Most of us are familiar with the popular TV show, “Shark Tank.” People just like you and I present their innovative ideas to some of today’s most successful self-made billionaires in hopes of exchanging a percentage of their company for an investment in their product. For these hopeful entrepreneurs, a deal with one of the sharks could be the investment they need to grow their company.
But, how exactly do you come up with a new product idea that could land you on the next episode of Shark Tank? It’s actually not as complicated as you may think, but it takes a strong commitment to the process. There are no shortcuts if you want to avoid holding onto one of the many great ideas that never makes it to the development stage.
With rapid advances in technology and constant changes in consumer needs and wants the key lies in identifying a problem and creating an innovative solution, either through product or service.
How do you come up with new product ideas? New product ideas are generated as part of a process called New Product Development. It is process of bringing a new, original product idea to the market. This new idea may include one that have never been brought to the market before, or may be an idea that improves an existing product, modifying it to meet a new or changing consumer need.
Going back to the show, a recent episode highlighted two young parents presenting a problem to the sharks: their baby’s socks simply would not stay on her feet. They either fell off or were pulled off, time and again. And, talking to friends and other parents, they quickly realized that this was a problem that many parents shared.
So, they decided that they needed to come up with an innovative idea that would provide a solution for this problem. In this case, these young inventors turned entrepreneurs took an existing product and made it better, solving a problem that they themselves were experiencing, which is a great place to start when coming up with new product ideas.
With a solution in hand, this pair of inventors found themselves on a journey toward new product development, likely asking themselves, “what now?” As you continue reading, we’ll answer that question, and go through each of the steps that are part of the new product development process (Wikipedia contributors, 2019), focusing specifically on idea generation and how to get your ideas to stick. And, we’ll find out how solving a problem with baby socks led to the creation of a successful company.
The New Product Development Process
The new product development process is just that, a process. There are some very specific steps you’ll want to take to ensure that you do not waste time, and more importantly, money. While each phase takes work, the process is fairly structured and straightforward, and you don’t have to be part of a 10-person business team to find your own place in the market.
As long as you follow each step, make decisions that are customer-driven, and are prepared to make changes and adjustments based on your market research along the way, your innovative idea can turn you from an inventor to a successful entrepreneur.
The New Product Development Step One: Idea Generation
Idea generation at its most basic is where opportunities arise from ideas that are based on unmet customer needs. This stage is often referred to as part of the “fuzzy front end” (“Fuzzy Front End”, n.d.). It’s messy. There’s little structure and less direction. It might even be the hardest part. But, it includes all of the steps from the start of an idea to the creation of a concept. This “pre-development” stage is where good ideas are born.
Generating Ideas: Problem ? Solution
We’ve already mentioned one way to generate ideas: asking yourself how to fix a problem you currently experience. This is one of the most basic ways to come up with a new product idea.
Consider making a list of existing consumer problems, perhaps those that you struggle with, and jot them down. Don’t be afraid to ask friends, family, and neighbors, too. These ideas often provide a launch pad for further ideas that can create solutions for unmet customer needs. The key: think outside of the box and remember that often, one idea leads to another (or a better yet, a better idea).
Here are some other questions to ask yourself as you brainstorm for new product ideas:
- What would make people’s lives (and yours) easier?
- What changes can be made to existing products to make them better?
- What feedback have customers given for existing products that provide insight into customer needs and desires?
Going back to the earlier example on “Shark Tank” about baby socks, we can see that there was clearly a problem that lacked a solution in the market. The idea generation stage of the process required brainstorming and asking questions about how to create a product that would meet a customer need, while also ensuring that their idea for a solution did not already exist.
In this case, the fuzzy front end and idea generation process began with a problem and ended with an idea for solution: a sock that would not fall off and could not be pulled off by tiny toddler fingers. Thus came about a sock with dots on the inside cuff that would provide the solution they (and many other parents) were looking for.
One last crucial note here: don’t stray from your passions.
Think about products, ideas, and areas of the market that intrigue you and that you are passionate about.
If you are an avid camper, what new product ideas can you come up with that would make aspect of camping easier or more enjoyable? If you are an exercise enthusiast, how might you make an existing product better? If you are a parent or someone who loves to cook, consider all of the times that you might have said to yourself, “I wish something existed that would fix this problem.”
It’s in these moments that there is the most potential for the next great new product.
New Product Development Step Two: Idea Screening
Idea screening is still part of the fuzzy front end. While you want to believe that you have come up with the perfect idea for the next best thing, you’ll want to remember that your target market is who, ultimately, will decide if your idea is one they will spend money on.
“For every seven new product ideas developed, only one becomes successful.” – Robert G. Cooper, McMaster University & Product Development Institute
Only one in seven become successful? That’s a tough pill to swallow. Idea screening can be the most difficult stage, emotionally, of the new product development process as a whole. Why? Because you will need to find out from the people who will buy your product whether or not they are willing to spend money on your idea.
Once you identify your target market, including demographics, trends, and expectations, you’ll want to gain as much information as you can about what they want. This is called market research. You can do this in various ways, but here are a few ideas:
- Surveys and questionnaires
- Focus groups
- Personal interviews
- Social media
It is crucial to understand that as an inventor, you will likely fall in love with one or more of your ideas, and have a hard time letting go when someone tells you that your idea isn’t quite right. But, this is an important part of the process and can certainly make or break your success.
Remember, oftentimes, good ideas lead to better ideas. So, use your market research to your advantage. Rather than being afraid of changes (or all together throwing an idea and starting over), embrace your target audience as those who will lead you in the right direction.
Here is a list of criteria that will help you to evaluate your ideas (“Employment, S. B. and T.”, 2019):
- Is there a need for the product or improvement to an existing product?
- Does the idea benefit the market and reflect market trends?
- Will your product or improvement withstand rapid technological changes?
- Where does your product fit into the market? Is there a gap there? Are there competitor products?
- Will your idea be profitable? How will you price it?
- Do you have the resources required for research and development?
Before jumping into the third step in the new product development process, let’s take a look at an example of a seemingly great idea that failed.
We’ve all come to depend on Google, from searching for the best products to making sure we don’t get lost. The name itself is now used interchangeably from noun to verb, a clear demarcation of the company’s immense success. Yet, even a company as well versed in new product development as Google has paid the price for missing a critical aspect of the screening process: ensuring that their new product solved a current customer problem.
Google glass was thought to be the next big innovation. But, the company quickly realized that they made a very expensive mistake in creating a product that did not address a problem consumers were aware or felt they had.
Customer driven product ideas that make it through the screening process predict consumer behavior, anticipate future customer needs, and solve a current consumer problem. Your customers will want to know what the product can do for them (“Reducing the Risk of Failure in New Product Development”, 2016). In other words, your target market must recognize their need for your product, and be willing to purchase it.
New Product Development Step Three: Concept Development and Testing
Once you have determined that you are ready to move beyond the screening stage, its time to develop a concept for your product that can be presented to the market for testing. This is a risk vs. reward process.
Because costs associated with new product development increase throughout the process, it is incredibly important that you focus on your customers’ needs and expectations at this stage (and every stage), testing your ideas before investing in full product development so that you can determine if your potential customer will buy and use your product. Reducing uncertainty about aspects of your product that may or may not work will lead to a higher probability of success (“New Products Process”, n.d.).
Imagine that you have been considering trying a new recipe for your family’s dinner. Before attempting it, you would want to take into account your family’s taste preferences, likes and dislikes, and eating habits. You would not want to make a recipe that called for spinach if your children (like mine!) or significant other avidly detests the vegetable.
The same principle applies here in step three of new product development. You want to turn your idea into a comprehensive concept description that depicts in detail your product from the perspective of your customer. Doing so will allow you to gather more valuable data about how responsive your target market will be to your product.
You may also want to consider more than one version of your product concept. The goal here is to gain enough insight and information about the customer’s attitude toward your product before you spend additional time and money on development.
New Product Development Step Four: Business Strategy Analysis and Development
If your product has survived the first three stages of the new product development cycle, congratulations! Remember, very few product ideas survive the initial screening phase, and that is not a bad thing. Ideas that do survive have “passed” necessary tests, ensuring that your product is innovative and addresses a consumer problem, one your target market is aware they have and are willing to pay money to fix.
Stage four is centered on developing a strategic plan of action in moving forward with development. This stage will help you to further solidify your product’s viability in the market, and avoid common failures to new product development, including ensuring that your customers recognize the value of your product.
During the business analysis phase, you will want to focus on profits, incorporating each of the following:
- An estimation of the selling price based on your competition and customer feedback.
- An estimation of sales volume based on the size of your target market.
- An estimation of profitability, including your break-even point (Jossy, n.d.).
Much of your “to-do” list in this phase will be dependent on market research. You will need to identify who the decision maker is in purchasing behavior, and begin thinking about your overall marketing strategy. The information you gathered in concept development and testing will help you to identify how to target your market effectively, and how you will approach product marketing.
One last note before moving on: think long term. Remember, as beneficial as constant change in the market can be to opening doors for new product launches, neglecting to address change will almost certainly lead to product failure. Consider how long your product will be relevant to your consumers, and what changes or variations may need to be introduced in the long run.
New Product Development Step Five: Product Development and Test Marketing
Step five is likely the most rewarding step of the entire new product development process. This is where you are finally able to develop a prototype for your product and test it in the market (Nelson, 2016). On the flip side, this stage can also be the most costly. You will want to proceed with caution and recognize that it is incredibly easy to make expensive mistakes when developing a prototype.
Take your time in making decisions throughout this phase, and never stray from your market research. Details matter. How your product is perceived, from packaging to naming, are all crucial decisions at this stage.
You will need to consider each of the following as you plan to create and test your prototype:
- What product features will you incorporate? Why? Your answer should directly reflect data gleaned from your market research.
- What benefits does the product provide? How will consumers react to the product? Anticipate your customers’ reactions.
- What will it cost to produce the product, and how does this cost reflect your profit expectation and break-even point? Remember, you want to be sure that a manufacturer can produce your product at a profitable price point.
Once you have a prototype in hand, it’s time to test it. This is the final stage before commercialization, the last step in the process. Similar to concept testing, here is where you are able to collect data, measure the response of your target market, and make any changes necessary based on the feedback you glean from focus groups and others who will potentially purchase your product.
No matter how challenging this stage is, remember to continually monitor and adjust based on feedback from consumers. Look at your product from their perspective at all times. In essence, be persistently customer-centered.
One last note here: Perhaps the best advice at this stage is to consult the experts. Consider the cost-benefit analysis of consulting with specialists in the field who can help you develop and test your prototype. You will want a complete marketing plan in hand that addresses distribution (where will you sell your product?), promotion (how will you promote your product), and pricing (how much will your product cost?), as well as your stated objectives in bringing your product to market.
New Product Development – Final Step: Commercialization
Commercialization is the final step of the new product development process and entails bringing your final product to market. It can take years to fully complete the entire new product development process, from start to finish, but do not be discouraged. The time you invest upfront in the “fuzzy front end” will ensure that you don’t make mistakes that will take even longer to fix.
Some companies have stated that it can take three years to launch a new product, and those companies that are successful in new product development repeat this cycle over and over again, with many innovative ideas not making it past the screening phase.
Remember those baby socks mentioned in the beginning of the article? Those young inventors turned entrepreneurs had a great idea for a solution for all of those missing baby socks back in 2014. Nearly five years later, having gone through idea generation, the screening process, a lot of market research, sleepless nights, and two children of their own, their new product has successfully made it to the final commercialization stage where “Squid Socks” was born.
Final Thoughts
Remember, a great idea can be had by anyone. But, an idea that sends you on the path toward new product development is more than just a great idea. It’s customer driven, consumer centered, and consistently adapting to a changing market. Follow these rules as your guide and you will be to insulate yourself from the common pitfalls that new investors face along their journey.