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What is Product Development and What Does it Entail? All You Need to Know About the Entire Process

By gswardman March 23, 2022

The product development procedure might appear enigmatic when you hear the origin tales of other successful ecommerce companies.

You’ll notice that the path to a final product seldom follows a straight line. One of the most crucial tests for budding entrepreneurs is bringing their vision for a unique product to reality.

What Do You Mean by Product Development?

Meaning of Product Development

The whole procedure of bringing a product to the target market is known as product development. It also comprises the resumption of a current product as well as the introduction of an old product to a new market.

This includes assessing market needs, developing a product concept, creating a product roadmap, deploying the product, and gathering feedback.

NPD (new product development) is a vital aspect of product design. The procedure does not come to a conclusion until the product’s life cycle is completed. You can collect user feedback and iterate on new versions by improving or incorporating new features.

There isn’t a single role that’s responsible for product development strategy. Product development brings together all departments of any firm, whether a startup or a large business. This includes design, development, production, product marketing, UI/UX, and more. Each group is critical to the product’s definition, design, construction, testing, and delivery.

What Are the Types of Product Development?

What Are the Types of Product Development

There are four main product development types: diversification, simplification, specialization, and standardization. All of these variables directly impact the manufacturing process and the product’s marketability.

Product Diversification

Product diversification is the technique of widening a product’s initial market. This method is used to increase sales of an existing product line, which is especially advantageous for a business that has seen sales decline or stagnate in the past.

Diversification of products can be costly, especially when introducing them widely in a new market. As a result, it makes sense to start with a few test markets to gauge client acceptability before expanding a new concept.

Product Simplification

Product simplification is the art of cramming as much functionality as possible into the smallest number of parts while employing the most appropriate and cost-effective materials and production techniques.

Product Specialization

Product specialization is a promotional methodology in which firms concentrate their advertising or branding efforts on a single product or series of products. These marketing efforts are often focused on the product’s benefits, quality and attracting new buyers.

Product Standardization

Product standardization is the practice of preserving accuracy and consistency among the several iterations of a single MVP (minimum viable product) or service accessible in different markets. It is a technique of selling a product or service without changing it.

If a product is modified at all, it is just on the surface. Otherwise, the features of the item or service stay the same. It’s created using the same materials and procedures as the original, comes in the same packaging, and is sold under the same brand name.

What Are The 7 Stages of Product Development?

Developing new products and services can be a nerve-wracking experience. Following a methodical NPD (New Product Development) process, on the other hand, can assist firms in gaining clarity and confidence in what they are doing.

Idea Generation (Ideation)

Idea Generation

The objective should be to develop a large number of good ideas that can be used to build the New Product Development plan. The main focus of the first stage should be organizing brainstorming sessions to solve consumer concerns.

This phase isn’t about coming up with flawless solutions that can be implemented immediately. Instead, fresh and untested ideas should be explored in order to be selected later.

By asking questions about current products, the SCAMPER model is a powerful technique for coming up with product ideas swiftly. Each letter represents a prompt:

  1. Substitute (For instance, faux leather for leather).
  2. Combine (For instance, a battery pack and a smartphone case).
  3. Adapt (For instance, a maternity bra with front clasps).
  4. Modify (For instance, a powered toothbrush with a sleeker design).
  5. Put to another use (For instance, memory foam cat pillows).
  6. Eliminate (For instance, eliminate the middle man and pass the savings on to users).
  7. Rearrange/Reverse (For instance, duffle bag that doesn’t crease your clothes).

Research

Research

You may be tempted to jump straight to production with your product concept, but this might be a mistake if you don’t validate it first. Product validation confirms that you’re building a product that people will like, and you won’t spend time, money, or effort on a flop.

Regardless of how you go about validating your concept, it’s critical to receive input from a large and unbiased audience on whether or not they’d buy your product.

Be mindful of overvaluing input from people who “certainly would buy” if you created your product. You can’t refer to someone as a customer until money changes hands. You might want to do an evaluation or a feasibility study to see if your planned project is worth investing in.

Planning

Planning

 

Because product development can quickly become difficult, it’s vital to prepare ahead of time before building your prototype.

Prior to approaching manufacturers or shopping for materials, it’s easy to get lost in the next steps if you don’t have a firm idea of your product’s design and functionality.

A hand-drawn sketch of what your product will look like is the best place to start planning. The illustration should be as thorough as possible, with labels describing each feature and function.

Prototyping

Prototyping

The prototype phase of product development aims to produce a finished product that can be used as a model for large-scale production.

You’ll rarely get to your finalized product in one attempt—prototyping typically entails trying out several different versions of your product, gradually eliminating some, and refining until you’re happy with a final prototype.

Prototyping also varies a lot based on the type of product you’re working on. Products that you can prototype yourself, such as culinary recipes and some cosmetics, are the least expensive and easiest examples.

On the other hand, entrepreneurs will often collaborate with a third party to prototype their product. These services can be found online by searching local industry services.

Sourcing

Sourcing

Once you’ve created a product prototype that you’re happy with, it’s time to start acquiring materials and secure the production partners you’ll need.

This is also known as developing your supply chain; the suppliers, processes, and resources required to develop a product and get it into the user’s hands.

While this step will primarily focus on locating manufacturers or suppliers, you should consider warehousing, freight, and logistics options.

Costing

Costing

After you’ve completed your research, conceptualization strategic planning, prototyping, and sourcing, you should have a better idea of how much it will cost to manufacture your product. Costing is a business analysis procedure in which you tally up all of the info you’ve acquired so far to establish your COGS (cost of goods sold) and hence a retail price and gross margin.

Create a spreadsheet with each extra charge included as a separate line item. All of your factory establishment costs, raw materials, production, and shipping costs should be included.

Shipping, import fees, and any tariffs you’ll have to pay to get your final product into the hands of the buyer should all be considered because these prices can have a massive impact on your COGS, depending on where you’re manufacturing the product.

Commercialization

Commercialization

Now you’ve created a lucrative and successful product that’s ready to go out into the world. The final stage in this process is to launch your product on the market! For a product launch, the product development team will hand over the reins to the marketing team.

Don’t worry if you don’t have the funds for expensive advertisements. Using the following methods, you can still conduct a successful go-to-market plan:

  1. Create campaigns for chat marketing.
  2. Emailing your subscriber list about a new product launch.
  3. Make Facebook and Instagram shopping possible.
  4. Get feedback from your first clients.
  5. Working on an affiliate marketing strategy with influencers.

What Is the Product Lifecycle?

What Is the Product Lifecycle

The term ‘product life cycle’ refers to the time between when a product is introduced to the market and when it is taken off the shelves. A product’s life cycle is divided into four stages: introduction, growth, maturity, and decline.

Management and marketing experts utilize this notion to determine whether it is acceptable to boost advertising, lower pricing, expand into new areas, or revamp packaging.

Market Introduction

This stage entails creating a market strategy, which often includes investing in promotion and marketing to raise customer awareness regarding the product and its advantages.

As demand grows, sales are likely to be slow. This stage can take a long time to complete, depending on the product’s complexity, how fresh and original it is, how well it meets client wants, and whether or not there is any competition in the market.

A new product development that is tailored to the consumer’s demands is more likely to prevail, but there is plenty of evidence that goods can fail at this stage, preventing stage two from being achieved. As a result, many businesses prefer to follow in the footsteps of an industry pioneer by upgrading an existing product and launching their own version.

Market Growth

If a product successfully traverses the market introduction stage of the life cycle, it is ready to enter the growth stage. As a result of the increased demand, manufacturing should expand, and the product should become more readily available.

As the product takes off, the steady development of the market introduction and growth phase turns into a sudden upturn. At this stage, rivals can join the market with their own variants of your product – either exact copies or improved ones.

As the consumer has more options, branding becomes more crucial to preserve your position in the industry. In the face of increased competition, product pricing and accessibility become critical elements in generating sales.

Market Maturity

Since a product has already established itself in the market, the cost of developing and selling the current product will decrease. The signs of market saturation can be seen as the product life cycle reaches this maturity phase.

Many consumers will have purchased the product by this time, and rivals will have established themselves, making branding, pricing, and product uniqueness even more critical to preserving market share. Instead of promoting your goods as they could have done in stage one, retailers will become order takers and stockists.

Market Decline

The life cycle will eventually shorten as competition grows, with other companies attempting to replicate your success with more product features or lower prices.

New developments that supplant your present product can also cause decline. For instance, horse-drawn carriages fell out of favor when the car took over.

Market saturation implies there is no longer any profit to be made, so a lot of businesses will start to diversify into other industries.

Of course, some businesses can survive the downturn and continue to sell, but manufacturing will likely be on a smaller scale, and pricing and profit margins will undoubtedly suffer.

Consumers may also abandon a product in favor of a new option, but this may be reversed in rare cases when styles and fashions resurface to rekindle interest in an earlier product.

Product Development Models

Product Development Models

Activity Stage Models

These models are comparable to department-stage models, but they are more realistic since they highlight actions performed. Activity stage models also employ feedback loops to make it easier to iterate the activities.

Conversion-Process Models

In these models, new product ideas are viewed as a series of inputs into a ‘black-box’ where they are transformed into an output. Customer needs, technological concepts, and production capability, for instance, could be inputs, and the result would be the final product.

Cross-Functional Models

Communication across departments is one of the most common issues that arise during the product development process. Projects are also constantly moved back and forth between departments.

Furthermore, the project would undergo more adjustments at each interface, extending the product development process. The cross-functional teams model alleviated many of these restrictions by having a specialized design team representing people from various roles.

The utilization of cross-functional teams necessitates a fundamental change in the structure of a company. It emphasizes the use of project management and multidisciplinary teams.

Decision Stage Models

Decision Stage Models

Decision-stage models represent the new product development process as a set of decisions that must be made in order to move the project forward. They also make it easier to iterate by employing feedback loops.

The stage-gate process separates the work into different time-sequenced early stages separated by admin decision gates, which is a frequently used product development procedure.

Department Stage Models

This is an early version of NPD models. It is built on the linear model of innovation, in which each department is in charge of certain duties.

R&D (research and development) will come up with interesting technical ideas; the engineering department will take those ideas and develop possible prototypes; the production department will look into ways to make a viable product that can be mass-produced; and finally, the marketing department will plan and execute the launch.

Network models

These models highlight the process of accumulating information from several sources, including market research, development, and production.

As the project moves from the concept testing (tech breakthrough or business opportunity) through development, knowledge is gradually built up.

Response Models

These employ a behaviorist approach to change analysis. Response models, in particular, concentrate on an individual’s or a company’s reaction to a new concept or project proposal.

How Fast Can You Get a Product to Market?

Get a Product to Market

It will take around a year to get your product from concept development to market if you can get it there as quickly as possible.

That time frame pertains to the ideal circumstance, which means you have a team with a lot of development and production experience and a lot of money to invest.

Nonetheless, this is a really unusual circumstance. In order to bring a concept to the target audience in a year, the stars must align perfectly.

Two years is far more realistic for most goods. Most hardware startups can achieve their objective of one year of development followed by one year of scaling to manufacturing.

This is why having a long-term perspective is so important. Even for seasoned IT organizations, introducing a new hardware product to market takes time.

Although speed to market is essential, don’t hurry. You’ll most likely be working on getting your product to market for at least a year, if not longer.

What Is Product Development in Marketing?

What Is Product Development in Marketing

Product development allows businesses to broaden their target client bases and enter new markets. When preparing to introduce a new product, a marketing plan may help you connect with your clients before releasing the product by building interest and enthusiasm.

Your marketing plan should reinforce all touchpoints, use client data to facilitate individualized targeting, and promote your brand from all angles. Throughout the process of developing your plan, keep the customer experience in mind.

Your product marketing plan helps potential customers in gaining interest, whether your organization is developing new items or improving existing designs. Knowing how your product competes against your rivals, adapting your company’s culture around a brand, and assigning resources are all crucial aspects of marketing strategy.

Combining classic marketing strategies such as print, radio, and TV advertisements with modern marketing trends such as emails and social media allows you to reach a larger audience faster and less money. Throughout the process, keep your consumers in mind.

A product marketing plan helps your company allocate cash and resources, assess risk, and manage time as your product expands into new market areas. Your business plan should clearly define your product, determine price, set launch goals, and, most importantly, consider the user experience at each stage of the process.

Product Development Example?

Dropbox

Dropbox

Based on discoveries from their usage statistics, their platform has grown from a file-sharing platform to an organizing tool for teams. Dropbox’s first objective as a peer-to-peer network was to make the act of sharing information between users simple.

Dropbox’s cloud-based file-sharing features worked well with office applications for remote teams, thus this transition happened organically. As per one interview, Dropbox employed both bottom-up and top-down development procedures, which meant that any member of the Dropbox team could give feedback on the product’s direction.

Dropbox was able to develop features like admin capabilities, folder management, and version history as a single-user product through users collaborating with their teams. Dropbox was used by their team when they needed collaborative documentation.

Houseparty

Houseparty

Houseparty is an excellent example of how little; gradual alterations can lead to significant results. They needed strategies to boost user engagement as their platform evolved as a tool for engaging with individuals and small groups.

Houseparty used Taplytics to do A/B testing and trials to learn more about where users had the biggest issue with the app. Why consumer engagement? Since it is the statistic that most exemplifies the value of their product to their users.

Houseparty had a better understanding of what was causing user engagement drops as a result of their tests, and they found an opportunity to improve their onboarding process.

Netflix

Netflix

Netflix started as a DVD rental service. As one of the most common OTT (over-the-top) platforms on the market, Netflix’s transition toward streaming media is an ideal case study of evolving alongside market trends.

Their subsequent shift from licensing existing media to creating original content demonstrates a thorough understanding of what consumers expect from an OTT streaming service.

When we examine Netflix’s history, we notice a recurring theme: the company’s desire to reduce user friction. At crucial periods in their journey, Netflix recognized a market need and developed a product to fill it.

Every choice Netflix takes is based on detailed user data, whether it’s the simple access to DVDs in the beginning or user-profiles and on-demand streaming now. Each upgrade has also helped them in steadily increasing their pricing.

As Netflix has added value, they’ve iterated on the product experience, price strategy, and content to solve issues that their consumers have. This has allowed Netflix to align its software development approach to both business goals and consumer wants, allowing it to generate more income as it expands.

Final Thought

This is what the product development process entails. Not so little process that chaos follows but not so much process that the business is diverted from its most important objective; developing products that excite users and meet business goals.