7 Stages of New Product Development Process

Every year, thousands of startups and companies fail when launching new products. The statistics are ruthless: about 95% of new projects fail within the first year after launch.

If you ask, “Why does this happen? Is it a lack of talent or ambition?” — the answer is no. The secret lies not in the brilliance of the idea but in the thoroughness of its implementation.

By choosing a structured approach that helps minimize risks and optimize resources, you can offer customers what they truly want.

We explain how the ideal (in our opinion) development cycle looks like:

• how many steps are in the new product development process
• what pitfalls await you at each stage
• we share proven strategies to reduce risks and reveal the secrets of successful tech giants

Ready to transform your current NPD process and increase your chances of success for future projects?

What is new product development?

It may sound trivial, but let’s start with terminology. At the beginning, it’s important to make sure we all understand what the “new product development process” means.

An engineer might see “development” as technical creation, while a marketer might think of packaging and positioning. We will describe the process of creating hardware, embedded, and software solutions, as well as how their interaction shapes the final product. Since these areas are closely interconnected, it is especially valuable when all development stages are integrated within a single company.

It’s important to note that NPD process is not always about creating something entirely new. The 7 stages described here also apply to improving existing products or services significantly.

Now, armed with this understanding, let’s move to a detailed discussion of different approaches to building a new product depending on the goals, level of novelty, and company strategy.

Types of new product development

So, your goal is to come up with a new product. A common mistake is trying to create a “revolutionary product” using an incremental improvement model. Choosing this path risks failure due to lack of time and money.

Understanding types of new product development is crucial because it directly affects your budget and implementation timelines. Also, launching the product for existing customers versus entering new market segments involves fundamentally different target audiences, which is critical to consider.

Without answering “WHO are you making this for?” you won’t create anything worthwhile. Here are the main types of NPD:

• Breakthrough Innovation: Completely new products with no existing analogs. Based on breakthrough technology and innovative product ideas. The main risk is market rejection. Target customers are early adopters and B2B partners.

Tip! Pay special attention to market research — no marketing strategies will save a product that doesn’t resonate with potential customers.

• Disruptive Innovation or new products for new markets that change the “rules of the game,” creating new demand by disrupting old industries. Example: Airbnb creating a platform for renting private homes instead of hotels. Customers are those who previously did not use similar services.
• Incremental Development. A type of development that changes the product vision. Simply put, it’s an upgrade of what you already have: adding new features, improving quality, or enhancing the design. From a marketing perspective, it may include rebranding and/or repositioning. For example, you created a great product for the mass market and now want to move into the premium segment.
• Line Extension. Adding new options to an existing product line: a new flavor of a drink or a new model in a car series. This approach works well to increase the average check through cross-selling. However, it is important that the finished product does not oversaturate the market.
• Imitative New Products. Type of new product development where concept development is based on already existing ideas from your competitors. Essentially, it’s creating an analogue with minimal differences. This approach is suitable for quickly entering the market with minimal risks and costs.

And what about the implementation timeline? Let’s take a look at this and other key points in a table format.

* these figures are indicative and not a public offer. Please contact our manager to get a precise estimate for your case.

Sometimes, among types of new product development, you can find custom development (creating a product to order) or modification/adaptation for new markets as separate categories. So, like any classification, ours is quite conditional. We wouldn’t strongly stick to rigid definitions since we practice an individual approach that depends on many factors.

The 7 stages of new product development

As you’ve probably understood, the new product development process requires a professional approach, clear strategy, and the ability to manage challenges efficiently. Here is how these stages unfold at Embrox Solutions:

1. Idea generation

It can happen in different ways, but most often through:

• analysis of consumer needs
• studying market trends
• feedback from existing customers
• brainstorming sessions

In 80% of cases (according to our internal data), clients come to developers with an already formed product idea. Our task is not just to take it on but to conduct a deep viability audit. For this, the following assessments may be used:

• TAM/SAM analysis (market potential evaluation)
• SWOT analysis
• assessment of technical feasibility and risks (including not only technological but also regulatory, financial, operational, etc.)
• evaluation of the business model potential (unit economics, monetization paths).

For ideas that don’t pass the filters, we offer 3 development options: radical concept change, gradual evolution (modification of key parameters), combination (synthesis with other ideas).

Important! We never impose solutions. All adjustments are agreed upon through a system of "checkpoints" tied to business metrics. This way, you maintain control while benefiting from an expert filter for your ideas.

2. Product strategy

Once a viable idea passes filters, the next step is creating a product strategy — detailed specifications with user stories, customer journey maps, and a phased product roadmap. Prioritizing features for the MVP is critical.

Outcome: a clear development plan with milestones and KPIs to avoid resource dilution and clarify the final product vision.

3. Prototyping

The implementation stage of the development strategy. When it comes to a classic digital product (SaaS, mobile apps, web services), a prototype usually means Low-Fi Wireframes (showing screen logic and navigation) or a Clickable Prototype/mockup of the product, including User Flow and basic UX.

For physical products, this stage may involve creating a concept model, a functional MVP, an engineering sample, or even a pilot series.

In hardware and embedded development, especially in the IoT field, prototyping becomes an even more complex process. In addition to the visual and functional representation of the product, it is essential to test the interaction of all technological layers of the IoT stack — from hardware and firmware to data transmission and the operation of the cloud platform. It is also necessary to ensure the prototype’s compatibility with the future production line to minimize costs during the transition to mass manufacturing.

In any case, this stage concludes when:

• all user stories are confirmed
• the UI Kit is ready for developers
• usability tests have been conducted
• there is a discrepancy document between the prototype and the technical specification
• the client, team, investors, and all stakeholders are satisfied with the result

4. Development process

On one hand, this is the most crucial stage of product development. On the other hand, it is merely the result of how well the preparatory work was done.

It’s a mistake to assume that the client does not take an active part at this stage, because there are mandatory involvement points. These include not only strategic decisions regarding deviations from the plan but also mandatory sprint reviews. The developer’s task is not only to deliver quality work but also to make the process predictable and transparent. At Embrox Solutions, we build a system that allows the client to make informed decisions and feel like a part of the process.

A key part of a sound development approach is improving productivity and reducing time spent on routine tasks. To achieve this, it’s worth implementing automation tools — from CI/CD pipelines to automated testing and deployment. This accelerates the process, minimizes errors, and ensures greater product stability.

 It is worth nothing that when working with hardware and embedded solutions, it is especially important to consider that the development process includes additional, clearly structured stages, including:

• device hardware — electrical or electromechanical components, often containing embedded software;
• device software — a set of instructions controlling its operation;
• communications — technologies for transmitting data between devices and other systems;
• cloud platform — infrastructure for storing, processing, and analyzing data;
• cloud applications (user interfaces and services that enable interaction with the system).

This comprehensive approach makes it possible to create a reliable, functional, and competitive product. Thanks to our extensive experience, we do not outsource any stage of the process to third parties.

Important! At your request, we can involve our partners in China for the full implementation of this stage. We will also transfer all the necessary information about your product to the production teams to ensure a smooth launch. After that, you will be able to order the first batch and bring your solution to market.

5. Testing

The initial product is ready? Great! Now it’s time to verify how well it performs. For this, the product team organizes A/B testing, usability tests with real users, load testing (and other types as needed). For hardware, this includes field trials in real conditions.

As a result, stakeholders receive objective data on how the target audience perceives the product, which features are actually used, and which turn out to be unnecessary. For example, testing might reveal that 70% of users don’t understand how to use a key feature — meaning the onboarding process needs improvement.

6. Development & Scaling

This stage is a critical bridge between development and commercial operation. It’s important not only to verify technical readiness but also to assess scalability potential and identify vulnerabilities.

At Embrox Solutions, we conduct comprehensive diagnostics across three areas:

• Performance: load testing simulating peak traffic (up to 5x the planned volume)
• Security: penetration testing and vulnerability analysis based on OWASP Top 10
• Resilience: scenario testing such as database server failure, payment gateway disconnection, and DDoS attacks

Our toolkit combines automated tests (k6, OWASP ZAP) with manual testing.

It’s also the right time to prepare monitoring processes. There are three levels of control: infrastructure (CPU, memory, network, and for IoT devices — also sensors, batteries and communication modules), business metrics (conversion, average check, and for physical products — the failure rate and the percentage of defect-free deliveries, and user experience (operation duration, errors, the usability of the interface, both in software and in physical interaction with the device).

Finally, we train the support team and develop a "scaling roadmap" that outlines the transition points to the next growth stage.

7. Launch & Post-Launch

The product is live! The key motto is: "observe, analyze, optimize."

The outcome of this stage is a product that not only works but constantly evolves to meet the changing needs of the market. We ensure a smooth transition from development to operation, where the client’s team fully takes over product management, and our role shifts toward consultative support and implementation of new features. This approach helps avoid common post-launch issues: from sudden infrastructure overloads to unexpected drops in user activity.

Example of new product development

Scanning Suitcase is a device designed for use in the field during harvest collection. Its main purpose is to identify workers and track the time of harvesting and packing. All collected data is uploaded to the cloud for further analysis and management. The device helps increase employee efficiency and reduce business costs.

In the 7 steps of new product development described above, the focus was on digital projects. We believe you’ll be interested to learn how this process works with physical devices.

At the initial project stage, in-depth analysis was conducted to understand the needs of the target audience — farmers working with large harvests. The team carried out research to find ways to optimize harvesting tracking, improve data accuracy, and boost overall productivity.

During development, we integrated several technologies and platforms. For effective QR code scanning, we used a Raspberry Pi 3 Model B with a multi-camera adapter. The engineering team implemented a unique solution using multicore processing and asynchronous data handling, which enabled high-speed performance.

At the testing stage, the team focused on optimizing scanning speed and reducing the number of cameras used for QR code recognition. We conducted a series of trials in real-world conditions to ensure system stability under various lighting levels and on different surfaces. Firmware updates via a mobile app were also configured for easier maintenance.

After completing all tests and optimizations, the device was ready for deployment. We set up data transfer from the device to the mobile app via Bluetooth, followed by cloud uploading for centralized management.

Result: Scanning Suitcase is an excellent example of how a well-planned, consistent development approach focused on convenience and practicality helped achieve — and in some aspects even exceed — the expected results.

Common Challenges in New Product Development

Unfortunately, even with the most careful planning, unforeseen challenges can arise. However, our systematic approach not only minimizes risks but also turns any difficulties into growth opportunities.

When it comes to the main challenges of IoT and hardware development, many of them overlap with those already described above. These areas also face integration issues (the hardware, embedded software, cloud, and applications must work in sync).

The solution? Step-by-step integration with testing at each level (hardware → firmware → cloud → UI). They are also vulnerable to security issues (in addition to the solutions mentioned earlier, it’s worth adding protection against physical tampering).

Expert tips from Embrox for new product development

Successful product development starts with the team. It is crucial to choose partners who share your passion and vision and have experience implementing similar projects. At Embrox, we believe a strong team is not just a collection of professionals but a true synergy where each member contributes valuable expertise. Collaborate with those who understand your business and are ready to keep pace with technology.

Don’t be afraid of difficult challenges. Often, they hide key competitive advantages. Our experience shows that 90% of “impossible” tasks can be solved with a creative approach.

Technical constraints? A reason for innovation.

Tight deadlines? An opportunity to optimize processes.

Unpredictable market? A chance to create a truly flexible product.

Flexibility ≠ chaos. It’s conscious adaptability.

Final Words on NPD

What unites NPD and IoT? Since these areas are key to our company, we recognize the importance of finding points of intersection. Although they are different concepts, they can complement each other and pursue a common goal.

Both NPD and IoT are based on the implementation of innovations and the use of advanced technologies. NPD focuses on creating new products or services, while IoT is a technological model that integrates smart devices, sensors, communication channels, and data exchange, forming complete, interconnected systems.

At the same time, both areas require teamwork from specialists in various fields. In NPD, these are engineers, designers, marketers, and other experts. In IoT, they include hardware developers, software engineers, data analysts, and industry-specific specialists who work together to create integrated solutions.

You’ll be surprised how easy and fast the new product development process can be if you follow a strategy and understand the key aspects of each stage. By following a proven methodology, you get not just “another product,” but a unique market solution with:

• Proven demand (thanks to thorough idea validation)
• Technical reliability (through multi-stage testing)
• Scalability (with a well-designed architecture for growth)

Want your product to start on the right foot? Let’s discuss your case. 

FAQ

How long does new product development take?

The development time for a new product can vary widely: from just a few weeks (for example, a redesign) to over 10 years (in niches like aerospace, requiring crash tests and certification). It all depends on the type of product, technology complexity, resources, and market conditions.

Generally, IT/digital projects can complete all 7 steps of new product development within 3 to 12 months (especially when using flexible methodologies like Agile product development). IoT solutions usually require a bit more time. Accordingly, the longest development times are typical for physical devices.

How many steps are there in the new product development process?

We recommend focusing on the 7 steps of new product development: Idea → Research → Planning → Prototype → Testing → Scaling → Launch.

This is the foundation. In reality, the process is often adapted to specific conditions. The number of stages may be reduced, combined, or expanded. For example, startups often skip deep market research, testing hypotheses immediately via an MVP (minimum viable product). Agile methodologies (Scrum, Kanban) avoid excessive planning. On the other hand, complex hardware/IoT products may require additional stages: industrial design (ergonomics of the casing), durability testing (e.g., for smartwatches), etc.

What is the first step of the new product development process?

For the client, the first step of the new product development is finding an idea based on a problem (pain points of the target audience that your product can solve). For the development team, this step means analysis and focus, not immediate coding or design. It’s crucial that you and your team understand each other correctly and establish good communication. Then, all other stages of new product development will proceed smoothly and lead to the desired result.

In our opinion, the first phase is really about achieving perfect synchronization. At Embrox Solutions, we use a clearly defined product roadmap and a shared glossary of terms, conduct regular cross-functional meetings with documented decisions, and use interactive prototypes instead of traditional specifications.

What is the final stage of the new product development process?

The final stage of the new product development is the commercial launch and post-release support. For the development team, the project is considered complete when:

• The product is stable in production
• KPIs for initial metrics (conversion, retention, revenue) are met
• Documentation is handed over and support training is conducted

However, this does not mean the work is over. It remains important to monitor metrics, collect feedback, and promptly implement improvements.