Have you looked at Marketing Technology landscape, Digital Advertising landscape, Payments landscape, Social Media landscape lately? The number of companies developing new products is rising at alarming rate. Companies that are hugely successful are marked by 2 key qualities – great products with intense “market focus” and “customer focus“.
Product development, also called, New Product Development (NPD) is the process of creating new products to the market.
It has become an imperative for companies to innovate leveraging advances in technology to create new products, fill the gaps in market, and gain competitive advantage. Matter of fact, silicon valley, lives and breathes NPD.
New products are an organization’s most important source of revenue. New products bring in higher sales, increased customer loyalty, and ultimately higher profits.
NPD is a usually a 3-step process
There are a lot of strategic, planning and financial considerations for bringing new product to market. At a high level, it’s a 3-step process:
Note that during first 2 phases, investments need to be made to develop products through launch, when it starts generating revenue. That’s why the business case development is so important during planning phase – it helps us understand what is the break even point, when the product will start generating revenues, etc.
Organizations such as the Product Development and Management Association (PDMA) and the Product Development Institute (PDI) provide guidance about selecting the best development framework for a new product or service. Design Thinking is another mechanism to create new products.
1. Product Planning
- Idea generation – could be brainstorming sessions, market research & analysis, competitor analysis, SWOT analysis, etc.
- Concept Development and Testing – Initial POC and focus group testing with actual customers to get their feedback. Read SPRINT on how to solve big problems and test new ideas in 5 days.
- Develop business case – All ideas need to make sense from customer, operations, financial, risk, company strategy and brand considerations perspective. The next step is developing a business case which must include at least –
- detailed marketing strategy highlighting the target market
- detailed sales strategy
- product positioning and the marketing mix that will be used
- a full appraisal of the costs
- identification of a break-even point, etc. If the business case is not viable, go back to drawing board.
2. Product Development and Launch
- Core Development – user personas, designs, and running all kinds of tests
- Beta Testing – testing the developed product with real customers and incorporating their feedback.
- Commercialization – making the product available to the customer base at large and launching a marketing effort to support it.
3. Product Maintenance and Support
- Product Rationalization – continuous evaluation of product i.e. cost benefit analysis, to see if product should be enhanced with additional features, augment with new technology to realize additional benefits, retired (end of life), etc.
So, what makes certain products successful?
There are many elements, but I’ll point to few key factors –
- Company Culture – Encouraging everyone to come up with Innovative ideas, encouraging risk taking
- Leadership commitment – to digital, disruptive technologies
- Great understanding of customers, market and competitors
- Agility and Collaboration – iterative, working fast, and working together across other departments
Remember, NPD must be collaborative, iterative and innovative. During the course of NPD, errors will be made, business cases will have to be rewritten, designs will get trashed, loss could be recorded, etc. Having your entire team working and supporting each other in tight synchronicity will ensure the successful launch of goods or services.
Best selling products of all time!
Best products, as defined by those that have generated highest sales in their category –
- Toyota (>40M since 1996),
- Lipitor (>141B since 1996)
- iPad (>225M sold since 2010)
- iPhone (>700M sold since 2007)
- Playstation (350M consoles sold since 1995)
- Marios Bros (>240M games)
- Coke (1.8B servings daily)
- Angry Birds (> 2B downloads), etc.
NPD is an essential activity for all businesses. It helps organizations stay ahead of the competition. NPD very often requires long-term forecasting of market trends, development of new designs and processes, and substantial capital commitment. How do you turn a “capital intensive” organization to “talent intensive” organization is the question that every organization should be thinking about.