In the changing business environment, technological breakthrough and changing customer needs, organizations need more than one product to survive, remain financially successful and competitive. New start- ups also need to transform their vision into real product or service. Successful new products and services not only serve basic customer requirements by meeting quality, service and performance requirements, but also introduce some unexpected innovative features that drive customers to buy them. Understanding product development process helps adding value in new products.
Product development is the complete process of transforming and idea into a real product and taking it to the market. It is a series of overlapping, interdependent phases beginning with new idea generation to conceptualizing, testing, launching the product and collecting feedback. Each phase of the product development process is described in detail below:
Phase 1: Generate Ideas for New Product
Phase 2: Product development
Phase 3: Testing
Phase 4: Sourcing
Phase 5: Costing
Phase 6: Commercialization of Product
Index
Generate Ideas for New Product
This is the initial stage of product development where the team brainstorms product concepts based on customer needs, pricing and market research. Organizations may have their own research and development in- house or they may take help of external agencies for design services. An organization may also use customer input for new ideas. Many organizations have established feedback mechanisms for their existing products and services. These feedbacks may be used for generating ideas for new product development. Additionally, the organizations may use design tools such as quality function deployment (QFD) to develop the technical specifications necessary to meet customer requirements. QFD links the needs of the customer with design, development, engineering, manufacturing and service functions.
The following factors are considered for generating new product concept:
Target Market
It is important to identify the target market in the beginning to build the product around the target market.
Existing products
Customer feedbacks regarding existing products may be used for generating ideas for new product development
Functionality
An idea of all the functions the product will serve id important to reduce the gap between product features and customer requirements.
SWOT Analysis
In SWOT analysis The product’s strengths, weaknesses, opportunities and threats are analyzed to make the product different from competitors.
SCAMPER Method
The brainstorming method like SCAMPER method is used to refine the ideas. It involves substituting, combining, adapting, modifying, eliminating or rearranging the product concept.
Product Development
This step consists of development of business case, concept approval from the competent authority and development of product. The design team presents the proposal for approval to fully develop and commercialize the product. To increase the chances for project acceptance, the design team should develop a business case, which outlines the justification for marketing the product based on the need analysis, technical requirements, cost analysis, any environmental constraints, market size and potential, projected revenue and expected profit. A needs analysis identifies the target audience, tangible and intangible product features desired by the customer, sales projections and the product’s expected fit with the organizational mission, vision and strategy. The senior management or the owner will assess the feasibility of the product or service design. When senior management is involved, it may use a scorecard to evaluate the project.
A sample scorecard criterion for product selection is depicted below:
Once the proposal is approved, the product is fully designed and the specifications are fixed. A prototype is built in case of a manufactured product, which includes both the tangible and intangible elements.
Testing
Once the concept is fully developed into a product it is validated and tested. This ensure that every part of the product- from development to marketing- is working effectively before it is released in the market.
Testing incorporates the following steps:
Concept Development and Testing
The product prototype is tested in real conditions to make sure it delivers the functions for which it has been designed. It there are any issues crop up during the testing procedure then these are resolved by the design and manufacturing team and the prototype is again tested till its satisfactory performance.
Front- end Testing
During this stage, the front end functionality is tested for risks regarding development code or customer- facing errors. The e- commerce platform where the produce is being launched is also checked for its functionality to ensure that it is stable for product launch.
Test Marketing
Before final production of the product, the marketing plan is tested for functionality and errors. This is also a time to ensure that all campaigns are set up correctly and ready to launch.
Sourcing
Once the prototype is successfully tested, it’s time to procure material for mass manufacturing of the product. For production, the raw material and services are sources either in-house or from vendors or suppliers. This step is also referred to as ‘building the supply chain’ for the product. Apart from finding appropriate suppliers for raw materials, the factors like storage, shipping, warehouse, transportation, etc. are also take care in this phase.
Finding multiple suppliers for the different materials required for production, will allow you to compare costs. It also has an added benefit of creating a back- up in case the primary supplier fails to supply the material. Options for sourcing locally or from overseas suppliers is also explored in this stage.
Costing
After moving through the previous phases of product development process, i.e. generating ideas, product development, testing and sourcing a clear picture of cost of the product is obtained. To determine the cost of the product, expenses incurred during each phase are noted down and various cost components are added to arrive on the final cost of the product. This should include the cost of raw materials, factory setup costs, manufacturing costs and shipping costs. It is important to incorporate shipping, import fees and any other duties to be paid to get the final product into the customer’s hands.
Once the final cost of the product is determined, you should work on pricing strategy to arrive on price of the produce.
Commercialization of Product
After successful product development, testing, deciding on sourcing of materials and arriving on the cost and price of the product, it’s time to commercialize the produce, i.e., launching the product and implementing it on your website.
It involves the following steps:
Product Manufacturing
This involves physical creation of the product that will be released in market. This may require production or additional requirement of software concepts. The manufacturing team is given the final prototype to produce the product as per the specifications.
E- Commerce Implementation
Once the production of the product is going on, it is simultaneously implemented on the e- commerce platform. Suitable marketing strategies like sending product launch e- mails, working with influencers for affiliate marketing campaign, getting product featured in magazines and websites, enable Instagram shopping, get reviews from early customers, etc., are also implemented in this stage.
Experience shows that organizations should start small and then speed up production and delivery as per the demand pattern.
To increase the success rate of the development process, organizations should optimize the analysis process and evaluation of its current capabilities.
Key Takeaway
(1) Product development is the complete process of transforming and idea into a real product and taking it to the market.
(2) Product development consists of phases like idea generation, product development, testing, sourcing, costing and commercialization of product.
(3) Feedbacks on the existing products may be used for generating ideas for new product development.
(4) The organizations may use design tools such as quality function deployment (QFD) to develop the technical specifications necessary to meet customer requirements.
(5) The product prototype is tested in real conditions to make sure it delivers the functions for which it has been designed.
(6) Testing incorporates the steps such as, concept development and testing, front end testing and test marketing.
(7) Finding multiple suppliers for the different materials required for production, facilitates in comparing costs. It also has an added benefit of creating a back- up in case the primary supplier fails to supply the material.
(8) To determine the cost of the product, expenses incurred during each phase are noted down and various cost components are added to arrive on the final cost of the product.
(9) It is important to incorporate shipping, import fees and any other duties to be paid to get the final product into the customer’s hands.
(10) Experience shows that organizations should start small and then speed up production and delivery as per the demand pattern.
