Getting a great idea isn’t always a challenge. Instead, for some new entrepreneurs, the obstacle is developing a product quickly to get it to market before competitors do. This article provides a guide to the product development process to help small business owners know the necessary steps to take.
Putting a product out as soon as possible isn’t always essential. Time to market is going to vary depending on the product being sold and the industry. Yet, with more innovative products, it’s going to be key. You don’t want to see someone else launching a similar product before yours. Quickly developing a product can:
- Provide competitive advantage
- Reduce R&D costs (and waste)
- Improve customer satisfaction (e.g., “We love the latest gadget! We love new features!”)
- Grow revenue
- Increase market share
McKinsey and Co. research suggests, “a product that is six months late to market, earns 33% less profit over five years; if it is released on time, but is 50% over budget, that cuts into profits by only about 4%.”
But, what exactly does product development involve? This article will outline the central steps in the new product development process (assuming you already have the idea; that’s step one):
- Screen and develop the idea
- Prototype the product
- Validate/test product
- Sourcing
- Decide on a business model
- Build a marketing strategy
- Launch the product
Screen and Develop the Idea
Your idea is, of course, brilliant. At least you think so. But, before you take it too far, solicit other people’s input. Share your idea with people you trust. You can avoid a lot of time and money wasted by screening your idea first. Especially if you are going to be starting a business around this idea, it can pay off to get an outside point of view first.
Once you have some positive feedback from an unbiased audience, you’ll want to do more product development. You’ll need to do market research to determine if there is a viable audience for your idea. Plus, you’ll want to identify what is needed to bring that new product idea to life.
If you don’t have a solid plan before prototyping, things can quickly become complicated. In new product development, you need to think about all the component parts required. This will help you move into the prototype stage efficiently and cost-effectively.
Prototype the Product
The prototype gives you an idea of what the finished product will be like. This sample can help you see what works and doesn’t about your design. Don’t expect prototyping to be a one-and-done approach. This is when you can experiment with several versions of the product to improve and eliminate unwanted elements.
It is much better (and less costly) to change the product at the prototype stage. You may be able to prototype the product yourself thanks to 3D printing and online tools such as SketchUp or Tinkercad. Otherwise, you’ll typically work with another party to get your prototype. If you’re on a budget, you might look into art, design, fashion, and tech schools near you to see if there are upper-level students you can hire for prototyping help.
Validate/Test Product
Early in the product development process, you want to start testing a minimum viable product (MVP). This is a version of your product with just enough functionality to let early customers give it a try. Lean Startup’s Eric Ries says the MVP is “the version of a new product that allows a team to collect the maximum amount of validated learning about customers with the least amount of effort.”
This means you need to be set up to collect feedback. This can help you iterate. Plus, the earlier you identify incremental improvements you can make, the better.
Sourcing
You’ll need to find a manufacturer for your product and source the materials required. This is going to be your supply chain. All of these businesses will become partners in getting the product to your customers. Weigh the pros and cons of different supplier/manufacturer options. For one, going international can cut costs, but with a local partner, you could have greater control over the process.
The right partners can also help provide input into the product development strategy based on their experiences. They might have ways to economize manufacturing or be aware of pitfalls you haven’t thought of yet.
You’ll also need to look into information about storage and shipping logistics to fully and accurately cost your product.
Want more help? Check out our article How to Find the Right Supplier: From Concept to Manufacturing.
Decide on a Business Model
If you’re starting a new business around this idea, you’ll need to develop a business plan. Even if you have a plan already, you’ll need to decide on the best business model for this particular product. This is when you estimate the costs and potential profits for the product to decide on the most economically feasible approach.
Maybe you’ll take a business-to-business approach? You might launch by going to an existing ecommerce business for distribution. Or go directly to consumers? You might look for retailers who could sell your product for you. Or you might set up your own online shop. Perhaps you already have other products and services that you can package this new product with to drive sales.
Build a Marketing Strategy
Again, if this is the first product from your business, you’ll need to consider overall business branding in relation to this product. Otherwise, once you have the finished product, you’ll want to come up with:
- Product name
- Packaging
- Marketing message
Then, you’ll need a strategy to market the product. This will involve identifying a target audience and where they are most likely to see marketing about your product. In this internet age, you’ll probably want to use social media channels and digital advertising. But your product might also sell well in context (e.g., setting up a tent at a surfing contest for your surfboard wax) or in a storefront in a specific area.
Want more help? Read Highly Effective Ways to Market a Product.
Launch the product
Now that you’ve got a physical product and you’ve done all the legwork in your product development strategy, it’s time to launch. Get out there and sell! Maximize the product’s earning potential by planning a product launch strategy in detail.
Popular tactics include:
- Getting reviews from early users
- Enabling Instagram shopping
- Submitting your product for gift guide consideration
- Working with influencers
- Announcing the product launch to your subscribers
Then, there’s the launch party. You may not be busting out the Cristal for this one, but even a small internal product launch party can help you and your team celebrate reaching this milestone in the product development process.
Start selling your products even faster with Yahoo Business Maker. You can develop a business plan, handle business filings, track finances, build a new website, monitor business listings, and run a point-of-sale system from one easy-to-use dashboard.
