7 Stages of New Product Development (NPD) Process

New Product Development- Converting Ideas into Products

Sitting in the balcony all by yourself, sipping your favorite cappuccino, and all of a sudden when you least expected it, you experience an epiphany! That is the exact moment when you suddenly discover the idea for your New Product Development project.

What follows next is the adrenaline rush to get started right away and convert that idea into a real product.

Looks relatable?

But the journey to a successful product launch must pass through a bunch of milestones: Feasibility study, contemplating the user needs your product will solve, prioritizing those requirements, planning, prototyping, designing, getting it functional, testing, fixing bugs, and finally launching it.

And then, of course, marketing it.

This is exactly what Soaq did! The team discovered that there was a space for an intelligent video platform that would collect & distribute videos smartly in an organization.

When they came to us, they wanted to build a system that stirred engagement, communication, and collaboration across the organizational hierarchy using the video platform as an anchor.

Together, we built a product with a powerful recommendation engine, flexible access, permission system, dynamic filters, and a lot more with a tracking system that fed data back into the recommendation engine. The more an organization uses Soaq, the better it becomes for them.

So, is your innovative idea worth bringing into reality? If yes, then our expert analysis into the entire concept can surely add a cherry on the cake.

What is Product Development?

Product Development can be defined as a pre-arranged process of transforming an idea into commercializable product offering. The major highlight of the process is its alignment with changing customer needs and technological disruptions.

Sometimes, organizations mistake Product Development for traditional application development. But, it is not true! This webinar is a boon when new to building world-class products.

Webinar Retain and Engage Your Customers Through Personalization

However, there’s a new buzzword doing the rounds in the market:
New Product Development

Before diving deeper, let us first learn how Product Development and new Product Development differ from each other.

Product Development is the broader term that incorporates the complete process of ideating, designing, developing, and launching new products or already existing products to gain a competitive advantage in the market.

Whereas, New Product Development (NPD) is about introducing a unique and out-of-box idea and launching it in the market.

We can say that the new product is about taking advantage of the white space in the market and launching a solution that is entirely new.

In other words, Product Development is about iterating & improving new and existing products while New Product Development focuses on innovation. It is about your crazy idea that might look impossible at first and transforming the 7P marketing mix to 7N.

converting 7P of marketing into 7N of Product Development

And, when these ideas are no more just ideas but living realities – the gigantic opportunities that they tag along are worth a mention.

Be it a competitive edge, replacing traditional products, bringing a significant return on investment, or even winning an award for innovation; nothing can stop you from triggering disruption.

And, you’ll be like:

But there is a catch here! The idea should not only look enticing to you as a businessman, it should actually solve a user problem to a degree that they will flock to using your product.

You should be able to answer the million-dollar question asked by the user: What’s in it for me?

Once you figure it out, the next question that pops up is: What are the stages involved in building a new product?

What Is the New Product Development Life-cycle?

The New Product Development lifecycle takes you along a journey that will make your every effort count. Needless to mention, every stage of this Product Development takes you one step ahead towards the envisioned goal.

Listing the 7 stages of new product development

Stage 1: Idea Generation — Managing the fuzzy front end of the development process

The best way to have a good idea is to have a lot of ideas.
~ Linus Pauling

Your goal should be to generate a lot of worthy ideas that can form the foundation for your New Product Development endeavors. The major part of this stage should be to give significance to brainstorming sessions where innovation is the end product.

This phase is not about generating fool-proof ideas that are ready for implementation. Instead, raw and unproven ideas should be more of a thing here.

Here’s how you can do that.

Step 1: Emphasize on the user problem the product would want to solve

Because the problem that is well thought off is a problem half-solved. To help you figure out, here is the best way to discover what problem should your business be focusing on:

Personal Problems: If you are facing a problem it is likely that others may be facing it too. All you need to do is focus on that one problem and build a solution that can be tagged as “one for all.”

To gain expertise in this area, you need to understand the human story behind digital offerings. This interview excerpt by Meena Kothandaraman could give you a fair understanding of user behaviors and building products that fits into their world.

Jeff Lawson, the founder of Twilio, has an interesting story behind the launch of their communication-based software product.

He was associated with three business companies in the past, and all of them lacked one thing: Productivity

When he was driven to start again with something of his own, he knew that he needed something to cover up the communication gap that is the biggest hurdle towards the path to productivity.

That is when Twilio happened. The product building and launching had its ups and downs, but it was his own conviction to having needed this product that led to making up for a great business idea.

Here’s an inspiring extract of his speech from the Web Summit.

Step 2: Qualify Each of the Listed Problems

This step helps check the feasibility of the shortlisted problems and the solution based on the 4U approach by Michael Skok, the founder of Startup Secrets. The 4U stands for:

The 4U approach for qualifying each of the listed problems

Let’s move on by discussing each of the aspects in detail.

  • Unworkable: Figure out whether the software product will actually address some real problems. Will the product be able to solve the inefficiencies faced by businesses and will it be able to save people’s time and save them from getting fired? If the answer is YES, you are good to go.
  • Unavoidable: Is the problem that you are working on unavoidable to the extent that it becomes mandatory to comply? You need to find out whether solving that problem is a choice or a compulsion? If the answer is YES, moving on will be a good decision.
  • Urgent: Is the problem so urgent that it needs to get a solution on a priority basis? If the answer is YES, you know that the product in mind would be a success for sure.
  • Undeserved: Are there no valid solutions for the problem in question? If the answer is YES, you know that it is a great opportunity to innovate.

Step 3: Coming Up With Possible Solutions

You have a problem, it’s time to look for possible solutions. For every user problem, there ought to possible New Product Development opportunities.

Here’s the workflow that starts from a problem and ends up with a much-needed solution.

Every problem is equal to a viable solution

Just keep in mind: Your solution should stand out. And, this is possible when the market is researched thoroughly for similar solutions. If something like that exists, make sure that your idea of doing things is unique and can solve problems differently.

Only then will your product be accepted which will lead to success down the line.

Example: AWS Lambda has topped the list of G2 Awards for 2019, both for the fall and summer. This proves that innovation and uniqueness do get a noteworthy response. And, with competitors like Google Cloud Functions, AWS Lambda is still ahead in the race.

All because of its unique business model!

Proof that AWS Lambda won the best product award by G2

Step 4: Narrowing Down Problems + Solutions

Put each of the ideas on a piece of paper and make two columns. List the problems in one of the columns and solutions on the other. Contemplate on each of the ideas and you should be able to figure out what scores best in terms of uniqueness and innovation.

You could try something like this:

template for mapping problems with viable solutions

However, there is no hard and fast rule that the Product Development team hits the nail on the first go.

In that case, the Replicate, Re-Purpose, and Upgrade approach is very helpful.

Replicate: A business can form its ground on an already existing business model in the initial phases. The trick that would make it work is to introduce the software product in the new market conditions. And when things get kick-started in the right direction, expand the business by introducing out-of-the-box features.
Re-Purpose: This focuses on adopting an already existing business model but with a twist. For example, LinkedIn introduced LinkedIn Learning, an e-learning platform for professionals, similar to e-learning platform for students, but with a different target audience.
Upgrading: This concept revolves around introducing a new business model that is better in one way or the other from existing solutions. It could be improved performance, better speed, addressing the challenges that a competitor is facing, or introducing some added functionalities.

Stage 2: Idea Screening — Trim down the potential shortlisted ideas

Do not forget that not everything is worth hanging onto. No matter how attached you are to a business idea, giving it up can sometimes be the best decision. This stage is exactly about that: giving up on several ideas and choosing the one that has the highest potential of success.

The process is quite simple: Put all the ideas available on the table for internal review, i.e., turn to people with industry knowledge and experience in the field.

Idea Screening: Conducting Internal Review

An important thing to remember here is to be very patient. Similarly, do not fend away criticism just because your heart says that you are on the right track. Opinions from experts are related to their understanding and knowledge through the years and you need to give them their due weight. Also, remember to be respectful and thankful to those who agree to help you.

Another great idea screening strategy, used by many experts is the tried & tested, much-revered approach of doing a SWOT ( Strengths, Weaknesses, Opportunities, and Threat) Analysis.

Here the team does a detailed analysis of the idea so that they can shortlist an idea where strengths and opportunities overpower threats and weaknesses.

Conducting a SWOT is fairly simple, and you need a simple 2×2 grid to get started:

SWOT Analysis Template

However you arrive at the final idea you want to pursue further, do not lose sight of the fact that it should provide something unique to stand out from its competition, be approved by all the stakeholders, and should deserve your time, effort, and investment.

In short, people should be eagerly ready to pay for the idea.

Stage 3: Concept Development & Testing — Structure the idea to showcase a broader picture

Your team has generated an idea. It looks promising. It looks wonderful. It looks incredible. Here comes the but.

Before you start getting excited about the New Product Development process, developing a detailed concept and testing it with the target group is a good, rather recommended practice.

This ensures that the need for the product actually exists and would solve the most highlighted problem of the customers. It is time to test all those assumptions, hypotheses, and expert opinions in the field.

At the very least, it ensures that you discover problems in your approach sooner and are able to course-correct earlier. That saves you both time and money.

Poor product equals to startup idea failure

And when you see all is well, it forms not only a great confidence boost to the team, it acts as a strong data point to potential investors and allies.


So, how do you do this?

You try and identify whether or not the product is needed by building a value proposition for your new software product so that it can be tested with the target groups.

The easy-to-follow concept development steps include:

Step 1: Figuring Out the Gain/Pain Ratio

At this point, you need to create an insightful picture of the product from the user’s perspective. This can be achieved by calculating the gain/pain ratio, which helps in understanding:

Gain = Benefits of the product for the customer, and

Pain = The efforts made by the customer to understand the product

The Pain/Gain Ratio as part of concept development and testing

Step 2: Conducting a Competitor Analysis

Knowing about existing market players is a critical strategic step you should not avoid. When you understand the competition, it becomes easier to infer:

  • Where the competitor lacks
  • Where there is scope for improvement
  • What can you do to make your product a game-changer

Yes, that is the buzzword you need to stick to: Game Changer

Step 3: Enlisting the Major Product Features

The feature-set embedded in the software product will make or break your business. When creating a list of such features, it is imperative to know:

How is it an out-of-box feature and how is it going to make a difference?

For example, when HubSpot built their CRM, they looked at all the key features of popular CRM software and their major feature set was an essential tools list.

Unique feature set of Hubspot

Step 4: Create a Value Proposition Chart

Even when you are convinced with the wisdom & the utility of your idea, being able to state it clearly to the end-user, in their context is quite a different story altogether. You have to give a clear picture of what the new software product is capable of doing along with helping your customers understand your vision.

This clean & presentable fashion can be best represented in the form of a value proposition chart. The format of which should include:

Value proposition chart as part of concept development and testing

Step 5: Concept Testing

Once the value proposition is ready, it is time to present it to the set of selected customers. How they perceive the idea is the test of your efforts so far. Because, if they disapprove of the idea, clearly you are doing something wrong.

And if you do decide to proceed anyway, chances of failure become manifold. So it is a safer idea to test the concept with the targeted group before putting your blood and sweat into the New Product Development process.

You can get very good insight by focusing on just 4 critical aspects:

  • Identification: Of the segments of the audience who would benefit from the product in transit.
  • Assessment: Of other alternatives that the customers are more likely to be interested in.
  • Development: Of a foolproof plan for the New Product Development right from features, marketing, pricing, and distribution.
  • Positioning: Of the product’s unique features into your customers’ minds as the more eager they are, the more chances of success in the first go.

The concept testing report would look something like this:

Template of concept testing report

Stage 4: Market Strategy/Business Analysis — Painting the complete picture of the product

Marketing strategy is all about drafting a way to reach out to the targeted audience.

Perhaps the best and most straightforward method is to just follow McCarthy’s 4Ps of marketing.

McCarthy's 4Ps of Marketing

Business analysis will help you decide whether the New Product Development efforts are worth the financial investment or not. That is, estimating the selling price and expected profits of the new software Product Development company.

For instance, when it comes to settling on a selling price, this is what you need to consider:

Step 1: Identify the Base Price of the Product

When you know how much would it take to develop the product from your end, chalking out the selling price and the profit expectations become easy. The best way to identify the base price is:

a) Cost-Based Pricing Model: Here, the initial production cost is added to the markup percentage to come up with the final price you would quote for the software product.

Cost-Plus pricing for estimating product cost

Hypothetical pricing analysis:

Production cost = Technology cost + development cost + licensing cost = $100
Price =$150

Also, if your business analysis team applies the “psychological price trick,” i.e., ending the final price with 5 or 9 digit number, chances of success are expected to increase.

Applying the above-said rule, the most attractive price of the product would be $149.99

b) Market-Focused Pricing: This pricing is inferred after a thorough analysis of the pricing model of similar software products in the market.

The market-oriented pricing follows the following trajectory.

Market-Oriented pricing for estimating product cost

The factors to consider when selecting a competitive price:

  • Price above market: A higher price is suitable when the software product is better than what already exists, has a great demand, performs better, is faster, or has a higher quality.
  • Copy market: Selling the software product at the same price as your competitors can be a safer move in the initial launch days.
  • Price below market: A lower price bracket than your competitor could be beneficial as it could be your best chance of creating a promising market for the product.

Following this strategy, it is the wisdom of the business on how they want the price of their product – lower or higher than their competitors.

Stage 5: Product Development — Transforming ideas into reality

When the New Product Development idea is in place, the market strategy is already documented, and business analysis is completed; next comes creating a beta version or a prototype and then testing it in an internal environment.

Embed the most promising features in the product when building a prototype so that its feasibility, appeal, and acceptance can be checked. So, if you get the positive vibes from the feedback on the prototype built, a go-ahead for the actual development should be the next step.

But, that is not it! Your organization has another key decision in the line:

What software Product Development methodology should you be adopting? When there are dozens of options to choose from, it is natural to be confused.

Important Software Product Development Methodologies

As we said, there is a myriad of software Product Development methodologies that are followed by a greater number of teams and organizations. However, we will focus on the two most important Product Development methodologies that you will inevitably gravitate towards. Eventually, chances are you will use a variation of one of these.

1. Waterfall: Though a traditional approach, many organizations still follow the waterfall approach when developing products. It is also known as a sequential life cycle model as it moves on to the next step only when the previous step gets completed.

The life cycle of a waterfall model looks something like this:

Steps of a waterfall development process

So, when do you use the waterfall model of development?

  • Your project is small.
  • Good documention is mandatory.
  • You want to minimise time learning the methodology.
  • Managing dependencies is utmost important.

2. Agile: This is the better and newer way of software product development that is gaining momentum for its iterative nature. It follows a continuous development trajectory where small milestones are achieved in small, self-contained production cycles.

The best part of an Agile Transformation is that it allows transparency when it comes to maintaining a flow of communication across different levels of the organization.

The life cycle of the agile model looks something like this:

Steps included in the agile development process

When do you use the agile model of development?

  • Multiple stakeholders are involved.
  • Faster & foolproof deliveries are needed.
  • Risk of failed development needs to be reduced.
  • Easy accommodation of changing requirements.

Both the Product Development methodologies are good in their respective ways, but if you ask us what would we prefer, the answer is: Agile Development.

It is a Software Development methodology that we proudly follow as it allows the development process to be divided into short term goals that are divided into Sprints.

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The advantage is that it speeds up the development process while maintaining communication and synchronization across the development teams.

In terms of Product Development, agile can be really helpful in building roadmaps that can track progress and maintain transparency throughout.

Here’s a product roadmap template you could refer to:

Agile Development- Product Roadmap Template

The brownie point is that there are available tools that can automate the development of such product roadmaps. Trello is one such tool that can actually be helpful.

Ideally, you should consult a Product Development partner to gain deeper insights and learn from their war stories of having built successful products using different methodologies.

Stage 6: Market Testing — To test the product’s effectiveness prior to getting launched

The objective of this stage is to reduce the uncertainty revolving around the success of the software product, i.e., checking the viability of the new product or its marketing campaign.

There are two market testing strategies to follow:

  • Alpha Testing: The test engineers deployed in the organization use and judge the product on the basis of performance. The test engineers do not only check the product’s performance but also map the marketing mix results with the product created. In case of any issues, the changes are planned and implemented before the final go-ahead.
  • Beta Testing: The target groups or customers use the product and give their unbiased feedback to the organization. It is about listening to the voice-of-customers, VOC. If any issues are reported, they are moved back to the development team for fixtures.

For better understanding, here is a comparison chart that will help you identify the role of alpha and beta testing for any New Product Development company.

Alpha and Beta testing: Comparison Chart

There is also a third form of market testing that is quite applicable to product validation. This market testing approach is called in-home usage test (IHUT). Here, the product developed is provided to intended customers, who will ultimately use the product.

These users should be allowed to use the product and then their feedback should be recorded. It is another successful way to test market the built product. If they will love the product, you are good to go. On the other hand, if dissatisfaction is reported, you can always ask what made them not like it.

Stage 7: Market Entry/Commercialization — Getting the fully-fledged product in the market

Commercialization is an umbrella term that entails varied strategies required to make the software product a hit. Here is a complete demonstration:

What all does commercialization include

If all the mentioned strategies fall right in place, nothing can stop your product from getting the attention it deserves.

Taken that yours is a completely new product in the market, sometimes marketing strategies fall off the track. This is because businesses find it tricky to hit the right cord when trying to stirring likeability for the product.

There is one trick here that will work in your favor: Being a thought leader to put the concept of the software product in the customer’s mind.

Here are some must-do marketing activities that will help you gain traction:

a. Marketing the Concept Over Product

The idea here is simple: try and create an emotional connect with the target group by making them realize that they need their software products to solve their business problem.

Here’s an example:

When Hubspot, a marketer’s product got launched, it was not much of a success. Sadly, people did not understand the intent of the now successful product.

So, what did they do?

They chose to market their unique selling point instead of marketing and promoting the entire product. And, their unique selling point was “inbound marketing.”

They started to create awareness around it and instantly became a recognized leader in the software product industry.

b. Do not Give a Miss to the UX Design

You have an amazing software product, but to make it look amazing to the audience, you need to go the extra mile. That is, create a UX experience that is both user-friendly and attractive.

The fact is:

No matter how great your product is, people will leave the website if their needs are not fulfilled. Here’s the proof.

How bad UX can lead to product failure-Stat

Also, maintain clean navigation and a sitemap that reflects intuitiveness. If looking for motivation, look at how your competition is working on their UX design and also keep a track of the latest UX design trends in the market.

Here is a free ebook that helps in understanding the process of making good User Experience (UX) decisions that improve the overall customer experience (CX) of your product.

How to make good UX decisions to build great CX

c. Having an Outstanding Brand Voice

A unique mindset and a unique voice always have an all-ears audience. This is where your marketing team plays a significant role. They need to establish an effective communication style that represents the brand in the best manner.

Be it be blogs, emails, or even the website content; all of these elements need to be taken care of. In the end, the words should hold the power to stir the interest of the target audience in the organization’s favor.

For reference, you can glance through Mailchimp’s Content style guide to make a lasting experience.

d. Conducting Interesting Webinars

Webinars are one way to attract quality leads. But, what you talk about in these webinars matters. You need to understand:

There is one thing about effective marketing- it only works when you talk about the benefit of the people and not when you endlessly boast about the product

A pro-tip; start the conversations by talking about the user problem first and then move on to introduce the solution. In short, you need to implement storytelling and engage your audience in the best possible manner.

Benefits of Following the Software Development Process

One line answer to why the systematic Software Development process will benefit your organization:

To reduce the chances of failure in this highly competitive landscape.

Let us look at some benefits of following a formal process for building new products.

Listing the benefits of following the new product development process


This was all about New Product Development in the software arena! If you have that hunger to create something new and to be recognized among the top players, this is your chance! Get connected with an experienced custom software development company to embark upon a New Product Development journey.

Your motto should be: Try new things. Experiment. Mess Up. Start Over.

But, never stop innovating and never let anything hold you back!

Just remember to stick to the four pillars of new product creation:

  • Ability to create new ideas
  • Knowledge of the team
  • Determination
  • Ability to take risks

To end it on a positive note, here’s a quote by Steve Jobs.

“The people who are crazy enough to think that they can change the world are the ones who do.”

So, what are you planning to bring to the market next?

Get a new product developed with Net Solutions

Satinder Singh

About the Author

Satinder Singh works as an Associate Project Manager at Net Solutions for the past nine years. His abundant knowledge and ability to drill down the details makes him a perfect person for the job. Being a constant part of the organization, Satinder has also been an active organizer of various events and CSR activities.

Leave a Comment

  • Pingback: Scaled Agile Framework (SAFe) for Enterprise-Level Product Development

  • Antz

    12:23 PM, May 17, 2020

    Really good stuff

    suresh k panchbhai

    4:24 PM, Feb 18, 2020

    good one explained nicely.

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