Please refer to any book on Product Development. Its a long process and can be not be explained in few words. However, any product development commences with customer needs.
A classical book on Product development is "Product Design and Development", Karl.T.Ulrich, Steven D Eppinger, Anita Goyal Tata McGrawHill,
Please read through the book. If you have specific prodcut in mind then same can be discussed. In fact every product development is a challenge in itself.