Factors contributing to new product development:

Several factors contribute to the new product development, while most are related to the external environment variables, the most important internal factors in the new product development is the surplus capacity that a firm may have at any given time.

Changing customer preferences: the driving force in the new product development is changing customer life styles, leading towards a change in the customers' preferences and expectations. The changing role of women, growth in the nuclear and stand alone families' increasing in education and income levels, and a manifold increase in the electronic media also contributes towards changing customer's expectations and preferences.

Technological changes: another factor is the technological in the industry and the market. For example, if Mrs. India Gandhi's government has not decided to expand the television network to cover 70 % of the India population, launched its own satellite INSAT IB and started colour telecast in 1982. It is extremely doubtful if many of today's products would have seen the light of the day in the Indian market.

Government policy: Government policies can also encourage or foster new product development processes. For example, a government policy encouraging competition can motivate firms to launch new products.