What is a Great Product Development Strategy?
With new products entering the market every day, there’s an ever-growing need for better product development. Things like the industry, type of product, features, and other factors come into play. That’s why you need an excellent product development strategy.
A lot of companies tend to focus on a product based on their customers. Some decide to offer a solution to an existing problem through their product. But, in all cases, until they have a proper product development strategy, there’s a good chance they’ll fail somewhere along the line.
You can have the best ideation process and product idea, but it’s not going to do much without a product development strategy. If you're interested in learning more via video then watch below. Otherwise, skip ahead.
In this article, we’ll go over what a product development strategy is and how you can develop a great one for your product.
Let’s get started.
What is a Product Development Strategy?
A product development strategy is a process of bringing a new product into an existing or new market by doing continuous market research, thorough testing, and careful product concept planning.
It can also be about bringing an existing product into a new market. At times, you may also want a product development strategy for any current product in the current market space; however, that usually happens if you’re introducing a new feature, are rebranding, or launching a new complementary product line.
According to the product life cycle, every product eventually plateaus as the business revenue growth diminishes. That’s usually when companies adopt new product-led growth strategies, additional product lines, or a new marketing strategy.
Some companies focus on new product development strategies that allow them to create new products to help current products grow too. It doesn’t matter whether you have a successful product or not; you can use a product development strategy to improve growth.
A product development strategy usually works along with a business strategy. Depending on whether it’s the commercialization of a product, additional iterations of an existing product, or anything else, the product development process can differ.
The functionality of the product is usually the result of extensive market research through focus groups. That helps understand the customers’ needs in certain demographics and target markets. The development team can then use that data for brainstorming and come up with a proper strategy.
Product Development Strategy Process (NPD Process)
The entire new product development process (NPD process) can be summarized into eight steps. It’s the same for startups, SMEs, and even enterprises. All development projects go through these steps, and they are crucial to the success of the product life cycle.
The first step is idea generation, where you systematically brainstorm new product ideas based on real-world problems, existing market products, and basic target audience research.
For any product, you need to come up with hundreds of ideas, so you can decide on a few good ones. There are two ways to come up with ideas.
You can either go for internal idea sources where existing company stakeholders and employees come up with ideas. That includes research and development, product managers, marketers, and more.
On the other hand, you could go for external idea sources. That can include everything from outside stakeholders, suppliers, and competitors to secondary sources of inspiration.
Screen the Best Ideas
Idea screening is just filtering all your ideas and choosing a few good ones. The point is to pinpoint a certain kind of idea and then choose the best idea among them.
Once the product development process officially starts, you can’t go back and think of new ideas to implement. Any methodology that’s changed during the process can cause lag and delays.
When choosing ideas, there are two things you should look at – profitability and utility. Profitability concerns the company, and utility concerns the final user.
If you're interested in learning how to create a great product strategy, then take a look at our product management certifications where we help you do just that.
Product Concept Development (and Testing)
When you’ve decided on an idea, the next step is to turn the idea into a product concept. The product concept is a more comprehensive and detailed version of the idea.
You can develop multiple product concepts for various ideas, but that just means more time, effort, and resources are being used.
When you develop a product concept, you need to test it out in an existing market. Product concepts need to be pretty precise to have an impact, and that’s where the testing comes in.
When you test out concepts with target audience clusters, you can see the people’s response, appeal, and reliability of the concept. Meanwhile, you can ask the consumers specific questions that will help you with product design, pricing, and prototyping.
Develop Marketing Strategy
After you’ve developed a complete product concept and tested it, you need a working marketing strategy. The marketing strategy is developed by keeping the current market, market share, and target audience in mind.
The marketing strategy has a few main parts, including the following.
- Value proposition
- Target market description
- Profit and market share goals (focus on SMART goals)
- Pricing outline
- Marketing and distribution budget
- Long-term profit goals, sales, and marketing mix.
The marketing strategy also allows you to track certain metrics.
Business Potential of Proposed Product
After the marketing strategy, it’s important to evaluate and analyze the effectiveness of the new proposed product. That includes viewing future projections, costs, and more.
To conduct this research, you can either go for market surveys or look at similar products by other companies. Developing a sales forecast will help you estimate costs, profits, and a timeline.
After the business analysis, the product development starts. Up until this point, your product was a rough idea, prototype, or a potential product. However, this step ensures that it becomes a full-fledged product.
This step usually requires a lot of investment as you will be spending on research and development. Usually, the R&D department tends to make multiple versions of the product. Officially, it’s called prototyping, and it can take months to figure out.
After you have a product prototype in place, you have to test it out. Marketers tend to bring in customers for product testing; it helps them get an idea of what the customer wants.
When you have a product in a place that’s accepted and ready to launch, it’s time for test marketing. This is where you test out marketing strategies based on realistic market settings. It helps marketers understand how the product is perceived, what needs to be done, and what other investments the company can make.
Marketing testing can run for months, depending on the product. However, it’s best to be as thorough as possible and use testing best practices.
The final step is where you have a working product, marketing strategy, and all the relevant information you need to make it work. At this point, you have to decide whether to launch the new product or not.
The step is just about officially introducing and pushing your product in the market. That means you’re going to be spending large amounts on marketing, sales, and promotions.
Keep in mind that you need to carefully plan for the introduction timing and place. If you launch at the wrong time and/or place, your product may end up failing.
Stages of a Product Development Strategy
Product management is all about adapting and modifying your current products to create, innovate, and actualize ideas. Product development works in a similar manner.
If you have a great product development process, you can effectively launch a great product. However, if you want to further improve the product’s chances of success, you can follow this product development strategy.
This isn’t a one-in-all solution to your strategy, but in fact, it is a culmination of multiple things that make up the entire strategy. It’s not necessary to follow it word-for-word. You may need to make slight changes and adjustments according to your industry, company, and product.
1. Modify Existing Products
Creating a newer and better version of a successful existing product can give it a massive boost. You can add new features, work on better marketing, and upgrade other aspects of the product.
This helps bring in a fresh perspective on an existing product while giving it room to grow even more.
It’s also a great opportunity to see what features customers tend to want the most and what they would want to see upgraded in the product.
In the long run, it helps plan for complementary and supplementary product lines.
2. Change Up Your Ideas
While messing with the initial product idea may seem counterintuitive, it can work out in some cases. It usually happens when the market and consumers aren’t responding well to new innovations.
For example, the removal of the 3.5mm jack from smartphones wasn’t received well by consumers since it meant using wireless earphones. To counter that, companies started to make Type-C cable earphones because that’s what the market wanted.
That’s why at times, you need to devote some resources to see what the market wants and change up your ideas accordingly.
3. Offer Product Trials
Offering a less expensive or free version of your product as a sample is a great way to convince customers to try your product. At times, people are often skeptical about trying new things, especially when they have to pay for them.
However, if you have a great product that’s bound to convert customers, you can offer product trials as a way of early onboarding.
There’s a good chance that if you convince a customer with a trial for one product, they will be more likely to buy other products too.
4. Increase the Value of Your Product
Engaging customers can be pretty easy if you add additional value to your products. Every product provides a certain value based on its utility, but you can add more value by offering more features, better quantities, customer support, discounts, promotions, and more.
If you’re competing with a product that offers no added benefits, customers are more likely to buy your product because you’re providing more value at the same price.
It’s inherent to want a better deal for the same product at the same price.
5. Customization and Specialization
If you paint your entire target market with the same brush, chances are that some of them will eventually grow tired. Furthermore, you won’t be building brand loyalty and brand affinity. That means the moment someone else comes up with the same product with better value; your customers will switch to that.
The best way to develop your product to counter this is to offer specialization and customization in your products. For example, Apple offers to imprint your name on your Mac, and so does Dell with their computers. That small but of specialization and customization improves brand loyalty and gives the customer a sense of importance.
In other cases, it allows customers to choose a product that suits their needs and wants.
6. Create Additional Products and Product Lines
Product development is contingent on a lot of factors, but the best way to jumpstart it is by launching new products that complement current ones.
Starting a new product line or adding products to current product lines gives you the same level of trust the consumer has in you. Meanwhile, you can launch multiple products and build a better product mix.
7. Focus on Package Deals
Your product might be great, but a lot of people tend to like deals. It’s a great motivator for them to make the final purchase, and that’s why making package deals for your products works.
That way, your customers are exposed to a variety of your products in different cases. This way, you can also make sure your consumers try out other product offerings.
8. Find New Market Spaces
Every product has the potential to be sold in multiple markets, and your product development strategy should take that into account.
That’s why it’s best to target people in different demographics, groups, locations, and more. It provides the product with the opportunity to grow exponentially.
Creating a Great Product Development Strategy
Your product strategy is largely contingent on your product development strategy. You need the latter for the former. It’s also how product managers, product marketing managers, the product team, and the marketing team can do their jobs more effectively.
However, to nail your product development strategy, you need to be consistent and thorough. It’s best to follow all the steps in the new product development process and then utilize the complete product development strategy.
The idea isn’t to do everything; the point is to do everything possible without compromising on product quality or the consumers.
Lastly, always keep your product development strategy customer-focused and completely solution-oriented.