Product development is a process whereby a business identifies an opportunity in the market for a product and then designs, tests, and introduces the product to the market.
Product Development Process
As you can see from the definition, there are four steps in the product development process. Let's take a quick look at each step.
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- Opportunity identification. At this step you scan the environment to determine what unfulfilled needs or desires are in the marketplace. Ideas can also come from employees, managers, customers, suppliers, research and development departments and even your competitors. You need to carefully define your market at this stage to set the scope of the market and to determine your competition. A market can be defined by customer needs, demographics, price, and product-type among other criteria. For example, you may define your market as sport cars for males aged 35-55 with annual gross incomes of at least $75,000 living in the United States. Finally, you must carefully analyze these opportunities to determine if they are feasible and useful in helping your company achieve its objectives.
- Product design. The core concept with product design is to have a clear understanding of the needs and wants of the target consumer for the product and then design the product around those needs and wants, while attempting to differentiate your product from competing products. The design will be evaluated, often refined, and modified. Product design also includes developing a marketing strategy to support the introduction of the new product into the market. Product design usually is a collaborative process involving different parts of the company including marketing, research and development, and production.
- Testing. After the product has been fully developed, it's time for a premarket test. Here you will perform some test marketing by introducing the new product to a limited number of customers or in limited geographical areas. For example, you may send the product out to a select group of customers who agree to use the product and provide feedback. This is called beta testing. You can also introduce the product to selective geographic areas of your total market, such as a few cities. You may take what you learned from the test marketing and send the product back to the design phase for modifications, or you may determine that the product is ready for the market.
- Market introduction. Now it's time to introduce the product to the entire target market. At this stage, you will have a product, a marketing plan, service procedures and distribution networks in place. For example, you may distribute a new software program to consumer electronic and big box retailers. You may also launch a television and Internet advertising campaign. You'll also set up your technical support department to handle any questions or problems related to the new product.
Product development is a process whereby you look for product opportunities, design a product and introduce it into the marketplace. The process involves four distinct steps:
- First, you scan the environment and talk to stakeholders such as employees, customers, and suppliers to find opportunities in the marketplace where needs and wants are not currently being fulfilled.
- Second, you design the product trying your best to match the product design to the needs and wants of the market. You evaluate the design and make any necessary improvements or modifications.
- Third, you engage in some test marketing to try to forecast the product's success.
- Finally, if the test marketing goes well, you introduce the product into the market.