What is product development?
Product development, also known as new product management or new product development, is the process of creating a new product or modifying an existing product for market. While the term “product” often refers to a physical entity, the process of product development includes services in addition to physical products.
Product development serves several purposes for both the company and customers. Primarily, product development:
- Offers value to customers: New products with innovative features provide value to customers.
- Improves the marketplace: Bringing new products to market spurs competition and encourages other companies to increase the value of their brands. This type of competition benefits everyone.
- Fosters company growth: Adding new products to your company’s line up should increase your profitability and help your company grow.
Stages of product development
Every company handles product development differently, depending on the industry, although there are some basics when traveling through the stages of product development, such as:
1. Idea generation
In the idea generation stage of development, researchers and developers are looking for great new ideas for products or services. Some companies have ongoing idea generation, some devote certain times of year to product ideation and others only seek idea generation when their business is ready to engage in the full process of product development. In the idea generation stage, employees come up with possible product ideas to develop.
2. Product selection
In the product selection stage, the group working on product development takes the ideas generated in stage one and assesses them for quality and feasibility. In some cases, the development team goes into the ideation phase with a general understanding of what they hope to create, while for others, the entire process is open-ended. In both scenarios, the goal of stage two is to arrive at a single permissible product idea to pursue.
3. Concept development
Once the team has established a feasible product idea, they take the concept to a testing group for feedback and development. Sometimes, this team is another set of internal employees disconnected from the initial stages of product development. Sometimes, it’s a group of outside stakeholders, like current company customers. Many companies solicit feedback from both internal and external stakeholders to fully develop their product idea.
4. Market analysis and development
Following the formation of a fully-fledged and vetted product idea, the development team performs market analysis. This process involves strategizing how to best bring the product to market, specifically in these areas:
- Price: The team determines the sale price for the product based on competitor pricing, market demand and anticipated profit margins.
- Promotion: The development team works in conjunction with a marketing team at this stage to begin developing an effective marketing and advertising plan.
- Placement: Finally, the team determines where they’ll sell the product. Some companies sell exclusively online, some sell only in brick and mortar stores and others do a combination.
5. Product design
Often simultaneously with the market analysis and development stage, the design team actively begins creating a prototype of the proposed product. Depending on the industry, type of product, intricacy of the design and manufacturing cost, the team may design the product using computer software, inexpensive materials like clay or plastic or make a full-fledged true-to-market example of what the company intends to sell.
6. Prototype testing
After completing the design phase, the development team takes the prototype and performs several types of testing on it. Usually, there’s technical testing to ensure the product works as expected and meets any safety regulations. There’s also market testing, in which the team shares the prototype with internal and external stakeholders for feedback. After gathering the results of the technical and market testing, the design team makes any necessary adjustments to the product before starting manufacturing of the official product.
7. Product launch
The final step in product development is planning and implementing the product launch. This stage primarily falls to the marketing team. They’ll create a comprehensive plan to engage with current company customers and potential customers through traditional and digital marketing channels to share information about the new product leading up to the day of the launch. Often, there’s a big event at the store or online on the actual launch day.
Tips for a successful product launch
Use these tips to help you structure an effective and successful product launch:
- Plan ahead. If you can, begin planning your product launch a year in advance. This way, you have plenty of time to establish your plan and start sharing information with your customers.
- Use the product. Prior to the launch, ensure any employee who will have a hand in selling the product has had the opportunity to use it, as this better prepares them to answer questions about the product.
- Understand your competition. Know what similar products are on the market from your competitors and be prepared to discuss why your product is better.
- Create interest. Begin establishing interest in your product early so news of the launch spreads organically.
- Increase momentum. Slowly build momentum to launch day over time to keep customers intrigued and excited about the product’s release.