Organizations must develop new products and services. A company can obtain new products in two ways. One is through acquisition- by buying a whole company, a patent, or a license to produce someone else’s product. The other is through new product development in the company’s own research and development department. Their current products face limited life spans and must be replaced by newer products. But new products can fail- the risks of innovation are as great as the rewards. The key to successful innovation lies in a total company effort, strong planning, and a systematic new product development process.
The new product development process consists
of eight stages: idea generation, idea screening, concept development and
testing, marketing strategy development, business analysis, product
development, test marketing and commercialization. The purpose of each stage is
to decide whether the idea should be further developed or dropped. The company
wants to minimize the chances of poor ideas moving forward and good ideas being
rejected.