New Service Development Process

The NSD process involves the following steps:

Stage 1: Generating the Concept: The ideas about new services can be generated internally or externally. Internally, the sources can emerge from the sales staff, front office staff, or specifically the R&D department, whereas the external sources can be the information about customers’ needs or the actions of the competitors in the market.

The data can be acquired in a structured and formal manner through various data collection tools like questionnaires and interviews.

For example, the insurance agents, the operational staff can help the company know more about the customers and their perspectives on the various policies.

NSD Process

Stage 2: Concept Screening: It is not possible to market all concepts or variants of concepts. The concept screening stage involves understanding and assessing the flow of concepts. There can be different stages of screening involving different functions.

Usually, there are three sets of criteria for assessing market positioning of the products, its operations/technical implications, and finance assessment.

This concept screening stage involves answering the following questions:

  1. Does the proposed product or service possess an attractive position in the market, which also matches with the marketing strategy of the organization?
  2. Does the proposed product or service use current resources capabilities, or can help in developing new capabilities?
  3. Is it feasible to invest in the proposed product or service, and is the return on investment is satisfactory on this product or sendee?

For example, the senior managers and officers can analyze all the ideas they can get from the sources, and then they can find out where they can change the policies or bring some newness so that it can tick in the minds of consumers.

Stage 3: Preliminary Design: The detailed work on the product or service design starts from this stage. It includes deciding what the product or service would encompass.

Different important information is collected for this, like the elements required to make the product or service, how these elements have to be arranged to finally make the package (i.e., product/service structure), and the exact quantities of each element required to finalize the package (i.e., bill of materials).

Stage 4: Design Evaluation and Improvement: At this stage, attempts are made to improve the preliminary design before introducing the prototypes/samples in the market. Various techniques can be used at this point for assessing and improving the preliminary design.

A few techniques are related to finding the total expense incurred and making it cost-effective. Others are related to finding technical features of the product or service for improving the total worth.

Most techniques are concerned with step-by-step interrogation to find out what each component contributes towards its total worth, why things are done in a manner, and how things can be done differently.

Stage 5: Prototyping and Final Design: Usually, ‘close to final’ designs are ‘prototyped.’ Sometimes, the design activity is also partially carried in the next stage to make an improved design as a prototype, which can be tested.

It may help in knowing more about the nature of the projected product or service, but usually, it helps in lowering the risk factor associated with introducing it directly in the market.

For example, computer simulations and clay models of car design are used for product prototypes. For service prototypes, computer simulations can be used, and these can also be used in pilot testing of the product/service. Different new products or services or pilot tested by the retailers in a few stores to test the reactions of the customers.

Stage 6: Developing the Operations Process: Almost every model of product and service development works on the assumption that the final stage will help in developing the operations processes, which will finally help in producing the intended product or service. However, practically product/service development and process development are inevitably linked.

However, keeping this step, in the end, does not support the idea that the development process for designing products and services, as per the market needs, can take place after deciding on its features.

Only when the operations processes are comfortable with the service design, the process decisions can be made.

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