THOUGHTS

The Basics of a Product Development Strategy

Feb 7, 2019

What is a product development strategy?

The market today is far more competitive than it used to be probably a decade ago. Single product designs are becoming obsolete, causing revenues to falter. Savvy companies have realized that product evolution and modification are inevitable to stay at the top of the game in the industry. An effective product development strategy is essential for this. Let us first understand what it is.

Product development strategy definition

A product development strategy can be defined as a strategy that involves developing new products or making modifications to existing products and then offering them to current or new markets. A product development plan or a product launch strategy is employed when there is no scope for growth in the current market with the company’s existing offerings. Here, the companies have three choices to make- create an updated version of the current product, introduce a new product, or cease the production of an existing non-performing product.

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Benefits of product development strategy

Product development strategy acts as a framework for introducing new products or for improving the performance, cost and quality of existing ones. One of the key product development strategy advantages is that it helps companies achieve their business goals including venturing into new markets, selling more quantities to current customers, or winning customers from competitors. However, a new product development strategy requires careful planning in order to minimize the risk of costly mistakes. Some of the other notable product development strategy advantages include:

Win business from competitors

An effective product development strategy proves to be helpful in winning businesses from the competitors who are unable to meet the new performance levels of the company. A product development plan also helps improve performance and thereby raises revenue and profits by charging higher prices. Gaining firsthand information from sales representatives or the consumers themselves will be useful in identifying the performance factors that are most important to the market.

Reduced cost and improved competitiveness

A good product development strategy should take into account the best ways to reduce costs. When the costs are lower, the company is at liberty to lower its prices and consequently win new business. Reduced costs also contribute to increasing the profit margin. How to achieve reduced costs? The product development teams can attain this by eliminating product features that the market does not need, using lower-cost materials, and simplifying the manufacturing process by redesigning that product.

Improve reputation and goodwill

The company’s product development plan must include targets for quality improvements. This helps boost sales. It must be also ensured that you deal with companies who have their own set of pre-defined quality standards. Making quality improvements as a part of the company’s product development strategy also makes it easier for companies to enter the markets with stringent quality and regulatory requirements.

How strong is your product development strategy? If you are not sure, it’s never too late to consult an expert.

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