One thing that all businesses have in common is that profitability, and ultimately their success is determined by their ability to sell their product. Whether it is a physical object, a service, or an experience, the development of products that resonate with their target audience is what will ultimately determine the success or failure of a company.
All products undergo a similar life cycle.
- Introduction – New to market, not widely known
- Growth – Product begins to gain traction in the marketplace. Product/market fit achieved. Sales increase.
- Maturity – Product is well known. Sales begin to reach peak.
- Decline – Product becomes dated. Sales decline.
It is because of this continuum that innovation is critical, and why successful businesses have some level of ongoing product development in their DNA.
And yet, according to Inc.com, a staggering 95% of all new product ventures fail each year.
More often than not, it’s the lack of a product development process that is the root cause of the failure.
Deep Dive: The Importance of Business Innovation
What is a New Product?
Market Development vs. Product Development
Businesses seeking growth can choose between two core strategies for increasing their market share: Market development or product development.
Market development takes existing products and introduces them to a new market, often incorporating changes that meet the unique needs of that target market.
- McDonald’s expansion into the Chinese market. Although the brand has been in business since the 1950s, in 2013 when they expanded their chain into the Chinese market, they were seen as a new product to the Asian consumer.
- Google Glass is widely known to be one of the biggest consumer product flops in recent history. However, this essentially hands-free technology is being embraced for its efficiency in both the manufacturing and healthcare sectors.
In both cases, the core product remained the same, while diversification came in the form of a new market.
On the other hand, product development involves bringing a new product to a market, or modifying an existing product to meet changes in an existing marketplace.
- Automobiles incorporating innovative technology such as backup cameras, hands-free audio, and keyless entry, just to name a few. In each case, the addition of one or more new technologies resulted in a “new” version of the original product.
- Apple developing the Apple Watch, targeting the existing iPhone audience with a new product that offers all of the popular features of the iPhone, with the convenience of a wearable.
The target customer remained the same, but the business evolved and/or pivoted their product development to meet customers’ growing needs.
Both market and product development are important for business growth. However, strategic business goals help determine which methodology will be the most beneficial.
The Ansoff Matrix helps break down the options:
In a nutshell, the Ansoff Matrix guides businesses in mitigating risk when making decisions about the best pathway to diversification.
Stages of Product Development
As Benjamin Franklin said, “If you fail to plan, you are planning to fail.”
The biggest reason 95% of new products fail is simple: poor planning. Once it’s been determined that your focus should be on bringing new products to an existing market, a product development process is a must.
Different variations of this process exist, some with fewer stages, some with more. However, the core principles of the product development process include:
|Brainstorming||Free flow of ideas based on meeting the needs of the current customer|
|Idea Evaluation||Which ideas are most viable in terms of meeting customer objectives and the ability to bring to market?|
|Market Research||How can we meet the needs of our current customer?|
|Competitive Analysis||In what ways are our competitors meeting or failing to meet our customer’s needs?|
|Prototyping||Creating a tangible product that can be tested and amended prior to launch|
|Market Testing||Presenting the prototype to a segment of the target customer base for evaluation and feedback.|
|Launch||The plan and implementation for making the new product available and promoting it in the current marketplace.|
The point is, whether your preferred process is four, seven, or ten steps, having a process to begin with is key to overall product development success.
The Process of Product Development
Once we understand the need for new products and the stages of product development, it’s time to start considering the components that will make up your new product development process.
Writers are taught the strategy of freewriting which gets ideas on paper before any editing or organizing takes place. The idea behind this is to maximize creativity, without the mental distraction of the tactical writing process.
In product development, idea generation is the messy, yet critical first step most akin to the freewriting process.
Get the most out of idea generation by keeping the following in mind:
Foster a judgment-free brainstorming environment, where contributors feel comfortable sharing free-flowing ideas on what may resonate with the existing customer base.
Know your customer. What are their pain points? How can you provide additional value to them?
Everyone is a resource. Sales, Customer Service, Tech Support, Executives – you name it. Everyone in your business has a unique point of view and ideas of how the customer can be better served. Loop these folks into the product development process for additional perspectives.
The Product Scope
If idea generation is the theoretical creative step, the product scope is where we start to sweat the details. It’s the fuzzy front end resulting from the idea generation stage, and in the end, becomes a cohesive roadmap that all project stakeholders can refer to throughout the development process.
The product scope is a tangible document providing the necessary framework to guide the remainder of the project. Ideally, it will include the following:
- Assumptions and constraints
- Roles and responsibilities of stakeholders
- Estimated costs
While it’s likely the charter will evolve as the project progresses, having a written scope will be instrumental in overall efficiency, while helping keep the development team on task.
Product Scope Deep Dive: What are Product Scopes?
Concept testing is the first opportunity in the new product development process to get feedback from customers on suggestions brought forth in the idea generation stage.
The goal of the concept testing step is to determine if and how a business should:
- Proceed with the concept as is
- Refine the concept
- Eliminate the concept altogether
Before too much time and resources are spent on bringing the concept to market, the qualitative data gathered from customer feedback allows the development team to determine the best course of action for the remainder of the project.
Concept Testing Deep Dive:
Technology Product Development
It’s easy to see how incorporating technology into product development can be beneficial. Tech tools to help us gather and store data, streamline communication between shareholders, and expedite prototyping, testing, and launch processes.
But what happens when technology is the product?
The principles of new product development also apply to software development – just in a less conventional way.
In The Agile Manifesto, Jim Highsmith details The 12 Principles of Agile Software Development:
The Agile Software Development methodology puts the emphasis is on interaction and collaboration, rather than adherence to a concrete plan.
Software Development Deep Dive:
Regardless of the product or customer, all businesses must maintain an attitude of continuous improvement to remain competitive and profitable, and to continue meeting their customers’ evolving needs.
For businesses who determine that new product development is necessary to help meet their business goals, comprehensive planning is the key to success.
Get Invited to Early Access!
Write product specs, plan sprints, get insights, and more!