If you’ve ever watched Shark Tank, you’ve seen aspiring entrepreneurs pitch their ideas to investors. What the show doesn’t highlight is the structured journey between initial concept and market launch—the new product development process.
Following a structured framework when developing new products can help you refine your product ideas, avoid costly mistakes, and build things people actually want to buy.
In this article, you’ll learn the seven key stages of the new product development process and how to apply them to your business—whether you’re launching your first product or expanding an existing line.
You’ll also discover how new product development differs from general product development, why it gives your business a competitive advantage, and some of the challenges you might face along the journey.
What is the new product development process?
The new product development process is a structured framework for turning an idea into a market-ready product. It consists of seven stages:
- Idea generationIdea screening
- Product concept testing
- Prototyping
- Design and development
- Test marketing
- Commercial launch
This process keeps your product development on track and lets you and your product team make adjustments as you go.
New product development vs. product development
New product development (NPD) refers specifically to bringing an entirely new idea to market. It involves identifying a customer need or market gap and creating something original to fill it.
Product development is a broader term. It includes NPD but also covers updates and improvements to existing products—like redesigning packaging, adding features, or improving performance based on customer feedback.
Product development is often ongoing. It cycles back to earlier stages as your business evolves, markets shift, or new product opportunities emerge. In contrast, the NPD phase ends once your product launches.
Benefits of the new product development process
While structured processes might take more time upfront, they help you bring better products to market more reliably—and often more efficiently in the long run. Here’s why following a formal new product development process matters:
Improves customer alignment
A formal NPD cycle involves customers at almost every stage. This consistent feedback loop ensures you’re building something people actually want—and will pay for.
Reduces risk
Entrepreneurs face significant challenges. Studies show that 25% of new products fail after one year, and 40% fail after two.
Skipping steps might seem like a shortcut, but it leads to costly mistakes. Without getting the right feedback, developing a thorough production plan, or validating your product with real customers, you’re more likely to launch something that misses the mark.
Enables a more efficient rollout
Though following a formal NPD process may take longer to bring a product to market, you’ll spend that time more effectively. Rather than backtracking to fix early mistakes, you’ll focus on making your product and its launch the best they can be.
Enhances innovation
You might think following a structured process would limit creativity, but it actually gives you more space to explore and innovate.
A well-defined NPD framework provides time for reflection, research and development, review, and collaboration. This helps you refine ideas to their best form instead of rushing with the first concept that comes to mind.
7 stages of the new product development process
New product development generally goes through these seven key stages:
- Idea generation
- Idea screening
- Product concept planning
- Prototyping
- Design and development
- Test marketing
- Commercial launch
1. Idea generation
The idea generation stage starts with brainstorming, where you explore as many ideas as possible. You might create something entirely new or add a fresh twist to an existing product. This is your chance to put all ideas on the table—you never know where a concept might lead.
For example, television producer and former surfing instructor Lindsay McCormick had an idea for dental hygiene products without additives or plastic. “I started looking into toothpaste and the way it comes in a plastic tube, and there’s a bunch of harsh chemicals, artificial flavors, and ingredients that come in it,” Lindsay says on the Shopify Masters podcast.
Her solution: Bite, a brand offering chewable toothpaste tablets and bamboo toothbrushes. “I was like, I could make something that’s better for the planet, better for our body,” she explains. “And I just went into making it.”
To do:
- Research market trends, customer pain points, and emerging product categories
- Look at competitors to identify gaps or opportunities
- Brainstorm ideas based on market research
2. Idea screening
Idea screening involves conducting product research, getting preliminary customer feedback, performing a feasibility study, and estimating production costs.
As you begin your business analysis, think about your target market. Who will buy your product? How does it satisfy customer’s needs and align with their lifestyles? Does it match current market trends?
Your market research should include competitive analysis to determine whether the market welcomes new products or is already saturated with similar offerings.
Lindsay figured the target audience for Bite products would be environmentally conscious customers who want to avoid plastics. She thought she could tap into a niche in a market dominated by large consumer product companies. “If there’s something that you think you could do better or that is being done in a way that you can improve upon, who’s to say that you aren’t the one to do it?”
To do:
- Evaluate ideas for feasibility, cost, and scalability
- Conduct product development research to assess customer demand
- Compare your idea against competitors to check for differentiation
- Validate your top concept with quick customer feedback or surveys
3. Product concept planning
During the planning phase, create a sketch of your product. Detail its features, and list the necessary materials and components for production. You’ll likely revise this sketch several times based on feedback from your development team as you move forward.
Concept development helps you spot flaws in your product idea and make necessary changes early. This prevents problems later in the product development life cycle when changes become more complicated and costly.
To do:
- Sketch out the product concept and outline key features
- Create wireframes and early mockups to communicate the idea
- Gather feedback from stakeholders and potential customers
4. Prototyping
The prototyping phase helps you develop a rough draft of your product that demonstrates its core functionality and validates your idea.
Don’t get too attached to your prototype—you might scrap it entirely as you learn and iterate. The goal is to learn quickly and align your team on how the product should work and where it needs improvement.
You might even build something yourself. The founder of Shwood, for example, built the first prototype for the brand’s wooden sunglasses using a tree branch, cabinet hinges, and lenses from a thrift store.
This stage gives you your first opportunity to estimate production time and costs. You don’t need a perfectly balanced budget yet—just rough numbers to gauge feasibility and identify potential problems early.
To do:
- Build a basic prototype of your product
- Test core functionality and user experience
- Estimate costs to evaluate feasibility
5. Design and development
Design and development brings you closer to turning your product idea into reality. Your goal is to finalize both form and function so your product can be produced at scale.
Production planning is a major part of this stage. You’ll need to identify suppliers and manufacturers, build a production timeline, and develop systems for consistent, high-quality output.
With these details in place, you can build detailed cost models that factor in materials, labor, manufacturing, packaging, logistics, and margins. This gives you a clear picture of what it’ll take to bring your product to market profitably.
To do:
- Finalize your product’s design, specs, and materials
- Find and request quotes from suppliers and manufacturers
- Create a production plan
6. Test marketing
Test marketing—sometimes called a soft launch or beta testing—involves trying your minimum viable product with a sample of your target audience before a full launch. This helps you understand what appeals to customers and identify improvements needed before going public.
First, select a customer sample that accurately represents your target market based on criteria like age group and purchasing power. Then determine how long you’ll conduct testing and at what cost.
Test results help fine-tune your marketing and pricing strategy. This shapes your value proposition—a concise message that conveys the benefit you’ll deliver to customers.
“We invented so many things that people use today in the outerwear world that they don't even know that came from us,” says Eran Elfassy, founder of Mackage on Shopify Masters. “It's because we dared to test stuff to make mistakes at the same time. Some things worked well, some things didn't work, but when something worked, we just made it even better. And when it didn't work, then we moved on to the next thing.”
To do:
- Release a beta test to a small group of target customers
- Collect data on product performance, customer satisfaction, and pricing
- Use feedback to improve features, packaging, and messaging
- Develop a marketing strategy
7. Commercial launch
Once you have your marketing plan, sales tactics, and customer support in place, you’re ready to share your new product with the world.
The final stage of the NPD process is commercial launch. At this point, you might aim to get your product stocked in retail stores or start your own online store. Use early sales results and customer reviews to adjust your go-to-market strategy as needed, and be prepared to make further product refinements.
Lindsay decided to sell Bite directly to customers online instead of through retail intermediaries. This ecommerce-only approach helped her maintain a strong connection with customers and receive payments quickly.
“Selling online is a really helpful way to go because of that quick tight cash loop,” she says. “You truly own your customer channel, and you have that direct relationship with them.”
To do:
- Finalize your marketing plan, sales channels, and customer support systems
- Launch your product
- Optimize marketing, operations, and fulfillment
Main challenges with the new product development process
The new product development process offers structure and clarity—but it comes with challenges. Entrepreneurs often face several roadblocks that can slow progress or compromise a successful launch.
Insufficient feedback
It’s easy to fall in love with an idea—but without real feedback, especially early on, you risk launching a product that doesn’t resonate with customers or justify your production efforts.
Skipping validation can lead to investing in something that feels good internally but falls flat in the market. Keep the door open to honest feedback from both your team and target audience to ensure your product is not only feasible but also meets a real market need.
Market uncertainty
Even with thorough research, there’s always uncertainty about how a new product will perform. Trends shift, competitors move quickly, and external factors—like economic conditions or supply chain disruptions—can reshape your market overnight.
The best approach: Run small tests, gather real-time data, and build flexibility into your new product development strategy. This helps you adapt quickly when markets change.
Idea overload
Entrepreneurs often overflow with ideas, but not all are worth pursuing right away. Without a clear screening process, you can easily stretch your team too thin or lose focus on your best opportunities.
That’s why idea evaluation and prioritization are key early stages in the NPD cycle. Stay focused on concepts that best align with your customers’ needs and your current capabilities.
Limited resources
The NPD process requires time, money, and expertise. But that doesn’t mean it’s out of reach for smaller teams or early stage founders.
The key is approaching the process strategically. Consider running micro-tests, validating demand through pre-orders, or using no-code tools for prototyping. These approaches help you follow a formal process without overextending your resources.
New product development process FAQ
What are the benefits of using the new product development process?
Following a structured development process gives you a clear roadmap for bringing an idea to fruition. It helps you validate concepts early, avoid design flaws, target the right customers, and create products people actually want to buy.
What are the 7 stages of a new product development process?
The seven stages are:
- Idea generation
- Idea screening
- Product concept planning
- Prototyping
- Design and development
- Test marketing
- Commercial launch
What is the first stage of the new product development process?
The first stage is idea generation, which involves market research, identifying customer problems, and brainstorming. This foundational work helps you discover opportunities for products that solve real customer needs.
How long does the new product development process take?
The timeline depends on your product complexity, existing resources, and market conditions. Simple products might move from concept to launch in a few months, while complex offerings can take a year or more. Established businesses typically move faster since they can leverage existing customer relationships, production capabilities, and distribution channels. First-time entrepreneurs often need more time to build these foundations.
