Businesses focus on designing new products and selling these products to customers. The company’s goal with creating new products involves two parts. The first part consists of finding a product that customers want to pay for; only products that customers purchase produce revenue for the business. The second part consists of beating competitors to market. The first company to offer a product generates the greatest number of repeat customers.


The process of creating a new product involves nearly every department in the organization. Many companies create a new product development team. The team includes representatives from the purchasing department, research and development, the production area, accounting and marketing. The purchasing and accounting representatives contribute financial data regarding the new product. The purchasing representative contacts vendors and provides material cost information to the team. The accounting representative uses the material cost information, estimated labor costs and calculates the total product cost. The accounting representative also calculates a potential profit margin using the anticipated selling price from the marketing department.

Research & Development

The research and development representative invests her time working with raw materials to create new products. This might involve mixing edible ingredients to create a new dessert or experimenting with different chemicals to create a safer hair dye. This may also involve creating new products that use cheaper ingredients. For this purpose, the research and development representative uses alternative ingredients to design the new product. In this case, the new product does not replace the original product since some customers will continue purchasing the original product.


The production representative spends time reviewing the production process needed to manufacture the new product. This representative determines how fast the equipment will run and how many units the company can produce in an hour. The production representative also evaluates the number of employees required to manufacture the product. In some cases, the production representative may recommend different equipment to increase the number of units produced or reduce the number of employees required.


The marketing representative analyzes customer needs and desires. The marketing representative suggests possible product ideas that customers want and are willing to pay for. She conducts market research to determine how much customers will pay for the product and how many units customers will purchase.