Planning A Product Launch? Here’s the Ultimate Checklist to Consider
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 modification 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.
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 raise 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 their 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.
New product development strategy: Key questions to answer
Question #1: who will lead the new product development strategy?
Although a company might possess all the expertise and capacity required in developing a new product development strategy, there are chances that they might be consumed with other projects or lack specialized expertise to address specific challenges. A key component of a company’ product development plan will be to list out who will participate and how it will be managed. Companies can opt from the following options:
In-house: The product development strategy and the project management are executed by the company’s own resources.
Outsource: An external partner is employed to design the product, manage the process, and source and coordinate the work of additional suppliers. The company’s employees provide them with business oversight, identify requirements, and contribute feedback to the project.
Hybrid: In some cases, it becomes more feasible to manage the project in-house and then coordinating the work of a design firm and one or more suppliers. This is a mix of moth in-house and outsourcing functions.
Question #2: How to validate the product design?
Commercial failure is one of the biggest risks associated with a new product development strategy. Even if the product development is on-time and meets the specs and budget requirements, chances are that the sales will fall flat. So, throughout the product development lifecycle it is vital to seek validation of market demand, the product’s value proposition, and the product design and features. Some of the main strategies to achieve this include:
Crowdfunding: Use a popular crowdfunding platform depending on the product category. This may prove to be highly effective to promote your idea early in the development cycle, attract investment, and validate the appeal of the product idea.
Prototyping: Companies can use prototypes at several stages of the product development strategy to demonstrate the product idea, gain feedback, and secure lead customers.
Low-volume tooling: Major investments for hardware products include production tooling and setup. Companies can start by building less-expensive, short-life tooling for a low-volume production run of your product in order to facilitate a market test.
Question #3: What is the best business model for acquiring customers?
The company’s customer acquisition and revenue models may have implications for the product design. Products that work on modern technology such as IoT consist of ecosystems of hardware, applications, connectivity, data storage, and data feeds. This expands the company’s range of possible business models, here are the options you need to consider:
- Subscriptions for data feeds, storage, or hosting
- Opportunities to increase user engagement and the network effect, exposing
- Purchase, lease, or metered usage for hardware or application components
- Free basic functionality with paid upgrade opportunities
- Recurring revenue opportunities through consumables, maintenance, and upgrades
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What is product segmentation?
A product segmentation strategy helps businesses identify ways to sell variations of their products in such a manner that it appeals to different markets. How is this different from a marketing segmentation? Marketing segmentation involves identifying various target markets for creating different messages for selling the same product to each group. The primary aim of a product segmentation strategy becomes evident when you realize that by slightly changing your product, the potential to increase sales becomes higher.
How to undertake a product segmentation strategy
Analyze the market
An ideal product marketing strategy must include methods to identify factors that make people want to purchase a particular product. For instance, brands can take the help of focus groups or surveys to find out what people like about their product and the scope of improvement that would make it much more desirable and eventually prompt them to purchase. The needs of each target groups of customers might be different. It is essential for businesses to identify the ones which are viable and incorporate the same into their offerings.
Use marketing segments
Brands can use various types of product segmentation to appeal to customers, one of the best ways to do it is to focus on the already existing customer segments of the business. This also helps to identify market segments that aren’t buying from the business and formulate different product variations that could induce a purchase from them. If the company sells products via the Internet, then it becomes much easier for them to offer customization options of products to the customers in order to meet the needs of different groups better.
Use distinctive marketing communication
Brands must ensure that they adjust their marketing messages accordingly to suit the product that they intend to promote. For instance, the marketing strategies used for selling a children’s snack should be different from the strategies used to promote snacks that are healthy and recommended for adults.
Types of product segmentation strategy
Mass market strategy
This is one of the easiest types of product segmentation wherein a common offering is made throughout by the brand irrespective of their target customers or difference in geographic locations. One of the key advantages of this product segmentation strategy is that the company receives a great economy of scale advantages since its factories are manufacturing the same product with the same materials and no additional customizations are required.
Large segment product segmentation strategies are more specific and require a significant investment to compete successfully in every available market at the same time. A company can specialize in making one type of product which allows them to eliminate an unprofitable segment or target the segment where it has the greatest advantage.
In this product segmentation strategy, a company targets more than one market segment. For instance, A chemical brand can make many brands of detergent just by changing the concentration of the chemicals used for each specific market. The company runs a separate advertising campaign for each product, and customers in a different region may not even know that these products are made by the company. This method is intentionally used by some companies to protect the reputation of their higher-end brands.
Niche segmentation is one of the popular types of product segmentation wherein the company’s products are made to suit the needs of a specific and highly specialized target customer group. This is one of the most effective types of product segmentation that can be used by a smaller firm to compete with larger counterparts in the market. Though a niche forms only a small part of the market, higher-end products are sold to this segment which compensates for this factor.
Facing trouble formulating the right product segmentation strategies for your business?
The need to diversify and add new product lines into your business or modify existing products is an essential element of growth for most companies. But the catch here is that product development is not a piece of cake. An immense amount of research, planning, time, money, and effort are channeled into product development. Hence, companies planning on developing a new product or modifying existing ones must ensure that they undertake calculated planning rather than jumping the gun before to a product launch. In fact, according to experts, the failure rate for a new product launch is often as high as a whopping 90% in some sectors. To increase the odds of your product not having to face the same fate, here are five product development steps to follow:
#1: Identify an opportunity
The starting point for any product development should be to identify the needs of current and potential customers, their level of satisfaction with the competitors’ offerings, their consumption habits, and the technical possibilities for improving the existing products. To achieve this objective, it is vital for companies to have managers with considerable experience and a strategic vision of the company, the clients, the competition, and the suppliers. When you identify a gap between what is being offered and what the actual demands are, it sparks the idea for a product launch.
#2: Measure the opportunity
Once information on market trends and the strategic objectives are gathered, the next step is to analyze the segments that the product is geared toward and predict future buying habits as accurately as possible. Companies can also rely on several product development tools that can help them identify the needs and systematically group them by established criteria.
# 3: Build the concept
In this phase, the new product idea is refined to serve the needs of potential clients and differentiate products from the competition. But how can businesses achieve this? To deal with this situation., begin with getting opinions from leading users who may foresee future needs in the market. Furthermore, build a team with expertise in various disciplines. This includes design and production people for the technical requirements, marketing experts for reaching out to customers, and finance and management experts for determining the funds that are available.The ultimate aim of this step is to stand out from the competition, satisfy the client, and show the highest potential for turning a profit.
# 4: Create a prototype
Testing is an essential step in determining the likeliness of a product to succeed or fail after the product launch. Creating a prototype will also help identify the flaws in the product and make the necessary changes before it is too late. This phase will also help the company to analyze whether a there is a healthy equilibrium between the launch cost and the product’s capacity to return a profit. It is advisable to keep in mind that investing in cost reduction at an early stage can increase profitability in the long run. Cutting down product prices can boost market share, which, in turn, trims distribution costs and discourages the competition.
#5: Product positioning and product launch
Once the product is designed and studied thoroughly, the next step is to decide on its strategic positioning. This is concerned with how you want potential customers to perceive the product? This stage needs to take into account economic factors and functional and emotional factors. Companies should identify how they can create an impact in the minds of the customers regarding the product. This will act as a primary driver for customers to buy the product after the product launch.