Product development may involve modification of an existing product or its presentation or formulation of an entirely new product that satisfies a newly defined customer want or market niche.


The first and foremost important step of new product development is idea generation because idea is the heart any new product. Later this idea will result into completely new product or modified product. There exist different sources and techniques of idea generation. Let’s see various sources of idea generation

  • Internal Sources: sales personnel, marketing personnel, research and development personnel, top management, executives of production & purchase department, customer service department, employee suggestion system
  • External Sources: customers, competitors, foreign products, consultants, advertising agencies, researchers & inventors, distribution channels.

Methods or techniques of Idea Generation:

1. Attribute Listing: In this method, major attributes of existing product are listed out and an attempt is made to modify the product in various ways, may be by adding special features in present product. Eg: Samsung camera with mobile, Television cum computer with internet, toothpaste for decay prevention or removal of sensitivity.

2. Morphological Analysis: here such ideas are generated which are likely to be appreciated by the customers. Eg: Eco friendly crackers, vacuum cleaner that decreases pollution, zero bacteria water or water purifier that maintains health, Cholesterol free oil.

3. Problem Analysis: Idea regarding new product can be generated by analysing or studying the problems of customers & present products. Eg: Roller luggage bag, folding umbrella, water bag with straw, paper soap for travelling, multi coloured ball pen

4. Related products: Such product can be planned that are related to the main or original products for instance, TV and TV cabinet, Shoes & Shocks

5. Brainstorming: This method was proposed by Alex Osborn 1938 in which a group is supposed to think & suggest as many ideas as possible regarding product or solution to a problem. Brainstorming helps in generating new ideas by stimulating group creativity.


The main objective of this step is to reduce the number or list of ideas generated in previous step. Each idea is properly evaluated to accept good / quality idea and drop bad one. This step is concerned with quality of idea not quantity. Idea screening ensures the removal of following two errors. (i.e) Drop error and Go error

  • Drop Error: it is an error in which good or quality idea is dropped
  • Go Error: It means a producer picks up bad idea.

All generated ideas are properly screened or evaluated on the basis of following criteria.

  • Market Criteria: It includes market size, market share, growth, positioning, and distribution
  • Product Criteria: newness of product, technical feasibility, organization support, service requirement, legal consideration
  • Financial Criteria: Profitability, return on investment, cash flow


Concept development means to convert product idea into product concept because customers are interested in buying product concept instead of product idea. For product concept few questions are to be answered such as…..

  • Who is to use the product?
  • What is primary benefit?
  • What is primary occasion for the use?

Eg: idea is to prepare snacks – product concept a tasty mid day snack for children, idea to prepare vitamin supplements – product concept healthy or vitamin supplement for elderly people at night, nutritive powder – Cadbury bourn vita,  manufacturing of medicine is an idea, but medicine for diabetic patients is product concept.

  • Concept testing: Having developed concept, concept testing must be customer oriented. Customers are called upon to give their comments, reactions & opinions about the product concept. Their opinions are obtained directly or through questionnaire.
  • Concept positioning: Concept positioning is determined after taking into consideration competitor’s product concept. Eg: Soap for health protection against the beauty soap, toothpaste for whitening teeth or decay prevention against sensitivity relief (Launching the new product having distinct features quite different from the competitor’s product)


In this stage, a firm plans out its market strategy such as product, pricing, distribution and sales strategy.


Business analysis means an in depth evaluation of product concept in order to determine its financial competitiveness, manufacturing and marketing viability in a given set of business environment. Business analysis includes market potential, market demand, estimating sales, cost and profit for the future period.

  • Market Potential: Estimating opportunity to grow or expecting future market growth
  • Market demand: Estimating market demand becomes possible or easy if similar product is already available in the market, customer base, sales history and current demand
  • Estimating sale: sales can be estimated from survey, sales history of similar product
  • Estimating cost & profit: taking into account development cost (product development, market research, manufacturing cost), allocated over head (cost of executive salaries, electricity), expected profit and revenue.


At this stage the idea is converted into physical product as per the consumer specification received from previous stages. The whole product development stage is divided into following jobs.

  • Engineering: It involves product drawing, designs, sample preparation, laboratory testing and so on. It also includes checking & rechecking of sample with consumer specification. This is the technical job carried out at workshop or research & development or laboratory.
  • Branding: The brand always signifies usefulness or characteristics of product. Eg: Taja Tea, Airwick room freshener, Lijjat papad. Selection of brand name is considered as an important matter at this stage
  • Packaging: There should be proper & suitable packing for new product. Safety, simplicity, maintenance, storage, transportation, advertisement & attractiveness should be considered. Size, colour, packaging, weight or designs are also important matters.


On trial bases a product is launched under normal marketing conditions to get consumers’ & dealers’ reaction so that necessary changes in the product or other aspects of marketing mix can be changed before introducing the product on large scales sales. Such pretesting of product before it is produced and marketed on large scale is called test marketing / market testing.


Market testing provides enough information about whether to launch the new product or not. All previous decisions are given final touch such as quality, features, packaging, sales department, sales promotion, distribution channel. Finally a company goes for large scale production of new product.


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