As new products flood the market daily, the demand for improved product development continues to escalate. Various factors such as industry, product type, features, and more must be considered. Therefore, an exceptional product development strategy is imperative.
Many companies concentrate on their customers’ needs when developing a product, while others aim to address an existing issue with their product. Regardless, without a sound product development strategy, the chances of encountering failure are high. Even if a company has an exceptional idea and ideation process, it won’t amount to much without an effective product development strategy. If you prefer learning through video, you may watch the clip below, or skip ahead if not.
In this blog, we are about to discuss a lot of interesting stuff regarding new product development and product development strategy, so stay tuned and keep reading. Let’s get started.
So, What’s a Product Development Strategy?
A product development strategy involves a series of steps aimed at introducing a new product to an existing or new market. It entails conducting constant market research, conducting thorough tests, and careful planning of product concepts. Additionally, it may involve introducing an existing product to a new market. In some cases, a product development strategy may be necessary for a current product in the current market space, particularly if a new feature is being introduced, rebranding is taking place, or a new complementary product line is being launched.
As per the product life cycle theory, all products eventually reach a plateau where revenue growth diminishes. This is typically when companies adopt fresh product-led growth strategies, introduce new product lines, or implement a new marketing strategy. Some companies concentrate on new product development strategies to help augment the growth of their current products. Regardless of whether a company’s product is successful or not, a product development strategy can be employed to enhance growth.
A product development strategy typically complements a business strategy, and the product development process can vary depending on factors such as commercializing a new product, iterating on an existing one, or other considerations. Extensive market research through focus groups is typically conducted to determine the functionality of the product and gain insight into the needs of customers in different demographics and target markets. The development team can then use this data to brainstorm and formulate a suitable strategy.
Let’s Understand New Product Development Strategy Process (NPD Process)
The process of new product development (NPD process) can be condensed into eight key steps, which remain consistent for start-ups, SMEs, and enterprises alike. These steps are fundamental to the success of the product life cycle, and all development projects must undergo them.
The initial step is idea generation, which involves systematically brainstorming new product concepts based on real-world issues, existing market products, and basic target audience research. To generate a few good ideas, it’s essential to come up with hundreds of them. Two methods can be used to generate ideas.
Internal idea sources involve existing company stakeholders and employees, such as research and development, product managers, marketers, and others.
Alternatively, external idea sources can be employed, including outside stakeholders, suppliers, competitors, and secondary sources of inspiration.
Screen the Best Ideas
Idea screening involves filtering all of the generated ideas and selecting a few of the best ones. The goal is to identify a specific type of idea and then pick the most promising one from among them. Once the official product development process commences, it is difficult to revert and incorporate new ideas. Changing methodologies mid-process can result in delays and setbacks.
When selecting ideas, two factors should be considered: profitability and utility. Profitability pertains to the company, whereas utility concerns the end-user.
For those interested in acquiring skills for creating an excellent product strategy, our product management certifications provide guidance on achieving this.
Product Concept Development (and Testing)
After selecting an idea, the subsequent step is to transform it into a product concept. The product concept is a more comprehensive and detailed version of the initial idea. Developing several product concepts for various ideas can be time-consuming, and it requires a significant amount of effort and resources.
To ensure the effectiveness of the product concept, it must be tested in an existing market. The precision of the product concept is vital, and testing enables this precision. Testing the concept with target audience clusters allows for a better understanding of consumer response, appeal, and reliability. During testing, consumers can be asked specific questions to aid in product design, pricing, and prototyping.
Develop Marketing Strategy
Once a complete product concept has been developed and tested, the next step is to create a viable marketing strategy. This strategy should be developed with the current market, market share, and target audience in mind. The marketing strategy typically consists of several key components, which may include:
- Value proposition
- Target market description
- Profit and market share goals (focus on SMART goals)
- Pricing outline
- Marketing and distribution budget
- Long-term profit goals, sales, and marketing mix.
The marketing strategy also allows you to track certain metrics.
Business Potential of Proposed Product
After the marketing strategy, it’s important to evaluate and analyze the effectiveness of the new proposed product. That includes viewing future projections, costs, and more.
To conduct this research, you can either go for market surveys or look at similar products by other companies. Developing a sales forecast will help you estimate costs, profits, and a timeline.
Once the business analysis is complete, the product development process begins. Up until this point, your product was just a rough idea, prototype, or a potential product. This step is crucial in turning it into a fully functional product.
This stage often requires a significant investment, as you’ll be spending on research and development. The R&D department typically creates multiple versions of the product during this phase, which is called prototyping, and can take several months to complete.
Once you have a product prototype ready, it’s time to test it. Marketers usually bring in customers for product testing, which helps them get an idea of what the customer wants.
When your product is ready to launch, the next step is to conduct test marketing, which involves testing out marketing strategies in realistic market settings. This phase is essential for marketers to understand how the product is perceived, what needs to be improved, and what other investments the company can make to ensure the product’s success. The duration of marketing testing can vary depending on the product, but it’s crucial to be as thorough as possible and follow testing best practices.
The last step in the product development process involves making the decision to launch the product. By this point, you have a fully functional product, a marketing strategy, and all the necessary information to make it work.
Launching the product involves introducing it to the market and promoting it through marketing and sales. It’s crucial to carefully plan the timing and location of the product launch to ensure its success. Failure to do so may result in the product’s failure despite its potential.
We Can Help You Create a Great Product Development Strategy
The success of your new product relies heavily on your product development strategy, as the latter is a prerequisite for the former. It is also essential for product managers, product marketing managers, the product team, and the marketing team to effectively perform their respective roles. At GID Company, we have a team of strategist to help pen down the best product development strategy that ensures the success. The Product Development Strategy defined with the help of experts at GID Company will help you maintain consistency and thoroughness.
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