Developing new products or modifying existing products so they appear new, and offering those products to current or new markets is the definition of product development strategy. There is nothing simple about the process. It requires keen attention to competitors and customer needs now and in the future, the ability to finance prototypes and manufacturing processes, and a creative marketing and communications plan.
There are several subsets of product development strategy;
Product Diversification Strategy
This strategy is employed when a company's existing market is saturated, and revenues and profits are stagnant or falling. There is little or no opportunity for growth. A product development diversification strategy takes a company outside its existing business and a new product is developed for a new market. An example of this strategy is a company that has sold insurance products and decides to develop a financial education program aimed at college students. The new product is not revolutionary as there are other companies producing similar products, but it is new to the company producing it.
Product Modification Strategy
Product modification strategies are generally aimed at existing markets, although a side benefit may be the capturing of new users for the new product. An example of this strategy is toothpaste. Toothpastes that promote whitening ability or anti- cavity attributes are built on existing plain toothpastes that only promise clean teeth.
Revolutionary Product Development
Revolutionary products are those for which there was no real prior need. Computers and cell phones are good examples. Before these products appeared on the market, consumers did not know they needed them. But, the germ of an idea on how to better communicate resulted in products that have changed the world and have drastically changed the competitive landscape.
Benchmarking the Process
Whatever strategy is employed, the new product development process must be carefully thought through. It also requires a series of benchmarks along the way. These evaluate whether the process should be continued as new product development is usually expensive and time consuming. For example, if a company is in the process of developing a new product and a competitor beats that company to market with a similar new product, the company must make a "go/no go" decision about its own product development options.
Consumers Front and Center
Whatever product development strategy a company selects, consumers need to be front and center and involved in the process from start to finish. Set aside enough budget for consumer evaluation of the new product at the concept, prototype and the final product stage. Make sure you not only include those consumers who represent your primary market, but also those to whom your company might appeal to secondarily.
January 03, 2018