What Is Product Development? (Plus Helpful Steps and Tips)
Updated February 3, 2023
Every product for sale at retail stores has undergone a detailed development process created by a team of individuals. If you're on a company's design team, you may help generate the product ideas, including considering development factors, such as the advertisement strategy and commercial release launch. Understanding how this process works may help you create a successful product launch for a company.
In this article, we discuss product development, its importance and four types of product classification, and we offer six steps and tips on creating a development plan.
What is product development?
Product development entails conceptualizing an idea for consumable goods and releasing them into the market. To develop a product, a company identifies the idea's potential consumer classification, specifies a target audience or market and sources the raw materials. Usually, companies follow a process for developing product ideas and readying items for sale. Many stakeholders are involved in this process, including designers, innovators, engineers, marketers, machine operators, financial analysts, market researchers, salespeople and executive decision-makers.
Why is product development important?
Product development is important because it can provide new value to customers, improve society and maintain or enhance a company's standing in its market. Developing a new product can provide new value to a company's existing consumers and interest potential leads. For example, if a company develops a line of laptops, it can begin developing additional products for the laptop, such as cases or wireless devices, to keep the customers interested.
Additionally, if a company develops a new product, it may have the potential to improve society by making life easier for individuals or improving the environment. For example, a medical company may develop a new drug to help individuals with a health condition experience an improved life. Last, businesses can develop products to maintain their place in the market and maintain consumer interest, allowing them to stay in competition with similar brands.
4 product classifications
Product classification organizes products into various categories. There are four category types, and identifying the right classification is a key component of developing and marketing new products. Each category has distinct qualities, and business strategists and marketers use them to predict consumer behavior, estimate purchases, determine the potential demand and calculate the estimated revenue.
Here's a list of the four product classifications:
1. Convenience goods
Convenience goods are items consumers regularly buy to meet their basic needs. Some examples of convenience goods include soap, detergent, deodorant, shampoo and toothpaste. Typically, convenience items have a lower price compared to other market competitors. Additionally, consumers may have loyalty to their chosen brand for items in this category. This makes marketing brand awareness and product campaigns essential for the successful launching of this product type.
2. Shopping goods
Shopping items are commodities individuals purchase to fulfill their needs and wants. These items can include clothes, shoes, electronics and home goods. Shopping goods prices may range based on the target markets and raw materials required for their creation. In this category, companies tightly link buying habits to consumer research, supply and demand, social influence and impulse purchasing. For these reasons, sourcing materials and prioritizing target markets are crucial to the product's success.
3. Specialty products
Specialty products are items with unique characteristics or substantial buyer recognition and brand loyalty. These goods can include luxury items or shopping items. They comprise the products consumers don't feel compelled to compare with competitors or those where there are no competitors for the brand. Some examples may include luxury cars, one-of-a-kind technologies and high-end designer fashion brands. Success when launching specialty products relies heavily on the raw materials and the product's adherence to brand standards and customer expectations.
4. Unsought goods
Unsought goods are products consumers buy out of obligation. Typically, these are not items individuals wish to purchase or fantasize about buying. These goods can include fire extinguishers, life insurance plans and tombstones. Success in launching this product type relies heavily on the marketing campaign, product availability and a company's ability to make customers feel at ease with their purchase.
Strategies for developing products
There are several strategies you can implement for a company to help with developing its product. Here's a list of several product development strategies:
Creating new products: When creating new products, companies may rely on their brand recognition, existing customer base and target markets. For new companies, launching a new product depends on the quality of raw materials, potential product impacts and the ability to develop strong brand awareness.
Modifying existing products: Modifying existing products by creating an updated version is a strategy companies use to motivate new buyers and engage loyal customers.
Changing ideas: Changing the product design or product direction is a strategy companies use when their target market isn't responding to a product launch as the company anticipated. For example, companies conduct market research and adapt their ideas or designs to meet the consumer's needs and desires.
Offering free trials: Offering a free or low-cost product sample or trial can be an enticing way to develop a loyal customer base or brand recognition.
Customizing options: Companies may build customization or specialization into their product design. For example, beauty products designed to match specific consumer needs or clothes that include an individual's name or photo may entice buyers and increase customer engagement.
Finding new markets: Similar to changing a product design, when a target market isn't responding well to a product launch, companies may attempt to find or reach new markets. They may consider targeting a different demographic, geographic location or buyers in a niche consumer group.
How to create a product development plan
Here's a list of the six steps for designing a plan for developing products:
1. Generate an idea
The first step is to generate unique product ideas. Formulating your product idea may stem from the desire to resolve personal lifestyle challenges or noticing a need or desire for a certain product type within a community or niche market.
For example, someone who finds it difficult to carry a vacuum up and down the stairs might develop a lightweight product to make the task easier. Another example might be if someone notices an increase in the consumer trend of purchasing gluten-free items, they might develop a gluten-free version of an existing company product. This process can involve researching, generating creative thoughts and innovating.
2. Screen and select ideas
The next stage is screening and selection. For ideas generated within a company design or innovation team, this process takes place internally. In cases like this, a product development team may use industry knowledge in market research to determine whether a product aligns with its company mission and evaluate its potential to thrive in the consumer market. For other individuals, like small business owners, this selection process takes place while pitching ideas to companies or investors to secure funding or sell their product design.
3. Develop the concept
After receiving approval from an internal product development team or acquiring private funds, the next step is to further develop the concept. During this stage, companies may determine the product's classification and the target audience or market. They can conduct market research and discuss with other company individuals to ensure the product idea meets the needs of the potential consumers.
4. Create the product
Physically developing the product is a technical component of creating a product. This is the stage where you can source materials and build prototypes. You can measure the prototypes against one another and evaluate them to determine which design model is best. Companies base these decisions on supply and demand, marketability, aesthetics, costs, storing options and potential revenue earnings.
5. Conduct market research
After you or the company have chosen a design model, marketing teams can conduct studies and focus groups to ensure the product design meets the consumers' needs. These studies may include roundtable discussions, taste tests, surveys, questionnaires and interviews. The studies can confirm the product classification and target market, and the work the team does may ensure the selected prototype is ready for product release.
Market researchers gather information and data from research studies and focus groups to generate metrics and assess profitability. The results may also lead to a company changing the product design, adapting the campaign direction or refocusing the target market or audience.
Related: Guide to Product Adaptation
6. Launch the product
The last step in product development is launching the product for the public or promoting a limited sale. This includes finalizing details, starting a marketing campaign, producing the first product batches for sale and scheduling distribution. Depending on the market or company reach, the distribution of the products may be online, in retail stores or across multiple external vendors. Additionally, product launches may include engaging customers through email or social media marketing, releasing commercials or contracting brand ambassadors.
Product development tips
Here are some tips for launching a product:
Study market trends
Market trends refer to consumer buying habits, desires and behaviors. There are many free reports, digital tools and analytics that evaluate and assess customer behaviors and industry trends. You can use this data with social observations to make informed estimations or predictions about how specific groups might respond to a design or product.
Research your competitors
The first step in researching your competitors is determining where your products are in the product classifications. Knowing whether a product is a convenience or a luxury item may help you identify a brand's competitors. Compare prices, product availabilities, marketing tactics and product placements in the stores. This information is valuable for developing and conceptualizing launch strategies, marketing plans and sale prices.
Copyright your idea
Obtaining copyright is claiming legal ownership or authorship of an original idea or product. If the item you are hoping to sell is a new technology or invention, or it contains original artwork, consider this process. To get copyright and protect your work, research online to find the paperwork, fill out the forms and submit them to begin the process.
Develop a prototype
A prototype is a working model of a product design. Having a working prototype is beneficial for sourcing funds and pitching to the company's investors. Additionally, creating a prototype can help start the processes of determining price and assessing the functionality of the raw materials required for the production and final product.
Create an elevator pitch
An elevator pitch is a brief description of a product, idea or solution. An ideal elevator pitch summarizes a product, its target market and the intent for launching it. Typically, it's short, informational and persuasive. The purpose of developing an elevator pitch is so you're prepared to speak comfortably and efficiently about a product or idea. A strong pitch can help you fund your launch or sell a product design to an existing company.
Be flexible and patient
It's vital for inventors, entrepreneurs and small business owners to be flexible and patient while developing a product for launch or sale. Even individuals with successful product ideas sometimes adapt their designs or plans in order to reach their goals. If you have a product or prototype that can solve consumer challenges or meet the needs of a specific niche or market, being adaptable may help you bring a product to reality.
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