Understanding Product Development Strategies and Its Stages – Almost all businesses, both small and large, are always related to product production, development, manufacture, and sales. When you have produced a product, the management section will work on a strategy on how to carry out product development.
In this article, the author will discuss what product development is and how to design a strategy and also the stages. Check out this article to the end.
Definition of Product Development
Product development is a process and strategy that needs to be carried out by a company in developing a product. Things that need to be done in developing a product are repairing old products or adding the use of these products to the target market. This means, you need to present new elements that can captivate customers.
In addition, product development is included in the process of making changes to existing products. At the same time as a process of looking for innovation to add value to old products and convert them into the form of these products. By doing product development, it means that the company understands and knows the needs and wants of the market.
The following is the definition of product development according to several book sources:
1. According to Tjiptono (2008), he revealed that product development is a strategy for new products, such as enhanced products, original products, modified products, and also new brands developed by means of research and development.
2. According to Armstrong and Kotler (2008), product development is a strategy to grow a company by offering product modifications or new products to predetermined target markets. Product development is carried out on physical products and ensures that existing product ideas can be turned into a new, more effective product.
3. According to Simamora (2000), states that product development is a process of finding ideas or ideas for new products and converting them into product lines that have been successful in the market. The search for new products is based on the assumption that the target market wants new elements. Therefore, the introduction of new products can help in achieving company goals.
4. According to Alma (2002), product development is an activity carried out by manufacturers in developing their products, improving old products, adding the use of old products, and reducing production costs and packaging costs.
Product Development Goals
The purpose of product development is to provide maximum value for consumers. Not only that, it also aims to win the company’s competition by selecting innovative products. Then also products that have been modified and have high value, be it in terms of design, packaging, size, and others.
Meanwhile, according to Keller and Kotler (2008), stated that there are two general objectives of product development, namely:
1. To meet new needs and strengthen the company’s image as an investor. This goal is achieved by offering a new product compared to the previous product.
2. The second goal is to maintain competitiveness with existing products. This is done by offering products that can provide various types of satisfaction or new uses.
According to Alma (2002), there are several reasons that underlie a company in developing products, including:
1. To meet the needs and desires of consumers
2. To increase turnover or increase sales
3. To utilize production resources
4. Win the competition with existing products
5. Increase profits by using the same materials
6. Utilizing the remaining materials
7 .Prevent consumers from feeling bored
8. To simplify product packaging
Product Development Strategy
Each company operating in a different field will follow its own product development strategy. Some members will innovate, while others will focus on adaptation in current product development.
Whatever strategy is used, it must be done clearly. When releasing a new product on the market, there are several product development strategies that you must implement, including:
1. Improving Existing Products
This strategy is carried out by creating new products from existing old products. Then modified and adapted to market desires. Apart from that, you also need to motivate the target market to buy the product that you have improved.
This focuses on adding features and updates that will affect consumer interest. But there are important things to note, that is, you have to keep looking for the features that consumers need from updated products.
2. Increase Product Value
Usually, the reason customers buy a product is because of the value they will receive from the product. That way, companies need to further strengthen product value by offering premium features, improving product quality, and also customer support. The added value presented will attract new consumers. Then existing customers will get something new from the product.
Offering samples or product samples for free will make customers want to buy your product. Here, customers will certainly check the quality of the product and the free sample will make them even more convinced to buy the premium version of the product. This free offer shows customers what they will get when they buy the product.
4. Specialize and Customize
You can customize some products and make them more special to target certain customer groups. In fact, you can also offer personalized products that are relevant to customer needs and wants. This will make them interested in buying the products you offer compared to competitors.
5. Package Offers
Offering a new package will certainly attract the attention of customers. You can offer products with various packages. Such as bundle packages, discounts, or free samples to choose the products you offer. The package here is an offer that other customers will not get. Especially if you offer a limited time offer, it is included in a good marketing strategy.
6. New Product Line
New product line is the development of a new product within a product line that is still relevant to the existing product line. When you want to make a new product, then you have to be careful with the development. Don’t let it, you only focus on offering products that are needed by customers. New products must be equipped with new features. So that it will increase sales of these products.
7. Changing Ideas or Ideas
This strategy is carried out by changing the definition and idea of the product. For example, when you create a new product but the target market doesn’t respond to the offer. Then you need to do market research and find out the appropriate customer wants and needs. Companies also need to provide new ideas for products to be developed and adapted to customer needs.
8. New Target Market
Selling several types of products in different markets is one strategy in product development. Where you can sell products in different markets. In fact, you can also change your target market and demographics and shift your focus from customers to business.
Types of Product Development
Every company must have a strategy for product development. It is intended that the product being developed can be in accordance with the wishes and needs of consumers and the company itself. But still in an attractive offer, so that existing consumers still want to have the product.
According to Keller and Kotler (2008), there are several types of product development strategies, including:
1. Improve existing products. This means that companies must use existing facilities and technology to create new innovations and improve old products. By using this method, the company will not get a big risk. Because they just need to make a complete change.
2. Expand product lines by adding items to existing product lines. You can also add to new products.
3. Adding existing products. In this case the company needs to add and provide variations to existing products. Then expand the market segment by serving various types of consumers who have different tastes.
4. Mimicking or modifying competitors’ strategies. This method can be done by imitating the strategies of competitors who are considered to be profitable. For example regarding pricing.
5. Adding product lines. Usually, companies will need substantial funds in the process of making new products that are not related to existing products. This is because products that have never been made and the facilities needed to manufacture them require substantial funds.
Stages or Product Development Process
1. Creating an Idea or Idea
Creating an idea for a new product is the first step in the product development process. In the process, the company needs to follow some systematic efforts in creating the latest products.
Usually, there are many ideas or ideas related to new products in the idea creation process. However, all these ideas must be able to proceed to the next stage. So that in this process, there will be many ideas that are wasted after passing various kinds of eligibility requirements for a product.
2. Screening of Ideas or Thoughts
The next stage is filtering ideas. After carrying out the creation stage, companies need to carry out screening related to product ideas that have been created. The screening is done with the aim that companies can get quality ideas. So that later it can be processed to the next stage. This is also useful for reducing production costs, minimizing the risk of failure, and also for selecting product ideas that are considered feasible and can be produced by the company.
3. Concept Development and Testing
After getting the product idea from the screening above, the next step that must be done is to develop the idea and test the new product concept. The concept here is a result of development efforts on several selected ideas. Where the product concept must be able to meet consumer needs. So that it can be better understood by the target market in a particular segment.
a. Concept Development
In carrying out concept development, companies must develop pre-selected ideas. Then make it a product concept so that it can be processed further. Therefore, in product development it is necessary to make several other alternatives that can be adapted to market needs and are also considered attractive.
b. Concept Testing
The new concept that has been developed must be tested first with the intended target market. Be it on a small or large scale. The concept can be presented in various forms. For certain types of products, it can be presented using pictures or word descriptions. In essence, the message to be conveyed to consumers must be easily accepted by the target market.
Then after the concept can be explained in detail to consumers. Then give them a question related to the interest and value contained in each product concept.
4. Marketing Strategy Development
When you have decided to choose a new product, the next step is to develop and develop a marketing strategy. The strategy must be developed and started from scratch. Starting from the release of products to the market until these products can be accepted by consumers.
5. Business Analysis
The product development stage that you must do if you have decided on a product concept and marketing strategy is to evaluate the business attractiveness of the new product that has been previously determined.
At this stage, only a re-examination is needed regarding sales projections, costs and profits derived from the sale of the new product, the goal is to find out whether all business factors are able to meet the company’s main goals or not.
If the final result of a business analysis shows a positive value and is in accordance with the company’s main goals, then the product can be moved to the next stage, namely the product development stage. These sales can be obtained by reviewing a history of other products from the company, it would be even better if the product is still in the same category as the product.
Apart from that, you can also monitor similar or similar products on the market, by monitoring these developments, as well as what things should be done and also avoided in order to achieve this.
Then, connect with various kinds of correct and appropriate marketing strategies, good sales distribution, as well as what promotions and communications will be delivered.
In a sales projection, the company must make maximum and minimum sales figures to be able to find out all the risks that will occur and be passed. In addition to all that, this can also be useful so that you can find out what the estimated costs are and what level of profit will be achieved from selling the product.
From all the results of this analysis, the company will be able to find out from the financial side and also be able to assess how attractive the product is to the business.
6. Product Development
In this stage, the product being developed is not a real or actual product, but is still in the concept of a series of words, videos, pictures, animations, or a prototype of a product.
If you have passed the business analysis, then you will proceed with developing it into an actual or real product. So, later consumers will evaluate the product by themselves. Because consumer input and experience is very useful for the product development process itself.
7. Test Marketing
Before the product is marketed according to its marketing strategy, the product must pass a marketing test on a real market on a small scale.
With this strategy, the production company will get an overview and experience related to the product to be launched, before the product is actually sold on a large scale, which requires a lot of marketing costs.
The results of the marketing test should be able to provide exposure related to the prospects for the product.
From the results of the marketing test, the company can then decide whether the new product can be launched, postponed, etc. If the company is sure that it will launch the product, then the company is obliged to prepare several activities, namely commercialization, starting from production preparation, preparation for new product launching activities such as promotion, advertising, distribution, and various other marketing activities.
There are not a few products that fail to enter a successful and broad market, therefore, to overcome this case, make sure all the steps above have been carried out.