Process of developing a new product or service for the market. This type of development is considered the preliminary step in product or service development and involves a number of steps that must be completed before the product can be introduced to the market. New product development may be done to develop an item to compete with a particular product/service or may be done to improve an already established product. New product development is essential to any business that must keep up with market trends and changes.
McCarthy
& Perreault: Competition is strong and dynamic in most markets. So it is
essential for a firm to keep developing new products as well as modifying its
current products to meet changing customer needs and competitors actions.
New Product development is
important because of the following reasons:
a)
Fulfill customer’s new demand. B) Increase consumer satisfaction, c) To
maintain customer’s loyalty, d) To increase sales, e) To increase profit, f)
Cross selling, g) Survival of the firm, h) Technological development, I) To
face competition, j) To buildup goodwill and image of the organizations, k) To
bring product diversification, l) Maximum utilization of energy and resources,
m) To utilize market opportunity, n) Reduce investment risk, o) Creating new
prospect of the product.( Example: Sony Trinitron flat screen T.V. or General
Air conditioner, To sale Histacin Jayson Pharmaceuticals earn more profit from
the market.