New Product Development: A Review

Abstract

The new product development (NPD) literature emphasizes the importance of introducing new products on the market for continuing business success. Their contributions to the growth of the companies, its influence on profit performance, and its role as a key factor in business planning have been well documented. New products are responsible for employment, economic growth, technological progress, and high standards of living. Therefore, the study of NPD and the processes through which they emerge is important. In the last few decades, the number of new product introductions increased dramatically as the industry became more aware of the importance of new products to business. Correspondingly, managing the NPD process has become a challenge for firms as it requires extensive financial and human resources and is time sensitive. The harsh realities are that the majority of new products never make it to market and those that do face a failure rate somewhere in order of 25 to 45 percent. For every seven new product ideas, about four enter development, one and a half are launched, and only one succeeds.