New Product Development For Dummies
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To take your product idea from planning to the market, have a look at how the new product development process works. Also check out product development terms and phrases, so you’re able to understand and contribute at meetings and events.

The development cycle

So you can turn your great ideas into money, take a look at how the cycle of new product development evolves, from inception to successfully marketing and selling your product:


Product development lingo

Get to know the following product development language so you’re on top of your game and your head isn’t spinning from all the jargon used during meetings and conventions:

Product development acronyms

  • B-2-B, B-2-C: When a business sells to another business, it sells “B-2-B”; when a business sells to a customer, it sells “B-2-C.”

  • COGS (cost of goods sold): You have to make more than the COGS to make an ROI (return on investment).

  • DFX (design for X): Product developers on cross-functional teams design products so they can be manufactured, serviced, and so on.

  • IP (intellectual property): Knowledge that someone owns and can potentially use to make a profit.

  • JVs (joint ventures): JVs help multiple companies develop new products. All firms contribute equity and share in the profits and expenses.

  • P&L (profit and loss): The basic calculation of “money in/money out” in a project or a business.

  • R&D (research and development): The name of the business function that carries out research and the design and engineering part of the product development process.

  • ROI (return on investment): The amount of revenue a company gets after making an investment.

  • QFD (quality function deployment): A matrix that enables product developers to match up customer needs (usually the Y-axis) with product features (usually the X-axis).

  • SBU (strategic business unit): A division of a company that focuses on a particular market or set of opportunities. New product strategies often vary among SBUs in a single organization.

  • SVA (shareholder value added): The amount of value a project is expected to return to shareholders.

  • VOC (voice of the customer): How companies and new product teams find out what moves, inspires, and frustrates their customers.

Other important product development terms to know

  • Alpha testing: Testing new products to make sure that they work in customers’ hands. Often, people within the company, or very friendly customers, participate in these tests.

  • Beta testing: Testing your product with real customers to make sure that it works in their environments.

  • Business case: This describes in business terms the benefit a concept or product will provide the company.

  • Cannibalization: When your new products eat up the sales of products you already have in the market.

  • Commodity: When a product no longer competes on differentiation and earns low margins, it has become a commodity.

  • Cross-functional team: A group of people brought together from several different functions within a company to develop a product.

  • Cycle time: The length of time it takes to deliver a new product, from idea to commercialization.

  • Portfolio: The collection of products in development and products in the market that focuses on achieving the company’s strategic goals.

  • Value chain: The companies that share in the value that new products create, including materials suppliers, parts makers, firms that assemble full products, dealers and distributors, and many others.

  • Value proposition: A succinct expression of what a new product will do for customers and for the company.

Take a look at the glossary on the Product Development and Management Association website for more new product development terms. The list keeps growing, and PDMA is keeping up with it!

About This Article

This article is from the book:

About the book authors:

Robin Karol is CEO of the Product Development and Management Association (PDMA), a professional society that creates and nurtures a global community in which people and businesses learn to grow and prosper through innovation and the introduction of new products. Robin is an adjunct full professor at the University of Delaware Lerner School of Business Administration, where she teaches courses on the Management of Creativity and Innovation. Robin worked at DuPont for 23 years in various aspects of innovation and new product development, achieving the role of Director of Innovation Processes. A certified new product development professional (NPDP), she received her PhD in Biochemistry from the State University of New York at Buffalo. She has numerous publications and has presented at many conferences and workshops. The Industrial Research Institute (IRI) presented Robin with its Maurice Holland Award for the best paper in its journal Research-Technology Management in 2003.

Beebe Nelson is Co-Director of the International Association for Product Development (IAPD), a consortium of leading product developers who come together to improve their ability to execute new product development. She has organized, chaired, presented at, and facilitated conferences and workshops in product development, and has contributed chapters and articles in a number of venues. From 1998 to 2003, she was Book Review Editor of the Journal of Product Innovation Management, a publication of the PDMA. Beebe is a certified new product development professional (NPDP) and holds a doctorate in philosophy from the Harvard Graduate School of Education. Beebe has taught Philosophy at the University of Massachusetts at Boston and most recently in the College of Management at UMass-Lowell. She chairs the Advisory Council of Partners in Ending Hunger, a not-for-profit organization located in Maine.

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