The Product Development Process: Complete From Idea to Market
80 - 90% of all new products fail.
At least, that's what we all hear.
The number is closer to 40 - 50%.
I hear you, that's not reassuring either.
Like a 50 - 50 coin toss.
Good news is, it doesn't have to be that way.
The answer: Your Product Development Process
By the end of this article:
You will know the exact product development steps to take your product from nothing but an idea and all the way into market.
What is the Product Development Process?
In a nutshell:
It's the complete path a product takes from concept to market.
Having a plan or a product development strategy for this precise path is non-negotiable because it helps to:
1. Keep your progress aligned with what is best for your business and
2. Ensure you create the most value for your customers.
This is the main objective of product development:
To create customer value.
If you're not providing value to your consumers no amount of execution, marketing or capital will make it a success.
Take a look at this product failure:
The hype around this product was immense.
However, it failed to address customer needs such as affordability, lack of use case, privacy and safety issues.
It didn't create customer value and as a result, it folded from the public in 2015.
Or how about this one:
I personally remember when this came out thinking that getting distributorship for this product would be good business.
This startup raised $120 Million and looked set to take off.
Then the worst possible thing happened.
It turned out that the Juicero product was no more effective than squeezing the pre-packaged fruit with your bare hands.
No customer value and they shut down soon after.
No matter how big or small your business is, if your product development process isn't focused on creating customer value, then your product is unlikely to succeed.
So where do you start this process?
Product Development Models
The first involves mathematical calculations and probabilities of different scenarios happening.
Whilst the second is considered the foundation of product development.
But there is another model that you most likely heard of.
It's the most commonly used and has a history of high impact results.
The Stage-Gate Model also known as the 8 Step New Product Development Process.
This means that products have to pass through each "stage" and must be approved to cross the "gate" to the next stage.
That way, less promising product ideas are filtered out before spending too much time and money on them.
This is often used at enterprise level, but we can learn from these concepts and apply them to startups and small businesses too.
Let's break down each step of the process to see how it works.
The 8 Steps of the New Product Development Process (NPD):
Every business starts with an idea.
Entrepreneurs spot a gap in the market and decide to fill it or they decide to improve on an existing solution.
Once you have this idea for a potential opportunity, it would be quite careless to start generating ideas for solutions without some background on the customers and how they see the problem from their perspective.
Granted, there are times where ideas come at you in sudden sparks of brilliance.
But here we are talking about a pro-active process, a system, a framework where you intentionally generate plenty of possible product solution ideas based on customer data that you have.
This is Divergent Thinking.
And SparcIt, a company that has conducted over 50,000 divergent thinking tests, puts it like this:
Where do we find the customer data do this?
Ideas can be generated internally based on existing customer data from your R&D and/or team discussions.
If you don't have existing data, this will have to come from external sources by doing your customer discovery.
You'll speak to suppliers, vendors, distributors, study competitors and of course talk to existing or potential customers.
If you havn't already read about this, have a look at this article on how to conduct your customer discovery to build products customers want and how to build your business hypotheses using the lean model canvas.
By the end of customer discovery, you should have a verified customer problem, a verified type of customer and an indication of what the customer expects from a possible solution.
In other words:
All the ingredients that you can use to start a brainstorm or sprint session for generating product ideas.
So you've gone through the divergent thinking stage and generated several product ideas.
Now its time to trim it down.
Here, ideas are filtered down to the ones that seem to have the highest potential return on investment.
The purpose is to focus only on products that have a higher chance of market success so as not to waste time or money.
A recent Study on creativity by Ruiz and Ghorabi explained how the number of feasible product ideas reduce as you come closer to releasing to market.
This is because quite simply, some ideas will be better than others.
The screening criteria will also depend on data from your customer discovery and past experience.
You'll filter the ideas based on things such as:
In a Case Study done by Wordstream to understand the challenges faced by agencies, they studied data from 200 internet marketing agencies.
The results showed that the biggest difficulty agencies face is with being more productive with their time.
What's more interesting though is what they did with it.
Here's how they used that info when they released their new tool Wordstream Advisor for Agencies.
See how their product is tailored to the main pain point?
In the same way, you can filter product ideas to focus on what matters most to your customers.
Let's test the potential of the filtered ideas.
Concept Development and Concept Testing
Concept development is about defining in more detail the customer needs to be addressed and the features that your product will use to satisfy those needs.
This is a critical step during which you will discover exactly what your customers most pressing needs and in turn opportunities for business growth.
You'll also learn the exact features that you will introduce in your product that will differentiate you from your competitors.
Concept testing on the other hand is about figuring out:
1. Whether customers understand what is being offered and does the Unique Selling Proposition resonate with them on an emotional level?
2. Is the offer simple enough for customers to see the outcome they will receive and is this outcome valuable enough that they would purchase your product?
This can be done using qualitative marketing tests.
There are a number of ways to run these tests:
- Individual interviews
- Focus group interviews (online or offline)
- Google Ads (with landing page)
When the social sharing app, Buffer ran their Google Ads to test their concept they looked at the number of people that were interested in the product based on sign ups and purchase attempts.
This step is about getting a more in depth view of the business potential.
You'll collect data on factors like:
- 1Barriers to Entry
- 2The competition and pricing
- 3Market size and growth
- 4Cash flow forecasts
- 5Customer Channels and Marketing
Take Linkedin for example:
If you wanted to build a social platform for professionals this would have a massive barrier to entry.
Linkedin has 400+ million users, they have the deep technology that would be difficult to re-create and they could probably re-create any new features that you introduce.
Furthermore, a lot of the users already have 500+ connections and would be very high friction to convince them to do that all over again.
Just look at this chart from Business Insider
Product ideas that are successful in passing through the above product development steps can now progress to development.
Which refers to building of a prototype or also known as a Minimum Viable Product (MVP).
This MVP is based on the collected information about customers core under-served needs.
There seems to be a misconception floating about that the word "minimum" means slapping together any half baked product and giving to customers and asking them to buy.
Good luck with that!
The MVP must function and provide value to the customer otherwise they will just not be interested.
Many entrepreneurs now support the "Minimum Loveable Product" or the "Exceptional Viable Product" as explained by Rand Fishkin, Founder of MOZ.
Also known as Usability testing, here the MVP is tested for readiness for market entry.
It will be tested with potential customers.
Based on the results here, decisions will be made on further improvements/iterations required prior to market launch.
Testing can be in the form of Qualitative User Interviews or in some cases, testing a small Beta Launch with Early Adopters.
Have a look at this article by Google Ventures on your User Interviews.
This Beta launch will help gain a clearer understanding of your marketing strategy in terms of the channels you will use, the marketing copy and value proposition to attract customers.
Constant feedback from these early customers help to further refine and improve the product.
The final step before full scale launch.
Finalize pricing and marketing strategy. Plus, the whole team is brought to speed on the strategy going forward.
Here are a few points to take into account for your pricing strategy:
- 1Competition and the existing pricing that customers are familiar with
- 2The marketing and sales channels you will use
- 3Costs to operate your product and your intended gross margins
- 4Your product goals
- 5How much value you're providing the customers
- 6The product life cyle
Full scale market launch.
Using all the information gathered about your product, the customer and marketing approach, you create a plan and release your product.
This plan will cover things like the timing of launch, the marketing strategy you will use, a PR program if required, a clear sales strategy and funnel, customer support strategy.
Post-launch you will continue to collect customer feedback and pay close attention to any "bug" fixes or improvement needed to your product to ensure the continued success of your product.
The fact is whether its 80% or 50%, too many products still fail.
But you can drastically reduce the chances of this happening using a clear product development process.
It will keep you focused on what's important to your business and your customers.
Your product will succeed and customers will be happy.
Win-win for everybody.
Who doesn't want that?