Interested in learning how the product development process works? Keep reading to find out!
The product development process allows businesses to create new and innovative products. Developing a product is both a challenging and exciting process. From the initial ideation to the design and production, each product launch differs from the next.
The product development process involves seven steps that take a product from its initial concept to the final market launch. This includes:
- Identifying what your target market needs.
- Generating a product concept that matches their needs.
- Researching the competition.
- Creating a product roadmap.
- Building a minimum viable product (MVP).
This guide discusses the seven simple steps involved in the product development process. It also discusses the benefits of the product development process and how to implement this process so that it is effective.
What are the 7 Steps of the Product Development Process
Although the product development process differs by industry, they all include the same seven steps. These steps not only simplify a launch but they encourage cross-team collaboration. The seven steps are as follows:
Idea Generation and Concept Development
The product development process begins with product idea development, and it’s the product development phase where you develop product ideas according to customers’ requirements, concept testing, and marketing research.
During product design, it is essential to consider the following:
Target market: They’re potential buyers that impact how you develop your product concepts for a targeted market.
Existing products: If you have an idea for an innovative product, evaluate that product list. Investigate if there are current products that solve a similar problem.
Find out if a competitor offers a product that doesn’t allow for market share. This information helps you decide if your new concept is viable. You ensure the success of your new idea.
Functionality: It is not necessary to have a detailed report of the product functionality at this stage. However, a general idea of its functions is essential. Consider the look and feel of your product and why this interests people in purchasing it.
SWOT analysis: Build the best version of your new concept by analyzing your product’s strengths, weaknesses, opportunities, and threats. This ensures that your product is different from competitors and solves a market gap.
SCAMPER method: SCAMPER involves substituting, combining, adapting, modifying, putting to another use, eliminating, or rearranging your product concept. This brainstorming method helps to refine your idea.
Tips for Idea Generation
Take notes: There are several ways to conceptualize a product idea. Because you are juggling ideas, friendly advice, user input, and market feedback, the process often takes a lot of time. Remember to take notes along the way. This helps to define the concept of your product better.
Summarize the concept: Describe and summarize the core functionality in a few lines. This explains the user needs it fulfills and its specific target market. If these lines are easy enough for your grandma to understand, you have succeeded in this step.
Brainstorm: A great way to come up with brilliant ideas is to have a structured brainstorming session. As long as you keep an open mind, it is an excellent source of ideas.
Pitch proof: Pitch your idea to others to create a strong concept, which enriches the idea and helps you build the pitch for your product.
Many financial partners request market research before they invest in a product. Market research involves gathering information about the size and characteristics of the demand for a product. While this is an important exercise, it does not define the product.
For example, Henry Ford did not base his product development on market research. Instead of discovering the need for larger horses, as market research showed at the time, he developed an automated vehicle.
Tips for Market Research
Open data: The practice of open data has allowed businesses to carry out market research with speed. Several official institutions offer access to their datasets free of charge.
Focus on existing data sources: Build up a quantitative view of the market for the product you are developing by focusing on existing data sources. Extrapolate or cross-reference market numbers to achieve this. While the market research does not have to be precise, your hypotheses need to be transparent and credible.
Research online: Online services like Statista provide a wide array of market statistics. Google also provides information on this if you search for it. Most businesses carry out market research online.
Change: The world keeps changing. Build a market hypothesis that reveals interesting market data for your product and changes to your market size projections.
You must include an economic dimension in your product launch. You do not need a full-fledged business plan for a product. However, your business plan needs to encompass all the economic variables involved in developing and marketing the product.
The business plan includes all the investments you need for product development. This also establishes any associated costs once you launch the product and the variables required for the sales pipeline.
To identify when this exercise becomes profitable, use the break-even analysis. In a longer-term perspective, conduct research on the customer lifetime value. This helps to refine the product definition.
Tips for Building a Business Plan
There are two valuable stages to incorporate into your business plan. These include one for the entire product development phase and one for the product launch phase. Each step uses different variables, which may require different types of investments.
Your expenses include acquiring reports and external expertise, researching time, and prototype development during the product development phase. The product launch phase business plan validates the amounts that you invest.
Hypotheses: When creating a business plan, the most critical questions link back to the underlying assumptions. That said, your hypotheses need to stay clear. In addition, remember to record these questions to refine your business plan.
Simulations: Simulate different business scenarios by using the variables you need to build the hypothesis in your business plan.
During the prototyping phase, the team does intensive research and documents the product. They achieve this by creating a more detailed business plan and constructing the product.
Early-stage prototypes are either as simple as a drawing or as complex as a computer render of the initial design. By creating these prototypes, you start identifying risk areas before making the product.
During the prototyping phase, the product development team deals with specifics such as:
Feasibility analysis: The first step of the prototyping phase is to evaluate your product strategy based on feasibility. Determine whether the workload is suitable and if finishing the work within a specified timeline is possible. If not, request help from additional stakeholders and adjust your dates.
Market risk research: Before you create the physical product, it is essential to analyze the production of your product for any potential risks. This prevents any chances of derailing the product launch at a later stage. Documenting these in a risk register ensures you always communicate risks to the team.
Development strategy: At this point, the team starts working through the development plan. That said, you must know who to assign tasks to and the timeline of these tasks. Use the critical path method to plan tasks and estimate the timeline.
MVP: A minimum viable product (MVP) is the outcome of the prototyping stage. In simple terms, MVP is a product that has only the necessary features for the product launch. For example, an MVP bike includes a frame, a seat, and wheels but does not contain a basket or bell.
Creating an MVP helps your team execute the product launch quicker than building all the desired features. This often drags out the launch timelines. Once the bandwidth is available, the team adds these desired features.
Tips for Prototyping
Sometimes the material and machinery you need to create a physical prototype are not always available. In this case, you need to outsource the work. That said, you must build detailed technical specifications for the product.
Make it photogenic: Even if designers are not working on your product yet, try to make the prototype as attractive and photogenic as possible. Since it is the first tangible outcome of a long process, it is a cornerstone for the next steps.
Let others test it: It is crucial to test the prototype, and they don’t have all of your underlying knowledge. Some of the most helpful information comes from spontaneous reactions.
Crowdfunding is much more than funding. It’s an excellent opportunity to obtain market feedback before your product is ready to sell. This puts your product in an actual market position and allows you to interact with your first circle of potential customers.
The product is not complete at this stage, but your crowdfunding exercise already allows you to perfect the sales pitch. In addition, at this point, you have invested the most and still have much more to invest in before selling in the market. This is an opportunity to raise financial resources at this pivotal point.
You receive honest user feedback on the first iteration of your product. This helps define your positioning strategy. This allows you to generate purchase orders for the future finished product, thus, generating cash before the product development cycle is complete.
With crowdfunding projects, it’s essential to race through all of the steps of the product development process as though you had already done it all. Describe the market, describe your product, show the prototype, offer your price, and generate a range of potential first-time users.
Keep the pace: Crowdfunding projects have a time limit, so reaching your objective within that time limit is essential.
Don’t give up: Crowdfunding projects are rich in feedback and knowledge and provide immense value for your launch. That said, even if you’ve reached the financial objective of your crowdfunding project, don’t stop there.
Design and Production
Once your prototype is ready and you’ve gained new knowledge from crowdfunding, begin writing the technical specifications. If necessary, call on the help of external designers to provide the design specifications required for the final product. However, this depends on the nature of your design.
Tips for Design and Production
With more detailed specifications, there are fewer chances of problems arising later on. At this step, you have the option of subcontracting to an external organization. Project management is the key to succeeding in the design and production process.
Plan for the unexpected: This is a critical step, and you are at the peak risk of the entire process. While many variables are outside your control, you must plan for the unexpected.
Put in some buffers: Make sure you’ve built some buffers for unexpected delays when planning a launch date.
Marketing and Distribution Strategy
One of the hardest tasks in product development is getting sales and marketing right for a new product. While it is a peripheral step in product development, a product launch needs a good market strategy.
Additionally, it is also essential to create a pricing strategy. This strategy considers the novelty of the product in the marketing plan.
Tips for Marketing and Distribution
In this step, you must define which channels you plan to reach your target audience. Establish what price and with what business model you propose your new product. Define what the conversion funnel looks like for it, as well as the sales tactics you plan to use. In addition, define how you deliver your product to the end-user.
Always learn: In business, you are always learning. The early stages of a product launch are crucial to your success. Learn from the initial feedback you receive, your first sales, and the first ad messaging. Take note of what works for you and what doesn’t.
Be agile: Remember not to let your plans be too rigid. Shift your attention and budgets to channels where you get regular traction.
What is Product Development?
Product development is the first stage of the product life cycle. When developing a product you want to sell online, it’s crucial to analyze market, product, and distribution characteristics to build your business plan.
The product development process refers to the steps that transform a product concept into marketable merchandise. This process starts with an idea and ends with technical specifications, pricing strategy, product positioning, financial characteristics, and service components.
What are the Benefits of the new Product Development Process?
The new product development process provides many benefits. Some of these benefits include the following:
- Ensures a faster time to market.
- Multiplies the chances of success.
- Better management of the feature creep.
- Helps check the technical feasibility of an idea.
- Effective in addressing the needs of target customers.
- Reduces technical debt.
- Negates the opportunity cost.
How do you Implement the Product Development Process?
To ensure that the product development process is effective, you must consider five things before starting the process. Considering the following aspects saves a lot of time and effort.
- Is there a demand for the product?
- Can you produce it?
- How can the product reach its customers?
- What competition is likely?
- Do you have the necessary financial resources?
Product Development Examples
The product development cycle varies by industry. Even so, as many products are in the market, there is almost an equal amount of product development processes. Here are two real-life examples of product development.
A young tech entrepreneur named Nick Woodman founded the idea for GoPro on a surf trip to Australia. When he realized that no one had created equipment to record a high-quality motion video in extreme conditions, he decided to build that product.
Woodman’s journey started when he attempted to raise the necessary funds to create the company. He achieved this goal in 2002. The first product he developed included a 35mm waterproof camera, which took two years to make.
Beats by Dre
Famous rapper Dr. Dre created the legendary Beats by Dre headphones. The driving factor for the Beats product involved Dr. Dre’s passion for sound.
With the market for headphones generally including most of the population, he didn’t need to research the market size. He also did not need to put a significant investment into its production.
The product’s success is due to its story, positioning, and branding via a contemporary music icon.
Product Development – Summary
The product development process varies depending on the nature and origin of your product idea. However, the proper product development process helps you complete each step with organized tasks and team collaboration.
The seven stages outlined above allow your team to get through all process steps, from the initial idea screening to the development phase. These seven steps help you create a defined product roadmap that ensures a successful finished product.