Contact us anytime to know more - Abhishek P., Founder & CFO CISIN
Many companies focus their attention on one product. Others decide to solve a problem with their product. In all cases, they will only succeed if they have an effective product development strategy. It only matters how good your imagination and product ideas are if you have a strategy for product development.
What is a Product Development Strategy (PDS)?
Product development strategies define a framework to create new products which are financially profitable, meet customer demands, and are technically viable. They also ensure that they align with your overall business strategy. Product development is the process by which a product enters an existing market or a new one. This involves market research that continues, testing, and meticulous product planning.
You can bring an existing product to a new market. You may need a strategy to develop a current product. This is usually the case when you are adding a feature or brand or creating a complementary line. Product life cycles indicate that every product will eventually reach a plateau as revenue increases in the company decrease. This is usually the time when businesses adopt new growth strategies that are based on new products, new product lines, or new marketing techniques.
Some businesses focus on product development strategies to build digital products that will help their existing products grow. You can improve your growth regardless of whether or not you already have a popular product. A strategy for product development is usually paired with an overall business plan. The product development process may differ depending on the product goal, whether that is the commercialization or iteration of an existing product.
Focus groups are used to conduct extensive research on the market and determine the functionality of a product. This helps to understand target customer needs within certain target demographics. This data can be used by the product development team to brainstorm and develop a strategy.
It is different from new product development. Establishing objectives and making funding decisions sets the course for new products. Product development strategies are designed to give tech companies a competitive edge by putting products in the most advantageous position for achieving business objectives such as revenue growth and profit throughout the entire product lifecycle.
What is a New Product Development Strategy Process?
In addition to consulting on product strategy, a business will also need to implement the product strategy it chooses. How can you create and implement a product strategy? The strategic planning process combines the vision of the business, which usually spans a time frame between three and five years, with the steps that must be taken to achieve this product vision over the next one or two years.
The strategy is then connected to the product and technology road maps - visual representations which allow the decision-makers to understand the evolution of technologies and products over time and how they change. The roadmaps must then be linked to a budgeting system that prioritizes future innovative products and allocates the necessary resources in the early stages.
The first thing to do if your business still needs an established process for guiding new product ideas is to examine your current annual budgeting and competitive analysis processes and see how they fit into the planning process. After creating your overall strategy for the coming year but before budgeting, you will need to start the strategic planning process.
New product development is the link between strategy and implementation. While many people believe this process is all about product design (before the design), it includes other business factors, such as the profitability of the entire product's lifecycle (over its lifetime). NPD tends towards focusing on the specific product being developed. Still, it should also include similar products within the line of products as part of the product definition.
Strategic planning, as well as the nurturing of new product ideas, are responsible for the most impressive product innovations. Many organizations need a systematic system for dealing with the two aspects of future product portfolios. These steps can summarize the entire process of new product development (NPD). The same applies to startups, small businesses, and enterprises. These steps are essential to the product's success and product longevity.
Want More Information About Our Services? Talk to Our Consultants!
Ideation Process
Idea generation is the first step, in which you brainstorm new products based on existing products and market research, as well as real-world issues. It would be best if you had hundreds of product ideas before you decide which ones are the best. You can come up with new ideas in two different ways.
Internal sources of ideas are also available, where employees and stakeholders within the company can generate new concepts. This includes product managers, research and development, and other stakeholders. You could also look for ideas from outside sources. This can range from external stakeholders to suppliers and competitors, as well as secondary sources.
You may already have an effective and well-conceived strategy if your company has formalized the process of front-end development. You can create an implicit strategy if your product team begins with a structured way of gathering customer feedback. This includes focus groups, getting input from customers who are new, brainstorming, and obtaining input from internal stakeholders.
It would be best if you began with the market share and demographic segments. Also, you can start by analyzing your corporate strategy. It can be more beneficial, to begin with the existing version since you know what improvements need to be made based on user feedback, functionality, and user experience.
It is still possible to validate your ideas at an early stage - these could be screenshots or paper prototyping. Filtering ideas can steer the ideation process in different directions. You can choose one idea over another by focusing, for example, on the time-to-market; on technology and risk calculations; on an effective platform that spins off families of products or customer insight and internal procedures.
The Best Ideas are Selected
The idea screening process is simply filtering your thoughts and selecting a handful of good ideas. It is important to choose the most suitable idea from a group of ideas. New concepts cannot be used once the actual product development process has started. Any modifications made to the methodology while the product is being developed can result in delays and lag.
When selecting an idea, you should take into account both its utility and profitability. The end user is concerned with utility, but the business is concerned with profits. You can accomplish it with the aid of our product management certificates.
Tests and Conceptual Development of Products
Once you have decided on a concept, it is time to develop the product. A developed and more specific form of your idea is a product concept. If you have several, it will take more time and effort to create your product concepts. Before launching them, you must test your product concepts in the market. Testing is essential because effective product concepts require accuracy. Target audiences can be used to test ideas to evaluate how they are received and how appealing they are. To assist with pricing and product development, you can also poll consumers.
Develop Marketing Strategy
You need to develop a marketing strategy after you have developed and tested a product. Marketing strategies are developed with the target market, current market, and market share in mind. Marketing strategy is divided into several main components, such as the following:
- Value proposition
- Target market description
- Profit and market share objectives with a SMART emphasis
- Pricing outline
- Budget for marketing and distribution
- Sales, marketing, and long-term profitability business goals.
You can also track metrics with the marketing strategy.
The Business Potential of the Proposed Product
After creating a marketing strategy, it is critical to analyze and assess the product. This involves taking a look at projected costs in the future. To achieve this, you can look at comparable products from other businesses or undertake market research. You may predict your expenditures, profits, and schedule with the use of a sales forecast.
Product Development
The market analysis is followed by the start of the product development process. Up until this point, your product may have only been a basic concept or prototype. This step will make sure that your product develops into a complete, marketable product.
As it involves research and development, this step necessitates a substantial expenditure. Multiple iterations of a product are frequently created by R&D departments. It can take several months to complete and is technically referred to as prototyping. You must test your product after you've created a prototype. Customers are often brought in by marketers to test products. This helps them understand what potential customers want.
Market Testing
Test marketing is the next step after you've launched a product that has been accepted by the market. You can test marketing strategies in a realistic setting. This helps the marketer understand the perception of the product, the changes that need to be made, and the other investments the business can make. Marketing tests can last for several months, depending on the product. It's important to use the best testing practices and be as thorough with your tests as you can.
Commercialization
You will have all of the information necessary to ensure that your product is successful. You must decide whether or not to launch your new product. This step is all about introducing your product and pushing it on the market. You'll have to spend a lot of money on sales, marketing, and promotion. You should carefully consider the timing and location of your successful product launch. Your product could only succeed if you choose the right place and time to launch.
Different Approaches to New Product Development Strategy
Product Management and the Market-Oriented Approach to Strategy
A common way to approach product strategy revolves around the size of the market or target audience. This can be based on a marketing strategy, but it could also be driven by market development strategies. This is often reflected in a product-led relative focus on market or technological innovation.
A new product can be a technical innovation in an existing market, or it may find new applications on the market for products already available. Five different product development approaches were identified through research on market-oriented strategies.
- Innovative companies that create and sell new products using their resources.
- Investors who invest in technology, usually through partnerships or acquisitions with other companies (for instance, with a university research center).
- New market searchers take products already on the market and find new applications. A company that creates games could sell an app similar to a game that allows HR to test out new candidates.
- Businesses continue to sell the same products on current markets and compete based on their price, margins, or distribution.
- Companies in the Middle of the Road are content to stick with existing products, which they modify and innovate on. They have low or moderate levels of innovation.
New Product Development Strategy: A Platform-based Approach
15-inch laptops could be a subfamily of laptops with different sizes in the computer industry. The amount of RAM, hard drive space, CPU speed, and graphics capabilities may fluctuate between variants within a single family and between price ranges.
Platform-based product strategy is a great way to maximize innovation. Platforms are usually the culmination of years of business development and research, codifying all of the work that has been done to develop one or several innovative concepts. The greatest advantage of a platform is its ability to maximize the business and revenue impact of an invention. This is often best demonstrated by showing relationships between derivatives and platforms in a product roadmap.
By leveraging the design effort embodied within a platform, you can reduce engineering time and calendar time for your product variations. By leveraging existing product know-how, innovation processes can be made more effective. You can also enter new markets efficiently by creating derivatives of existing product families.
Design Thinking: A Customer-Focused Approach
A second approach would be to break from the existing product line and focus on your company's internal processes to create valuable innovations. In this market strategy, the needs of customers are put first. Design Thinking is a new approach to creating products that focuses on gaining a deeper understanding of customers. Then, they convert the information from their customers into market-ready products through a series of steps.
The creation of new winning products is the outcome of a complex information-processing procedure, which includes:
- Customer insights are used to generate product concepts
- Product Planning
- Product engineering
- Engineering Manufacturing
The focus is on the customer, not on competitors. It is more focused on the customer and is often part of Agile Product Development. This approach puts the responsibility on the internal processes to provide for the customers. However, it can also involve the customer in the process by developing a Minimum-Viable Product (MVP), which is used for market research just before launch. The same methodology applies to existing products.
What is the Difference Between Product and Corporate Strategy?
Corporate strategy is the basis of product development strategy. Product development strategy is the corporate policy applied to product development. Only a small portion of the total strategy plan is represented by the annual strategic planning for new product development. The management of product concepts is a significant but minor component of this annual strategic process.
On every level-from your technology center to your core goods to enhanced and transformative ones, to geographic segmentation or distribution channels-the product plan is linked to the business strategy. A cross-functional design team must comprehend how its activities fit into a bigger picture.
What is the Difference Between Reactive and Proactive Product Development?
To maximize profit and stay competitive, a small company may adopt a defensive approach and use a primarily reactive strategy (rather than investing heavily in new product development). They are also known as market protection. After doing market research, advertising testing, and customer feedback, they could consider expanding into multiple markets.
It is less costly to do this than go through the whole process from ideation through launch. By expanding into other markets, you can also leverage social media and encourage customers to test your product in a focused way that is much cheaper than going through the entire product development cycle.
The Stages in a Product Development Strategy for Smaller Companies
The core of product management is customizing and altering your offerings. It involves coming up with, implementing, and realizing ideas. The process of product development is comparable. If you use a sound product development plan, you can launch a great product. This approach should be used if you want to raise the likelihood that your product will succeed.
Your entire strategy is made up of several things rather than product development solutions. You don't have to copy it verbatim. You may need to adjust and make small changes to suit your product, industry, and company.
Existing Products can be Modified
A new, improved version of an existing successful product could give it a huge boost. Add new product features to the product, improve marketing, and enhance other aspects. It helps to bring a new perspective and gives the product room for growth. This is also an excellent opportunity to find out what customers want and would like to upgrade in the product. It helps in the planning of complementary product lines.
You can Change Your Ideas
It may be possible to enhance the initial product concept. This typically happens when new products need to do better with customers and the market.
Read More: Importance of R&D in Software Product Development
Test out New Products
A sample of your product that is cheaper or even free can be a good way to get customers interested in your product. People sometimes need more time to try new products, particularly when they must pay. If you're confident that your product will convert clients, then offer a product trial as an early onboarding method. If you can convince someone to try a product and they like it, there's a high chance they will buy more.
How to Increase Your Product's Value
Customers can be readily engaged by giving the value of your goods. By including more features, more quantities, more customer service, more discounts, more promotions, and so forth, you can raise the worth of your product. If you provide greater value for the same price as competing products, customers are more likely to buy your product. It is inherent to want to pay less for the same thing.
Specialization and Customization
Some people will grow bored if you treat your whole target audience the same way. You won't build brand loyalty or affinity. Your customers are likely to switch brands if someone comes along with a better-valued product.
Specialization and customization are the best ways to combat this. Apple, for example, offers the option to have your name imprinted on your Mac. Dell also does this with its computers. This small bit of customization and specialization increases brand loyalty and makes the customer feel important. It allows the customer to select a product that best suits their needs.
Add New Products and Product Lines
The development of new products is dependent on many factors. However, the most effective way to get it started is by launching complementary ones. You can gain the trust of the customer by adding new products or expanding your current line. You can also launch more products to create a stronger product mix.
Concentrate on Package Deals
Even though your product may be excellent, many people like to get deals. Making package deals is a good way to motivate them. So, you can expose your clients to different products. You can ensure that your customers try other products by doing this.
Discover New Markets
Your product development plan should consider selling your products in different markets. It's important to reach out to people from different groups, demographics, and locations. This allows the product to expand exponentially.
What are the Best Ways to Make or Buy Decisions?
As companies grow, one of the questions that persist is whether they should rely more on M&A or organic development. A different way of asking the same question is: how much money should a business spend on new technology vs. buying it? Should they use the existing team for development or look outside? Should they invest in existing product lines or even further develop them? These and other questions are part of many product development engagements.
The price and worth of the technology are two of the most crucial factors in deciding whether to buy or sell. The amount of money required to purchase the new technology is shown on the matrix's X-axis. The strategic importance of the technology for the company is shown on the Y-axis. Do your core business and its future depend on the technology that you are looking to buy or create? You can assign it a low, middle, or high strategic relevance rating.
As part of the New Product Introduction process, which approaches product development from a manufacturing viewpoint, these choices may also be made by the manufacturing organization or operations department.
Five Tips for an Effective New Product Development Strategy
Tip #1: Look for ways to innovate away from the core product. Find a new way to innovate that doesn't have anything to do with your core product but has an additional benefit. The package tracking was what gave them the advantage. Market dominance is possible with the enhanced product, not just the core one.
Tip #2: Look for new applications of existing products. A gaming company, for example, could find an application in creating a game app to be used by HR departments when screening candidates. Consider products that might be successful in markets adjacent to your own.
Tip #3: Connect your vision corporately to the product strategy specialists and budgets. Establish clear lines of communication between budgets, technology, strategy, and product development. You can use road maps to outline the steps you'll take to implement your product strategy.
Tip #4: To manage a product portfolio, you need a process that is tied into R&D budgeting and spending, as well as a daily, ongoing process where a project team empowered with the right tools can move product development projects forward until they have been fully funded.
Tip #5: You need the proper governance and money to support new product ideas and to fill the pipeline with new, successful goods. For choosing and carrying out tasks, you also need a tested method.
Want More Information About Our Services? Talk to Our Consultants!
Conclusion
The product development strategy you select has a significant impact on the product strategy. The former is required for the latter. Additionally, this is a way for marketing teams, product project managers, and product marketing managers to work more effectively at their jobs.
However, you must be meticulous and reliable in order to execute your product development strategy flawlessly. You should employ a comprehensive product development strategy and adhere to the entire new product development cycle. It's not about doing everything but rather making sure that you do all of the things possible to ensure the quality of the product and the satisfaction level of the consumer. Last but not least, your strategy for product development should always be customer-focused and solution-oriented.
