Aspiring entrepreneurs working to introduce an original product in the market faces several challenges. The new product development process is rarely a straight line but if done in the right way, the process can cause a digital disruption when the new product hits the market and solves customers’ needs in an out-of-the-box, untried and unique way. Therefore, the business is able to achieve product-market fit when it meets end users’ needs
Several companies have successfully introduced new products in the market. These include video communication by Zoom, task management by Trello, remote designers by Figma, cloud storage by Dropbox, relational data management by AirTable, etc.
A lot of planning and market research goes into new product development. The goal is to bring into the market a product that meets customers’ needs. Here is a complete guide to getting you started on new product development.
What is Product Development?
This is the process of converting an idea into a new product. It is the process that an entrepreneur follows before launching a product to a new market, renewing an existing product or introducing an old product to a brand new market.
The product development steps are not standard, so they vary from one product to another based on the company’s management style and nature of its business.
The following are 7 product development stages.
Stages of New Product Development
1. Idea Generation
Solving customers’ problems should be entrepreneurs’ priority and so they should generate several worthy ideas. It’s characterized by several brainstorming sessions with the goal of coming up with raw and unproven ideas and discussing how to convert them to solutions for an existing problem.
The following is how businesses foolproof their ideas.
Focus on the Target Audience’s Problems
Being able to describe a problem demonstrates the ability to solve it. So a business cannot introduce a solution to a problem that it doesn’t know about it.
Here is how you can identify the challenges that your target audience is experiencing.
Personal Problems: Most lucrative ideas and products originate from problems that founders experienced in their personal life. Twilio founder, Jeff Lawson built a communication-based software because he worked with three business companies that lacked productivity. When he established his business he began by tackling communication gaps which he believed were the biggest roadblocks on the path to productivity.
Evaluate Shortlisted Problems: Check the feasibility of the problems and their solutions that you have listed. Check whether the proposed solution fills an existing customer experience gap and it will achieve product-market fit. Confirm whether solving the present problem is a compulsion or a choice. Check whether the problem is urgent and if the target market demands a solution. Look for the availability of products addressing the problem and to what extent.
Craft Possible Solutions: You might discover that the present problem is unidentified and there are no possible solutions. So this becomes a potential new product development opportunity for a unique product. A company can decide to use an existing product to solve the present problem differently or launch an entirely new product.
Qualify Problems & Possible Solutions: It will be prudent to create a comparison chart at this stage that shows the comparison between the problems and potential solutions. Next, share the findings with others and get their feedback. Try to Replicate, Re-Purpose and Upgrade if the stakeholders are not convinced with the shortlisted ideas.
- Replicate means creating a similar product to what your competitors have. However, your product should be unique features.
- Re-Purpose involves rewiring an existing product in order to expand the market share and target audience.
- Upgrading introduces a superior product than what is available in the market. The product should have improved performance, added functionalities, better speed and addresses competitor’s challenges.
2. Idea Screening
In this product development stage, the stakeholders want to choose the idea with the highest potential for success. So you will put all the ideas on the table and review them one by one using individuals with industry knowledge and experience in that field.
A proof of concept (POC) holds precedence when screening the idea because it helps you check whether it is technically feasible to build or not.
SWOT analysis provides a detailed analysis of whether the idea’s strengths and opportunities surpass its threats and weaknesses.
3. Concept Development
Provide a detailed version of this solution and user stories. This stage allows you to arrest problems early enough and correct them.
The concept development steps include:
Calculate the Gain/Pain Ratio: The step allows you to see the solution from the user’s perspective. So the gain is the benefits customers derive from the product while the pain is needed effort to use and understand the product.
Carryout Competitor Analysis: It’s important to understand existing market players because it will make it easier to know what competitors are lacking, the scope for improvement and the present market white space.
Enlist the Innovative Features: Highlight the main features that will solve the problem.
Draft a Value Proposition Chart: Describe the idea to users in a matter that they can tell what the new product is capable of doing for them.
Test the Concept: Select a few customers and present the value proposition to them. Be ready to go back to the idea screening step if the customers don’t find it promising at all.
4. Market Strategy
Creating a strategy that can help you reach your target audience is vital. McCarthy’s 4Ps is one of the straightforward methods you can consider. They involve;
Product: The branding strategy, product design and service levels being offered.
Price: Discounting policies, pricing strategy and payments modes.
Promotion: The mediums you intend to use to reach the target audience,
Placement: Define the scope of your products i.e. local or global.
On the other hand, business analysis helps you to evaluate whether this product development is worth the financial investment and if it will generate a continuous stream of value.
A good strategy regarding the selling price is needed and it should be after considering the base price of the product. Here is how you can get the base price.
Cost-Based Pricing Model: The new product’s final price is equal to the initial production cost plus the markup percentage.
Market-Focused Pricing: Infer the price after analyzing the pricing model of similar products.
When selecting a competitive price, it is important to consider the following factors:
Price above Market: This high price is set when developing a product to solve an urgent problem in the market.
Copy Market: The price is set at the same level as that of the competitors. But the brand has to increase its marketing efforts in order to overpower the competitors’.
Price below Market: It’s always recommended to set a lower price than your competitors in order to attract more customers and make them loyal. This can be true even when the product works differently.
5. Product Development
The product development cycle comes after screening the idea, documenting market strategy and completing a business analysis.
Developing a new product start with a prototype then followed by the minimum viable product (MVP).
Prototype: It involves creating the product’s UI/UX and sharing it with stakeholders. A prototype helps people visualize how the final product will be and whether it will meet the ergonomics best practices. For other types of products, prototyping allows you to experiment with their different versions, making improvements and eliminating options until you’re satisfied with the final sample. Therefore prototyping is different from different product types.
Minimum Viable Product (MVP): The MVP is launched after the design, development and testing phase. This product has minimal features and changes are done based on initial responses. The MVP for other products has enough functionality and early customers can use them in that state. This version helps validate a product concept at the early stages of product development. Further, product managers get user feedback early enough to help them make incremental improvements during the product development process. Lastly, MVP helps companies to gauge customers interest, as well as test price sensitivity thus help you to build something more valuable for your target audience.
6. Market Testing
For software products market testing is done to minimize any uncertainties around its success. It’s important to check the new product’s viability or its marketing campaign. You can use the following marketing strategies.
Alpha Testing: Test engineers judge the product on a performance basis.
Beta Testing: Customers and target groups put the product into use and provide unbiased feedback.
In-Home Usage Test (IHUT): Intended customers are given the developed product for them to use and record their feedback which becomes the foundation for further improvements.
This stage has strategies that ensure that the new product is successful. They comprise production, distribution, marketing, sales, and customer support. The strategies are geared towards making a product-market fit and attract the attention of the target audience.
Here is what you can do to help your product gain traction.
Marketing the Concept over Product Features: Discuss the intent of your product instead of boasting about its features. Tell your customer how they’re going to benefit from your products.
Have a Unique brand Voice: The marketing team should effectively represent the brand whether using content marketing, email marketing or website. All the content should be clear and consistent.
At times marketing your product through expensive ads can be effective if you have the budget to do so. However, you can still develop a successful go-to-market strategy such as email marketing, affiliate marketing campaigns, promotional gifts, customers’ reviews, or enable Instagram shopping.
The product development journey is different from one product to another. The above process is for software products that are slightly different from other products such as fashion, beauty, food, and beverage.
You can use the 7 stages of product development to introduce a new product to the market.