The test run confirms the time and cost of production, and the production process is refined as necessary. The product is then offered for sale in a small market area. A market test helps to determine cusomer respose to the marketing mix, including the product's price.


 * 6. Complete Production and Marketing Planning**. Based on the market test, final production and marketing planning are completed. Personnel are prepared for full-scale production.


 * 7. Make a Final Production Decision.** The company uses all of the information collected to this point to decide whether to move forward with the product. While a great deal of information is available to aid in the decision, there is still some risk involved with any new product.


 * 8. Implement Full-Scale Production and Marketing.** If all planning and testing are successful and the production decision is positive, the company moves the product into its product line. Production and sales may be small at first. The company must be prepared to increase production and marketing efforts as the market grows and competition increases.

Each step of the process is important to the development of a successful new product. At the completion of each step, a company may assess the information gathered and make a decision to halt development. For example, the company may realize that it cannot produce the envisioned product at a cost below what customers are willing to pay. If a product successfully passes each step in the process, the chances of financial success are greater.