Product Development: An Informative Guide (2021)
Introuction
1. Product Development Definition
Product development, as the name suggests, refers to the creation of a new product or the up-gradation of an existing product that possesses some marketable utility. It may also involve enhancements or changes made to the methods of production. There are three overarching elements of product development that can be identified and they are innovation, improvement, and enhancement.
- Innovation involves the creation of new products to meet the ever-changing demands of the consumer base and to increase revenue. A brand-new mobile phone with cutting-edge technology for example would be an example of innovation.
- Improvement refers to the up-gradation of old and existing products to boost their sales or increase their perceived utility. Improvement for example could mean the up-gradation of the battery capacity or the camera quality on an already existing mobile phone sold in the market.
- Enhancement, although meaning more or less the same as improvement, in this case, refers to the enhancements made to the process of production of products by incorporating new techniques and methods that can help make the production more cost-efficient.
Product development and design, therefore, becomes extremely important for a number of different reasons which is why companies invest lots of money into what they feel is a good product development plan. Firstly, the market for products of any kind is almost always evolving and changing and this in itself poses several challenges to the existing competitors in the market.
At any given point in time, a company may notice a downfall in product sales and business, there could be a better product in the market launched by a competitor, a similar product may be sold by competitors at a lower price, and so on. These variables almost always prompt companies to look into product planning and development in order to compete in the changing market and increase revenue, either by lowering the cost of production through enhancement, by innovating new products, or by improving existing ones.
When such circumstances come to the fore, the company must come up with a carefully determined product development strategy and systematically execute it in order to achieve its market goals and targets. This plan usually involves a company-specific product development process that depends on a variety of factors but more or less follows a basic structure.
2. Product Development Process
Product development is more often than not a systematic and step-by-step process designed to bring a product idea or design into the market and it more often than not includes the following steps.
A) Idea Generation
Any product that is designed or launched into the market has one thing in common, it fulfills a demand or a specific need that is shared by a small or large group of people. Therefore, it is first necessary for any company to do market research through surveys or focus groups in order to understand what product can penetrate and succeed in the market. Based on this information, a product idea is devised.
B) Idea Screening
This step involves the analysis and study of the product idea in order to understand the feasibility of manufacturing and the potential costs, revenue, and break-even point of introducing the product into the market. Once this screening is passed, the product idea moves along to concept testing.
C) Concept Testing
Concept testing involves an attempt to evaluate the response of the consumers in terms of the feasibility of the product. The company ideally reaches out to members of the potential customer base and enquires about how they feel about the product idea and whether they think it is something that they would use. At this stage, there might be surveys of consumers or focus groups arranged by the company in order to test the waters and see if such a large investment is one worth making.
D) Business Analysis
For any entrepreneur, this is arguably the most important step of the entire process where the company determines whether the production and introduction of the product are financially feasible. A cost-revenue analysis is done based on the available information of projected demand, existing pricing levels, cost of production, overheads, and other such factors to determine whether the company can afford to put the product idea into production.
E) Product Development
The crux of the entire process, in this step the company begins producing and distributing the product to specific markets to gauge consumer response. Such production is also accompanied by advertising and marketing efforts in those markets. However, most companies choose to initiate product development on a small scale first to ascertain market performance.
F) Test Marketing
Test marketing has its roots in product development and once the product has been distributed for sale across a region, the company will study the consumers’ responses in order to understand whether the product is well accepted or not. If the response is positive, large-scale production is given the green light but if the product is not well received, the company may send it back for modification or might scrap the idea altogether to minimize losses.
G) Commercialization
If the company feels that there is scope for success, commercialization takes place and involves the large-scale production and distribution of the product. This involves marketing as well and the company tries to push the product into different markets in order to maximize sales and revenue. There is also an expansion of distribution channels and the company will also attempt to get big retailers on board in order to boost their presence in the concerned market.
H) Review Market Performance
The last step of the product development process involves a review of the performance of the product in the market. The company must constantly keep a track of sales, consumer satisfaction, demand and profit levels, marketing success levels, and other such factors that indicate the performance of the product. This stage is extremely important for companies who can quickly identify any potential problems with the product and its distribution or marketing and revisit any of the above steps to correct them.
Conclusion:
Product development is an indispensable part of any company’s existence and as is clear from the aforementioned steps, it is not a particularly easy task and involves the cooperation of hundreds of people working on different aspects of the product development process.
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Also Read
https://www.jigsawacademy.com/blogs/product-management/role-of-a-product-manager/
https://www.jigsawacademy.com/blogs/product-management/product-manager-skills/
