This Product Development Process document describes the process of bringing a new
product or service to the market. It provides a template for a company to devise and
execute a successful product development plan. Some of the topics covered include:
generating the idea, gauging the market, measuring the investment, engineering the
product, and launching the new product. This document provides a helpful tool to any
company or business that is launching a new product.
[Product Name] Product Development Process
[Product Name]
[Product Development Manager Name]
[Product development is an ongoing process required by all types of companies, from companies based
in innovation, to service, to infrastructure. There is no single process for new product
development, no tried and true method that works for everyone. There are concepts however
that benefit a company, and fundamentals of business that need to be considered in the
product development process. Utilizing this template as an exercise, it will help you to start a
process, or review a product along a methodology, but there is no guarantee for success.]
© Copyright 2013 Docstoc Inc. 2
[Product Name] New Product Development Process
Understanding your Business
Business Definition
[Begin by defining your business. What is it that you do, what is your core mission to accomplish in
business? This may come from marketing statements, or it may come from executive vision and mission
statements. Consider how your company is positioned within your industry: does it deliver products
vertically within an industry silo, or deliver services horizontally across industries?]
Industry Drivers
[Note the industry drivers. What are customers asking for, what is on the horizon that customers are
not yet asking for? What industry trends are presenting themselves, and what is research reporting,
either academic or consultant based? Consider your own products and how they meet current industry
needs. Are there opportunities to evolve a product, redesign a product, or replace a product with a new
design? Look at competitors: can your company do what they do cheaper, more efficiently, or if it is
worth going head-to-head with competitors on a product?]
New Product Development
Generating the Idea
[Generating the idea is the most challenging area. Brainstorming has always been a recommended
option, however often times with product managers so entrenched in what they do, it may be difficult
to be creative. Consider requesting ideas from across the organization, from support staff to production
staff. Roll the ideas together and create a special cross-functional team to review the ideas. Consider
ideas both within the existing product portfolio, or ideas where existing or slightly modified products
can be used in other industries.
Anecdote: An excellent example of this comes from the California power outages of early 21st century.
Fuel prices were low and rail transport was looking for ways for greater revenue. Jumping across
industries they negotiated using unused engines as generators of power aiding utilities in addressing the
power constraints.
Based on the cross-functional teams’ review, create a short-list of ideas to evaluate. The next tasks may
be performed simultaneously or sequentially, however they should be performed by members of your
company specialized in the tasks.]
Gauging the Market
[Purchase or perform your own market assessment. What is happening in the industry, what drivers are
present? What is the justification for the company to take on the risk of producing a new product?
Assess the market value and project sales for the next 5-10 years. Look at what the market penetration
© Copyright 2013 Docstoc Inc. 3
would have to be to be successful: will existing customers find value in the new product, or will new
customers have to be pursued? Does the new product cannibalize existing sales, or represent new sales
opportunities? Understand the cost of marketing and selling the product to: what is the optimal price
point?]
Measuring the Investment
[Every new product requires a financial investment, representing risk. What has to be measured is how
quickly will the risk be overcome by the return on the investment; how many years before profitability?
The financial team will have to evaluate not only the project sales, but research and development, and
production costs too. How much will prototypes and development cost? Is it optimal to outsource the
development to another company, or have another company prototype the new product? Is
manufacturing or production of the product best done externally or internally? Are capital investments
necessary to upgrade production facilities to accommodate the new products? There are many financial
questions to be answered, but once they are, spreadsheets can become powerful tools to understand
the financial viability of the new product.]
Engineering the Product
[Even though marketing and finances may be determined for the new product, engineering the product
may be the most important component. An idea may be great, however if engineering the product
costs too much or the product cannot be manufactured at a price lower than what the market can bear,
then it may not be financially viable. Consider the costs of raw materials, manufacturing and shipping.
Are there further costs of ongoing support, installation and configuration? Do these represent
additional areas of income, or cost only?]
Launching the New Product
Referenced Article: Project Management Plan
[With an understanding of the market, investment and engineering of the new product, now it’s time to
execute the plans. Whether execution is performed as a project, or performed ad hoc, it is important to
stick to the fundamental research that was originally performed in the development stages. It’s
important to avoid scope creep, which is the continual modification of requirements to meet ever
changing expectations. This scenario has failed many companies who forwent the incremental value of
new products brought to market and then further refined. If you await the perfect product, you may
quickly find yourself reacting to competitors who have taken the lead. New product development
should be an ongoing process too, regularly scheduled as part of the corporate calendar. And new
product development is a skill that with practice can be refined and improved organizationally. With a
regularly scheduled process, involvement from diverse parts of the organization, and constant lookout
for new ideas, your organization will remain much more healthy than otherwise.]
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