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Product development is the name of a process to bring new products to market in your business. This may look different for different companies, depending on the nature and interaction that the company has with its customers. When you embark on product development, it means that you are committing to make a change to improve your business. However, rather than a standard task, it requires you to create a plan specific to your business to ensure that your ideas are fit for purpose.
Many businesses use specialised staff to help them create a product development plan to work through. The product development plan includes different stages of the product development process (which will be explained further on in this article). By working through this plan methodologically, you can check that your product ideas will provide good user satisfaction to help you reach your business goal.
What does product development do?
Businesses use product development to get ahead of their competitors. This can be instigated by a gap in the market, or a problem that requires a solution. Product development helps businesses by using innovation to gain revenue and impress their customers, keeping them coming back for your product or service.
However, product development is a complex process, with plenty of room for error. When thinking, ‘what does product development do?’, the simplest explanation is it helps to mitigate against mistakes from happening before it is too late. There are many stages and tasks involved in the product development process that are each designed to test your product before it hits the market.
It is better to notice errors in your product during the internal development stage, as opposed to when the products are already with your customers.
Many businesses use specialised staff to lead a team through the product development plan to get a product to market. The entire journey can present challenges throughout, so working through each stage carefully helps to mitigate errors when you are ready for market release.
According to a survey completed by Gartner, a huge 45% of product launches are delayed by at least one month, with 20% failing to meet internal targets. There are many things that can go wrong when developing a new product, which highlights the complexity of the process. However, without working through a product development plan you may risk your business’s reputation if your new product release fails.
How to develop a product idea
Product development begins with an idea, and often this idea stems from a problem. Businesses want to help solve their customers’ problems, so a new product idea should begin by researching what current problems your business or customers have. If your business has external customers, you may develop new or existing products or services.
However, many businesses may also have internal customers such as stakeholders and employees. In this instance, product development may be focussed on systems, hardware or software, which can positively impact your business.
To help you identify a product idea, you can involve your customers. This is because your customers are the ones who enable you to achieve profit. Customer feedback can be extremely powerful in steering your business. This could be obtained from feedback surveys, research and analysing customer activity. If your product can solve your customers’ problems, it will have a higher chance of succeeding on the market.
How to develop product knowledge
Product knowledge is obtained by completing research to ensure that your idea will give value to your business and customers. Completing this at an early stage can help you to avoid wasting time and resources which could have been better spent elsewhere.
Research completed by the House of Commons report that total expenditure on Research and Development in the UK was a staggering £38.5 billion in the year 2019-2020 across all industries. This is a continuation of a spending increase in this area over the past few decades, signifying the importance of investing in this area.
In order to generate good ideas, you need product knowledge. This means having information about the product you are developing, the sector, the economic climate, and most importantly, your customers. If you want to create an effective product with the most benefit, you will need to utilise knowledge about it. Not only will this help you build confidence in your decision-making, but it will help you to avoid mistakes.
We have some tips that can help you to develop your own product knowledge that we have included below:
- What is the current problem? – Often, product development is initiated based on a particular problem. The product that you have in mind can then solve that problem. So, by having a good understanding of the problem, you can design a product fit for purpose.
- Have I invested enough time in researching my products or services? – Research plays a crucial role in information gathering. You can find out about how to make your product reliable, safe, effective and valuable by turning to different sources for information. Doing this before the design stage can save valuable time and money.
- What value do I need to give to my customers? – Completing customer research can be a great way of understanding what your customers want. This coupled with your own consumerism research can help your product to excel from the start.
- How will my product be different from my competitors? – The best was to get ahead of competitors is to offer something that they do not. Completing research in this area can give you a good head start to having your own unique selling point.
- Have you considered all variables in relation to your product? – Product variables can quickly change the design of a new or existing product. Having a good idea of your purchase and sales price, as well as quality and production time can help you reduce your production time.
What are the stages in developing products?
The stages in product development may vary depending on your particular business and the type of product you are planning on bringing to the market.
However, we have included the most common stages that typically appear in all product development processes below:
- Identify the problem – Product development arises from there being a current problem or gap in the market. However, not all problems may warrant the design of a whole new product as this may not be profitable for you. You can quantify the problem to check that it would meet your desired goals and then use this to shape your entire product development process. Remember that your development costs must be recouped once your product is launched before you start making profit. During the product development stage, no sales are being made, which should be factored in during your business analysis stage.
- Identify the product idea – Once you have identified the problem you can complete brainstorming activities to share ideas. It can be beneficial to involve multiple colleagues at this stage to generate the best ideas, rather than struggling independently with a blank canvas.
- Research – Once you have condensed your ideas from your wider team, you can complete research to finalise your chosen product. Then you can create a more detailed product concept that can be used as the basis for your product development journey.
- Business analysis – Having a good understanding of the development and manufacturing costings can help you during the design phase. You can forecast your manufacturing costs to help you find your profit margins.
- Product design – This is the point where you would design the product ready for the manufacturing stage.
- Identifying materials and resources – Once you are happy with your product design, you can select and gather materials and connect with relevant partners to enquire about production.
- Creating a prototype – You can create an initial sample of your product to bring it to life ready for the product testing stage. Here you can ensure that you can achieve the features included in your design.
- Testing – The testing phase is extremely important to ensure that there are no errors in your product. If your prototype performs safely, reliably and is fit for purpose you can move on to the next stage. However, if your testing reveals issues, you should go back and rectify the errors in your design. The previous steps can be repeated as much as necessary until your product is functioning seamlessly.
- Commercialisation – This is where you consider the marketing for your product and introduce it to your customers. Marketing is an important stage of product development and can affect the success or failure of your launch. Consider your branding, the message you want to deliver, and the best channel for your customers to receive your message.
- Product launch – Once you have scheduled your marketing you are ready to launch your product to your customers.
- Evaluation – Evaluating your product is key to determining its success or failure. You can do this in a number of ways including analysing sales, customer interaction and profits. Evaluating your product periodically can help you to monitor customer behaviour and ensure that your investments have been successful in the long term.
The product development stages above can, and should, be used flexibly. This means that if you get to a stage and find errors, you can go back to previous stages to rectify these. Doing this before your product launch can save you a lot of time, money and customer loyalty. Releasing an unreliable product can quickly lose you customers, which could unfortunately damage your brand.
Who would do product development?
Product development involves a large team of people who are both internal and external to your business.
This is because the stages in product development include a mixture of disciplines such as:
- Marketing executives.
- Finance forecasts.
- Software developers (depending on your product).
- Sales staff.
All businesses can benefit from product development as a way to innovate, increase profit, reduce costs, or capitalise on a gap in the markets. The nature and size of your business will determine how much of your product development plan you need to outsource. For example, you may meet external stakeholders who can support you with manufacturing or software development.
No matter if tasks are completed internally or externally, the product development manager will have overall oversight of each stage. They will steer the entire process from thought conception to market launch (the role of a product development manager will be explained in more detail in the next section).
What is a product development manager?
The role of a product manager can be difficult to define because the responsibilities in the role heavily rely on the type of business they work for, and the type of product they are leading the development on. However, one common feature of all product development managers is that they all take the lead on the product development plan.
They hold responsibility for the success of the product, and strive for market success by co-ordinating the product development process. They are the hub for communication with all colleagues and stakeholders involved, ensuring that everyone involved is working from relevant information, liaising well with each other, and up to date on new revelations.
Having responsibility for such a variety of tasks means that product development managers do not manage employees despite having the word manager in their job title. By not having management responsibility over any people, they can encourage open, honest contribution from all colleagues involved in the product development, without a power imbalance altering the communication.
Why do companies develop new products?
Product development is a way for you to grow your business, by developing new and existing products. It is an important strategic process that can help you to reach higher business growth and achievements though innovation. Society is growing at a rapid speed, with more new businesses being listed every year.
In 2020, the Federation of Small Businesses found that there were almost six million businesses in the UK, suggesting that almost 9% of the population could be business owners. This makes it ever more important for your business to keep up with the competition.
The purpose of product development is to introduce or make improvements to your business offerings that are a benefit to your customers. This, in turn, will help your business to become more successful as your customers will want to continue to be served by you.