Learning objective

This component aims to present you a detailed process for better managing the new product development process. Although several methods are discussed the most popular which is the stage-gate process with all its success factors is described in detail. Readers will get an insight into how companies manage to successfully introduce new products and services to the market by following New Product Development (NPD) processes.
After reading the component you will be aware of:

  • The importance of following an NPD process
  • The necessary steps to implement the stage-gate process and the success factors of each step
  • How an NDP process can support you to minimise risks and maximise profits.

The estimated time to go through this module is about 30 minutes.

Introduction

All business organisations face the challenge of innovation. Their survival and growth depends upon their capacity to renew what they offer the world (product/service innovation) and the ways in which they create and deliver that offering (process innovation).1 New products are critical to successful growth and increased profitability for most Small and Medium Enterprises (SMEs). As most European SMEs don’t have a typical R&D (Research and development) department, SMEs who play and win the innovation game, not only sustain themselves in their sector but also tend to distinguish themselves as market leaders.

Basic marketing theory suggests that all products have a life cycle consisting of introduction, growth, maturity, and decline. In the maturity or decline stage it is vital that an organisation consider:

  1. expanding the product line to extend the life cycle
  2. or redesigning the product to maintain its competitive superiority
  3. or developing a new product to maintain revenue and profitability.

There are rewards for successful innovation and punishment for failing to innovate. But the new product development process must be managed properly so that the risks are minimised and profits are maximised. This text is designed to help you understand the NPD methods necessary to introduce successful new products.

 


1 Tidd, J., J. Bessant, and K. Pavitt, 2001

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