17 Jun
Product development, also called new product management, is a series of steps that includes the conceptualization, design, development and marketing of newly created or newly rebranded goods or services.
The objective of product development is to cultivate, maintain and increase a company’s market share by satisfying a consumer demand. Not every product will appeal to every customer or client base, so defining the target market for a product is a critical component that must take place early in the product development process.
Quantitative market research should be conducted at all phases of the design process, including before the product or service is conceived, while the product is being designed and after the product has been launched.
What is product development?
Product development refers to the complete process of taking a product to market. In other words, product development incorporates a product’s entire journey. The customers can be external or internal within a company. And it can support many different types of products from software to hardware, to consumer goods and services.
Moreover, product development methodologies are used to build many new offerings. It encompasses all stages required to bring a new experience to end users from ideation and analysis to design, engineering, and testing.
A clear product development process gives companies a way to explore new product ideas and learn what customers want in the early stages of conceptualization. The objective is to ensure that the new or enhanced product satisfies a real customer need and helps the company reach business goals.
Why is product development important?
Product development strategies are important to ensure value for your potential customers, as well as ensuring that there is demand and that your final products are of the highest possible quality before you take the products to market.
The very best products also help society improve, whether through the product line itself or through the employment and income generation the new items deliver.
On the business side of things, a new product can improve market share and create growth in a company, providing economic sustainability through new revenue streams. Of course, it can take years for development teams to take a product from the design process through to the point where it is ready to market and distribute. As a result, it is important that a plan is put in place for any new or existing products to be successfully developed.
Product development or product management?
Many people mistakenly mix up product development and product management. However, product management is actually just one aspect of the work that makes up your overall product development cycle.
Some companies think of ‘product development’ as the work done by developers, engineers, and quality assurance, however true product development covers the overall process of taking a design from concept to market, involving the input of many teams across a company, including:
- Product Management
- Product Marketing
- Project Management
- Architecture
- Design
- Development/Engineering
- Manufacturing
- Testing and Quality Assurance
- Shipping/Distribution
Each of these areas plays an important role in the process of defining, designing, prototyping, testing and delivering a final product.
Steps of product development process
1. Idea generation
Many entrepreneurs get stuck at the first stage as they don’t have an idea of what to sell. This often is because they’re waiting for a stroke of genius to reveal the perfect product they should sell. While building something fundamentally “new” can be creatively fulfilling, many of the best ideas are the result of iterating upon an existing product.
The SCAMPER model is a useful tool for quickly coming up with product ideas by asking questions about existing products. Each letter stands for a prompt:
- Substitute (e.g., faux fur for fur)
- Combine (e.g., a phone case and a battery pack)
- Adapt (e.g., a nursing bra with front clasps)
- Modify (e.g., an electric toothbrush with a sleeker design)
- Put to another use (e.g., memory-foam dog beds)
- Eliminate (e.g., get rid of the middleman to sell sunglasses and pass the savings on to consumers)
- Reverse/Rearrange (e.g., a duffle bag that doesn’t wrinkle your suits)
By considering these prompts, you can come up with new ways to transform existing ideas or even adapt them for a new target audience or problem.
2. Research
Product validation ensures you’re creating a product people will pay for and that you won’t waste time, money, and effort on an idea that won’t sell. There are several ways you can validate your product ideas, including:
- Talking about your idea with family and friends
- Sending out an online survey to get feedback
- Starting a crowdfunding campaign
- Asking for feedback on forums like Reddit
- Researching market demand using Google Trends
- Launching a Coming Soon page to gauge interest via email opt-ins or pre-orders
However you decide to go about validating your idea, it is important to get feedback from a substantial and unbiased audience as to whether they would buy your product. Be wary of overvaluing feedback from people who “definitely would buy” if you were to create your theoretical product until money changes hands, you can’t count someone as a customer. You may want to run a feasibility study or an assessment of whether your proposed idea is worth investing in or not.
Also, visiting your competitors’ website and signing up for their email list will allow you to understand how they attract customers and make sales. Asking your own potential customers what they like or dislike about your competitors will also be important in defining your own competitive advantage.
The information compiled from doing product validation and market research will allow you to gauge the demand for your product and also the level of competition that exists before you start planning.
3. Planning
Product development can be complicated, but it’s important to take the time to plan before you begin to build your prototype. When you eventually approach manufacturers or start looking for materials, if you don’t have a concrete idea of your product’s design and how it will function, it’s easy to get lost in the subsequent steps.
The best place to begin planning is with a hand-drawn sketch of what your product will look like. The sketch should be as detailed as possible, with labels explaining the various features and functions.
There’s no need for a professional quality drawing, since you won’ t be submitting it to a manufacturer at this stage. However, if you are not confident that you can produce a legible diagram that will make sense of your product, it is easy to find illustrators for hire on Dribbble, UpWork, or Minty.
Try to use your diagram to create a list of the different components or materials you will need in order to bring the product to life. The list does not need to be inclusive of all potential components, but it should allow you to begin planning what you will need in order to create the product. For example, a drawing of a purse design could be accompanied by this list:
- Zippers (large and small)
- Silver clasps
- Leather straps
- Protection pouch
- Embossed label
- Interior wallet
You should also consider the retail price or category your product will fall into. Is the product an everyday item or for special occasions? Will it use premium materials or be environmentally friendly? These are all questions to consider in the planning phase since they will help guide you through not only your product development process but also your brand positioning and marketing strategy.
Other than this packing, labels, and overall quality of your materials should be considered as well before you continue to the sourcing and costing stages. These will have an effect on how you market your product to your target customer, so it’s important to take these aspects of your product into consideration during the planning phase too.
4. Prototyping
This is the phase where you create a finished product to use as a sample for mass production. Prototyping usually involves experimenting with several versions of your product, slowly eliminating options and making improvements until you feel satisfied with a final sample.
It also differs significantly depending on the type of product you are developing. The least expensive and simplest cases are products you can prototype yourself, such as food recipes and some cosmetic products. This DIY prototyping can also extend to fashion, pottery, design, and other verticals, if you are lucky enough to be trained in these disciplines.
Most large cities also have art, design, or fashion schools where students are trained in these techniques. Administrators from these university or college programs can usually grant you access to their internal job board, where you can create a request for prototyping help.
For objects like toys, household accessories, electronics, and many other hard-exterior objects, you may require a 3D rendering in order to make a prototype. There are also user-friendly online tools such as SketchUp, Tinkercad, and Vectary for founders who want to learn how to create 3D models for themselves.
You’ll also want to start testing a minimum viable product (MVP) at this stage. The MVP is a version of your product with just enough functionality for early customers to use. It helps validate a product concept early in your product development process. It also helps product managers get user feedback as fast as possible to iterate and make small, incremental improvements to the product.
5. Sourcing
After prototyping now it’s time to start gathering the materials and securing the partners needed for production. This is also referred to as building your supply chain: the vendors, activities, and resources needed to create a product and get it into a customer’s hands.
While this phase will mainly involve finding manufacturers or suppliers, you may also factor storage, shipping, and warehousing into your choice. Finding multiple suppliers for the different materials you will need, as well as different potential manufacturers, will allow you to compare costs. It also has an added benefit of creating a backup option if one of your suppliers or manufacturers doesn’t work out. Sourcing several options is an important part of safeguarding your business for the long term.
During the sourcing phase, you will inevitably come across the decision of whether to produce your product locally or overseas. It is a good idea to compare the two options, as they each have their own advantages and disadvantages.
6. Costing
Costing is a business analysis process where you take all information gathered thus far and add up what your cost of goods sold (COGS) will be so you can determine a retail price and gross margin.
Begin by creating a spreadsheet with each additional cost broken out as a separate line item. This should include all of your raw materials, factory setup costs, manufacturing costs, and shipping costs. It is important to factor in shipping, import fees, and any duties you will need to pay in order to get your final product into the customer’s hands, as these fees can have a significant impact on your COGS, depending on where you are producing the product.
Another option is to create a second version of the spreadsheet, so you can compare local production versus overseas production. Once you have your total COGS calculated, you can come up with a pricing strategy for your product and subtract the COGS from that price to get your potential gross margin, or profit, on each unit sold.
7. Commercialization
At this point you’ve got a profitable and successful product ready for the world. The last step in this methodology is to introduce your product to the market! At this point, a product development team will hand the reins over to marketing for a product launch. If you don’t have the budget for expensive ads, don’t sweat it. You can still run a successful go-to-market strategy by using the following tactics:
- Sending product launch emails to your subscriber list
- Working with influencers on an affiliate marketing campaign
- Getting your product featured in gift guides
- Enable Instagram Shopping
- Run Chat Marketing campaigns
- Get reviews from early customers
Conclusion
The product development process refers to the step a business takes to bring a product to market. During product development, each journey to a finished product is different and every industry has its own unique set of quirks involved in creating something new. If you find yourself struggling to figure it all out, remember that every product that came before yours had to overcome the same challenges.
By following these steps as you undergo your own product development process, you can break down the overwhelming task of bringing a new product to market into more digestible phases.