⭐ New Product Development (NPD) — Quizlet

NPD: What is New Product Development?

The process of creating, testing, and launching a new product.

NPD: What is the correct order?

Idea Generation → Idea Screening → Concept Development & Testing → Business Analysis → Product Development → Test Marketing → Commercialization.

Idea Generation: What happens?

A company brainstorms MANY new product ideas from employees, customers, research, or consultants. TRIGGER: Coming up with ideas → Idea Generation.

Idea Screening: What happens?

The company eliminates ideas that don't fit its goals, target market, or capabilities. TRIGGER: Eliminating bad ideas → Idea Screening.

Concept Development & Testing: What happens?

Potential customers evaluate a proposed product idea BEFORE the actual product is developed. TRIGGER: First customer feedback on an idea → Concept Testing.

Business Analysis: What happens?

The company estimates costs, sales, and profitability to decide whether the product is financially worthwhile. TRIGGER: Will we make money? → Business Analysis.

Product Development: What happens?

The company creates and tests a working product or prototype using cross-functional teams. TRIGGER: Building the actual product → Product Development.

Cross-Functional Teams: What are they?

Employees from different departments, such as marketing, engineering, and design, working together to develop a product.

Test Marketing: What happens?

The company introduces a product to a limited market to evaluate customer reactions before a full launch. TRIGGER: Testing a real product before nationwide launch → Test Marketing.

Standard Test Marketing: What is it?

Selling the product in selected real cities or markets to evaluate its performance.

Controlled Test Marketing: What is it?

Testing a product through selected stores or retail networks where sales and marketing conditions can be monitored.

Simulated Test Marketing: What is it?

Using a simulated shopping environment to predict customer reactions without a full real-world market launch.

Commercialization: What happens?

The company officially launches the product into the market, often requiring major investment. TRIGGER: Full market launch → Commercialization.

Regional Rollout: Why do companies use it?

To introduce a product gradually across regions, monitor performance, and make adjustments before expanding.

Product Life Cycle: What is the order?

Development → Introduction → Growth → Maturity → Decline.

Development Stage: What happens to sales and profits?

No sales yet; costs create losses because the company is investing in development.

Introduction Stage: What happens?

Sales begin slowly, promotion costs are high, and profits are often negative. TRIGGER: New launch + low sales → Introduction.

Growth Stage: What happens?

Sales rise rapidly, profits generally increase, and competitors enter. TRIGGER: Rapidly increasing sales → Growth.

Maturity Stage: What happens?

Sales reach high levels and growth slows; competition is intense and profits may begin declining. TRIGGER: Sales plateau → Maturity.

Decline Stage: What happens?

Sales and profits fall as demand decreases or products become outdated. TRIGGER: Falling sales → Decline.

Diffusion of Innovation: What is the correct order?

Innovators → Early Adopters → Early Majority → Late Majority → Laggards.

Innovators vs. Early Adopters: What's the difference?

Innovators try new products first and accept high risk. Early adopters follow and often influence other consumers.

Early Majority vs. Late Majority vs. Laggards: What's the difference?

Early Majority → Adopt before the average person, after seeing evidence. Late Majority → Skeptical; adopt after most others. Laggards → Last to adopt; prefer familiar products.