Some psychologists break the process of concept formation into four steps. The following are examples of these steps:
A young child observes a horse in a pasture near her house. She becomes aware that this new thing exists. As people encounter more and varied life experiences, they continually observe things that they have never previously encountered. Observation is this initial step in forming a new concept.
The aforementioned child sees another horse as her mother takes her to ballet. Then she notices another horse in a commercial on TV. Although all these horses look different and are seen in various settings, the child begins to generalize all of the features that a horse embodies: has a long mane, lives outside, has hooves, and so on.
Once the child can generalize the features that are common to all horses, she begins to note similar features that other animals share with them. Cows also live outside and are pretty large, but they don't have long manes. Zebras have the mane and hooves but also have a certain pattern of stripes. The differences between similar concepts reinforces the original concept by solidifying the commonalities.
In the absence of a horse, the child can now picture what a horse looks like and may draw it from memory. The child does not need a tangible representation of the concept in order to apply it. This ability to think in increasingly abstract terms is important as the child grows in scientific, mathematic, literary, and artistic skills.
This process varies depending on the psychology text studied. Another psychologist lists the process as progressing from experience (exploration) to abstraction to generalization to analysis.
The commonalities are that new concepts must first be seen/observed/experienced and then examined closely before they can be applied to new and indirect situations.