NEW PRODUCT DEVELOPMENT In business and engineering, new product development (NPD) is the complete process of bringing a new

product to market. A product is a set of benefits offered for exchange and can be tangible (that is, something physical you can touch) or intangible (like a service, experience, or belief). There are two parallel paths involved in the NPD process: one involves the idea generation, product design and detail engineering; the other involves market research and marketing analysis. Companies typically see new product development as the first stage in generating and commercializing new product within the overall strategic process of product life cycle management used to maintain or grow their market share. THERE ARE EIGHT STAGES IN PROJECT DEVELOPMENT 1. Idea Generation is often called the "fuzzy front end" of the NPD process[1].

Ideas for new products can be obtained from basic research using a SWOT analysis (Strengths, Weaknesses, Opportunities & Threats). Market and consumer trends, company's R&D department, competitors, focus groups, employees, salespeople, corporate spies, trade shows, or ethnographic discovery methods (searching for user patterns and habits) may also be used to get an insight into new product lines or product features.

Lots of ideas are generated about the new product. Out of these ideas many are implemented. The ideas are generated in many forms. Many reasons are responsible for generation of an idea.

Idea Generation or Brainstorming of new product, service, or store concepts - idea generation techniques can begin when you have done your OPPORTUNITY ANALYSIS to support your ideas in the Idea Screening

Phase (shown in the next development step). 2. Idea Screening

The object is to eliminate unsound concepts prior to devoting resources to them. The screeners should ask several questions:

Will the customer in the target market benefit from the product? What is the size and growth forecasts of the market segment / target market? What is the current or expected competitive pressure for the product idea?

What are the industry sales and market trends the product idea is based on? Is it technically feasible to manufacture the product? Will the product be profitable when manufactured and delivered to the

customer at the target price? 3. Concept Development and Testing

Develop the marketing and engineering details

Investigate intellectual property issues and search patent databases Who is the target market and who is the decision maker in the purchasing process? What product features must the product incorporate? What benefits will the product provide? How will consumers react to the product? How will the product be produced most cost effectively? Prove feasibility through virtual computer aided rendering and rapid prototyping What will it cost to produce it?

Testing the Concept by asking a number of prospective customers what

they think of the idea - usually via Choice Modelling. 4. Business Analysis

Estimate likely selling price based upon competition and customer feedback Estimate sales volume based upon size of market and such tools as the Fourt-Woodlock equation

Estimate profitability and break-even point 5. Beta Testing and Market Testing

Produce a physical prototype or mock-up Test the product (and its packaging) in typical usage situations Conduct focus group customer interviews or introduce at trade show Make adjustments where necessary Produce an initial run of the product and sell it in a test market area to

determine customer acceptance 6. Technical Implementation

New program initiation Finalize Quality management system Resource estimation

Requirement publication Publish technical communications such as data sheets Engineering operations planning Department scheduling Supplier collaboration Logistics plan Resource plan publication Program review and monitoring

Contingencies - what-if planning 7. Commercialization (often considered post-NPD) Launch the product Produce and place advertisements and other promotions Fill the distribution pipeline with product

Critical path analysis is most useful at this stage 8. New Product Pricing Impact of new product on the entire product portfolio Value Analysis (internal & external) Competition and alternative competitive technologies Differing value segments (price, value and need) Product Costs (fixed & variable) Forecast of unit volumes, revenue, and profit

NDP ORGANIZATIONS

Product Development and Management Association (PDMA) Association of International Product Marketing & Management ISPIM (The International Society for Professional Innovation Management) Society of Concurrent Product Development (SCPD)

NDP STRATEGIES

Design for six sigma Flexible product development Quality function deployment Phasegate model User-centered design

EXAMPLE: DEVELOPMENT OF A NEW FOOD PRODUCT 1. Researching the Prior Information The first step in developing a food product is researching any prior information about the product, the technology that will be used, the required raw materials, the food chemistry of and interactions between the proposed ingredients, and shelf life studies of the ingredients and the finished product. Also of interest is information about similar products, consumer preference studies and any additives that will be used. The FDC Library is the best food science and technology information resource in Manitoba. The Library is a critical resource for obtaining information quickly that is accurate, current, relevant, complete and unbiased. FDC consultants use the Library for conducting literature searches to find information on processes, patents and product formulations. The FDC Library holds a collection of and has access to specialized information for food science and technology and has publications about virtually all subject areas in food science and technology. FDC consultants obtain information on any regulations that must be complied with in developing the food product. Legislation that clients must adhere to includes product labelling, nutritional labelling, allowable additives, health claims, nutrient content claims, standards and food safety practices such as HACCP (hazard analysis critical control points) 2. Standardization of Ingredients Product development work in the laboratory is next. If the client already has some sort of formulation to base the product development on, the consultant performs a standardization of volume amounts indicated in the recipe to weight measurements for commercial quantities. Weight measurements are more accurate than volume measurements for large laboratory and pilot plant quantities, and thus are more reliably reproduced in successive product development trials and production lots. The consultant also observes and thoroughly documents the client preparation method and recipe for accurate recording and thus reliable and consistent reproduction. If the client has a product idea that is theoretically new, the consultant will discuss the product qualities and ingredients the client desires and product formulation will begin immediately.

3. Prototype Development Once a formulation has been developed, a prototype of the product is made, which the consultant evaluates for potentially problematic considerations. Difficulties may arise from the ingredients or the preparation method once the process is reproduced in the laboratory and the ingredients have been standardized to weight measurements. The consultant and the client troubleshoot the process and alter the ingredient type, quality, quantity or the preparation method in order to correct any problems.

4. Commercial Ingredients When developing a food product for commercial distribution, the processor uses commercial ingredients that are available at volume discounts for large quantities, which is more economical than retail purchase of ingredients in large volumes. Commercial ingredients are also more consistent in quality. The consultant helps the client to determine the need for preservatives, stabilizers and other additives in the product and will identify the most cost-efficient sources of commercial ingredients for the client. Using commercial ingredients, the client recipe is reformulated and is altered as required to achieve the intended quality or to improve it. Ingredient quantities and preparation method are approximated repeatedly in order to achieve a prototype that is satisfactory to the client. Ingredient interaction effects are monitored throughout and internal sensory evaluation tests are conducted. The product continues to be reformulated as needed and client approval of the final laboratory prototype is required. The consultant confirms with the Canadian Food Inspection Agency (CFIA) that regulations have been complied with concerning nutrient content claims, health claims and product requirements. 5. Volume Scale-Up Determining the readiness of the product for scale-up to pilot production of high volumes is next. The goal is to duplicate the taste, colour, texture, appearance and other physical and sensory properties of the product on a large scale, while maintaining economic viability of manufacturing the product. 6. Packaging Considerations Packaging materials for the end product are chosen in consultation with the client. The client is responsible for cost and aesthetic considerations, including marketability and image of the packaged product. The FDC consultant is responsible for evaluating practical parameters, such as safety, functionality, interaction between food and packaging material and stability of the packaged product. In choosing appropriate and desirable packaging, decisions must be made about the following parameters:

Glass or plastic jars or bottles Metal or plastic lids Pressure- or heat-sensitive seals in lids Tamper-proof strips over or around lids Light and moisture barrier Cellophane, foil or paper packaging Consumer convenience 7. Pilot Plant Trials: Once a prototype has been prepared, pilot scale trials are conducted for test marketing. Clients have access to the technology in the FDC pilot

plant so that purchasing their own equipment and facility is not an immediate expense. Equipment selection occurs and processing parameters are established. Decisions are made about whether a product will be processed by chilling, freezing, dehydration, canning, aseptic conditions, modified atmospheric conditions, pasteurizing or irradiation. Processing effects are determined and calibrated for in maintaining quality control of the product and process development. Effects on the raw materials of the processing time, temperature, agitation, pumping and other preparation are considered in ensuring process reproducibility and maintaining the product quality once scaled up to commercial quantities. Troubleshooting occurs, including adjustment of the product formula, processing conditions or equipment used as required. Client approval of the pilot-scale prototype is required before further work continues. 8. Shelf Life Testing Shelf life testing is conducted to determine the length of time that a food product will maintain its safety and quality. Shelf life varies according to packaging type and method, as well as storage conditions. Temperature, humidity and exposure to light must be controlled. The components of shelf life testing include assessing the physical, chemical, microbiological and sensory attributes of the product. 9. Product Label Labelling requirements must be considered in creating a product for commercial distribution. Requirements vary between countries. Basic label requirements in Canada include:

Common name of the product (for example "peanut butter" or "strawberry jam") Net quantity Name and address of the producer List of ingredients Durable life date Whether previously frozen Bilingual requirements Nutrition facts table Labelling of nutritional content is mandatory in Canada with some exceptions. Nutritional content labelling is mandatory in the U.S. Nutritional labelling can be conducted by chemical methods or by use of a database of known nutritional values. FDC performs nutritional labelling services. In Canada, the final product label must be approved by the CFIA. 10. Final Project Report When the work has been completed according to the agreed-upon contract, a final project report is created. The written report includes a detailed description of the research and development conducted. The product formulation is documented as well

as the processing conditions. Ingredient suppliers are noted and equipment recommendations are made. The results of the shelf life studies are included as well. Clients have the option to rent the FDC facility and equipment for further processing. After a period of production in the FDC pilot plant and developing a sound market for the product, clients are better able to decide on business considerations such as whether to construct their own facility, or to co-operate with a processor to make the product for them.