NPD Glossary (M-R)

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Market Research

Information about the firm’s customers, competitors, or markets. Information may be from secondary sources (already published and publicly available) or primary sources (from customers themselves). Market research may be qualitative in nature, or quantitative.

Market Segmentation

Market segmentation is defined as a framework by which to sub-divide a larger heterogeneous market into smaller, more homogeneous parts.  These segments can be defined in many different ways: demographic (men vs. women, young vs. old, or richer vs. poorer), behavioral (those who buy on the phone vs. the internet vs. retail, or those who pay with cash vs. credit cards), or attitudinal (those who believe that store brands are just as good as national brands vs. those who don’t).  There are many analytical techniques used to identify segments such as cluster analysis, factor analysis, or discriminate analysis. But the most common method is simply to hypothesize a potential segmentatio n definition and then to test whether any differences that are observed are statistically significant.

Market Share

Market share represents the sales of a firm or of a product relative to the total market.  Market share is shown as a percentage and may compare monetary sales or unit volume sales.

Market Testing

Market testing is usually the final product development stage when the new product and its marketing plan are tested together. A market test simulates the eventual marketing mix and takes many different forms.


Mind-mapping is a graphical technique used to organize thoughts and ideas for new product development.

Mission Statement

A mission statement is a formal, short, written statement of the purpose of a company or organization.  The mission statement should guide the actions of the organization, spell out its overall goal, provide a sense of direction, and guide decision-making.  It provides the framework or context within which the company’s strategies are formulated.


Multitasking involves engaging in two (or more) tasks simultaneously.


Net Present Value (NPV)

Difference between the present value (PV) of the future cash flows from an investment and the amount of investment. Present value of the expected cash flows is computed by discounting them at the required rate of return (also called minimum rate of return). For example, an investment of $1,000 today at 10 percent will yield $1,100 at the end of the year; therefore, the present value of $1,100 at the desired rate of return (10 percent) is $1,000. The amount of investment ($1,000 in this example) is deducted from this figure to arrive at NPV which here is zero ($1,000-$1,000).

Network Diagram

A graphical diagram with boxes connected by lines that shows the sequence of development activities and the interrelationship of each task with another.  Additional information on the network diagram can be found here.

New Market

A company offers its products to a new market where the product had not been previously offered.

New Product Development (NPD)

The overall process of strategy, organization, concept generation, product and marketing plan creation and evaluation, and commercialization of a New Product. Sometimes referred to only as “Product Development.”

New Product Development Professional (NPDP)

A New Product Development Professional is certified by the PDMA as having mastered the body of knowledge in new product development, as proven by performance on the Certification test.  To qualify for the NPDP certification examination, a candidate must hold a bachelor’s or higher university degree (or an equivalent degree) from an accredited institution and have spent a minimum of two years working in the new product development field.

New Product Development (NPD) Facilitator

The operational managers responsible for ensuring the orderly and timely flow of ideas and projects through the process including on-going training, innovation input, continuous improvement of the process, and Post-launch reviews.

NPD Process

A disciplined and defined set of tasks and steps that describe the normal means by which a company repetitively converts embryonic ideas into salable products or services.


A new product project in which the product is a new category entry for the firm, but the category is not new to the consumer.


A good or service that has never before been available to either consumers or producers. The automobile was new-to-the-world when it was introduced, as were microwave ovens and pet rocks.

New Use

A new product project which seeks to position an original product in a new market without substantially changing the original product.

Not Invented Here (NIH)

A term used to describe persistent social, corporate or institutional culture that avoids using or buying already existing products, research or knowledge because of their external origins.



Outsourcing from another country, normally to gain access to less expensive labor or manufacturing costs.

Open Innovation

Firms that utilize open innovation combine internal and external ideas to develop new technologies, and they utilize internal and external paths to market.  Open innovation stresses a paradigm shift from “closed” innovation (where all R&D and marketing is conducted in-house) in that not all good ideas must be developed within the firm’s own boundaries.

Optimism Bias

Project optimism bias leads new product development teams to believe they can achieve the goals and objectives of a project within a pre-determined schedule and budget despite data demonstrating otherwise.


Outsourcing describes when a company acquires goods or services from an external source.  It often involves contracting with a third party.


PERT (Program Evaluation and Review Technique)

An event-oriented network analysis technique used to estimate project duration when there is a high degree of uncertainty in estimates of duration times for individual activities.

Platform (or Product Platform)

Underlying structures or basic architectures that are common across a group of products or that will be the basis of a series of products commercialized over a number of years.

Platform Strategy

A top-down planning approach to maximize market leverage from common technologies and applications.  A platform strategy allows management to focus on the key decisions at the right time and enables product derivatives to be launched rapidly and consistently.


Commonly referred to as a set of projects or products that a company is investing in and making strategic trade-offs against.

Portfolio Management

A business process by which a business unit decides on the mix of active projects, staffing and dollar budget allocated to each project currently being undertaken.

PM (Portfolio Management) Facilitator

 The portfolio management (PM) facilitator is responsible to manage the tools, data input consistency, training, and output templates from the PM tool.  The facilitator may also organize regularly scheduled portfolio review meetings, post-launch reviews, and provide feedback on the NPD process.

PM (Portfolio Management) Tool

A portfolio management tool is a computer program, spanning from a simple spreadsheet to a full-featured and integrated software suite, that allows the entire new or active product portfolio to be viewed and analyzed according to selected key variables.  PM Tools generally include idea pipeline and product lifecycle management.  Software tools may include team member notification, scheduling, budget control, and knowledge management modules.

Post-Launch Review

This review takes place after the new product has been introduced to the marketplace and after sufficient commercial experience has been gained to allow reasonable judgments concerning probable market receptivity and manufacturing/technology performance.

Primary Market Research

Market Research information that comes directly from the source–that is, potential customers.  Firms can compile this information or hire a professional market research firm to gather it via surveys, focus groups and other methods.  Typically the primary market research follows secondary market research studies.

Product Concept (see also Concept)

A statement about the planned product features that will achieve specific customer benefits relative to alternate product solutions or competitive products.  Concepts are evaluated through concept testing.

Product Innovation Charter (PIC)

A critical strategic document, the Product Innovation Charter (PIC) is the heart of any organized effort to commercialize a new product. It contains the reasons the project has been started, the goals, objectives, guidelines, and boundaries of the project. It is the “who, what, where, when, and why” of the product development project.

Product Launch

The process by which a new product is introduced into the market for initial sale.

Product Lifecycle Management (PLM)

Changing the features and benefits of the product, elements of the marketing mix, and manufacturing operations over time to maximize the profits obtainable from the product over its lifecycle.

Product Manager

The person assigned responsibility for overseeing all of the various activities that concern a particular product. Sometimes called a brand manager in consumer packaged goods firms.

Product Needs

Products that customers have identified they need or that technologists believe they can produce as a result of their technologies.  Product needs are derived by merging both market pull and technology push.  Products involve the application of technologies to solve problems of customers.  Roadmaps also depend on the technologist’s forecast of product capabilities that our customers maynot be aware of.  In some cases, a roadmap addresses a need for which there is no current product.

Product Pipeline

The scheduled stream of products in development for release to the market.

Product Protocol

A signed document, containing a record of the points on which agreement has been reached between negotiating parties preliminary to a final treaty or contract. The agreement indicates how customer needs will be translated to engineering design parameters.

Product Use Testing

Involves having persons or firms in the intended market use the new product for some time and report their reactions to it, in order to learn whether it satisfies the market needs identified in the ideation stage of development.

Profit Margin

Profit is the difference between the selling price and cost to manufacture the new product.  Profit margin is the ratio of profits to sales revenues.

Program Return Map

A graphical depiction of a new product or project’s development cost, expected revenue, and forecast profits plotted against time.

Project Management

The set of people, tools, techniques, and processes used to define the project’s goal, plan all the work necessary to reach that goal, lead the project and support teams, monitor progress, and ensure that the project is completed in a satisfactory way.

Project Management Office (PMO)

An internal organization that is responsible for the firm’s coordination of the project management functions throughout the firm.

Project Pipeline Management

 Fine-tuning resource deployment smoothly for projects during ramp-up, ramp-down, and mid-course adjustments.

Project Team (or NPD Team)

A multifunctional group of individuals chartered to plan and execute a New Product Development project.

Prospector (Miles & Snow Strategy type)

A firm that leads in technology, product and market development and commercialization, even though an individual product may not lead to profits. Their general goal is to be first to market with any particular innovation.


A physical model of the new product concept.  Depending upon the purpose, prototypes may be non-working, functionally working, or both functionally and aesthetically complete.


The pseudo sale is a type of market testing in which the customer does various things to react to the product and its marketing package together but the potential customer does not actually complete a purchase.


Qualitative Marketing Research

Research conducted with a very small number of respondents, either in groups or individually, to gain an impression of their beliefs, motivations, perceptions and opinions. Frequently used to gather initial consumer needs and obtain initial reactions to ideas and concepts. Results are not representative of the market in general or projectable. Qualitative marketing research is used to show why people buy a particular product, whereas quantitative marketing research reveals how many people buy it.

Quality Assurance (QA)

Function responsible for monitoring and evaluating development policies and practices, to ensure they meet company and applicable regulatory standards.

Quality Function Deployment

A structured method employing matrix analysis for linking what the market requires to how it will be accomplished in the development effort.  This method is most frequently used during the stage of development when a multifunctional team agrees on how customer needs relate to product specifications and the features that deliver those needs. By explicitly linking these aspects of product design, QFD minimizes the possibility of omitting important design characteristics or interactions across design characteristics.  QFD is also an important mechanism in promoting multifunctional teamwork.  Developed and introduced by Japanese auto manufacturers, QFD is widely used in the automotive industry.

Quantitative Market Research

Quantitative Market Research involves statistically significant data that is collected during product development states.  Quantitative data may be collected with surveys or interviews.  This type of market research will verify product development decisions and can be used to forecast sales, including volume and pricing, as well as formal business cases to make a go-to-launch decision.


Radical Innovation

A new product, generally containing new technologies, that significantly changes behaviors and consumption patterns in the marketplace.

Reactor (Miles & Snow Strategy type)

A firm that has no coherent innovation strategy. They only develop new products when absolutely forced to by the competitive situation.

Real Options

The right, but not the obligation, to undertake capital budgeting decisions to modify, postpone, expand, or abandon a project.

Real (Project) Time

The time that it actually takes to conduct a project activity, from start to finish.  For example, the standard work day is 8 hours.

See related definition of elapsed time, where in comparison to real time, a work day may be 10 hours of elapsed time to include commuting, lunch, and real (project) time.

Reservation Price

The maximum amount that a customer is willing to pay for a product or service.

Return on Investment (ROI)

A standard measure of project profitability, this is the discounted profits over the life of the project expressed as a percentage of initial investment.

Risk-Adjusted NPV (ANPV)

The Net Present Value (NPV) of the future stream of earnings (cash flow) from the project, less all remaining development, capital, and market launch costs.  The risk adjustment is carried out by weighting alternative scenarios cash flows of occurring, such as probability of technical or commercial success.

Risk Management

The process of identifying, measuring, and mitigating the business risk in a product development project.

Risk Tolerance

The level of risk that a project stakeholder is willing to accept. Tolerance levels are context specific.  That is, stakeholders may be willing to accept different levels of risk for different types of risk, such as risks of project delay, price realization, and technical potential.


A graphical multi-step process to forecast future market and/or technology changes, and then plan the products to address these changes.

Root Cause Analysis

Root Cause Analysis is a method that is used to address a problem or non-conformance, in order to get to the “root cause” of the problem. It is used so we can correct or eliminate the cause, and prevent the problem from recurring.

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