All products will begin with an idea. It is a notion that can make life easier for people or allow business to be more efficient. The idea cannot just lie dormant in the mind. There comes a point when you must make a decision. If you have decided to move forward, you must be aware that there is a product development cycle. You have to walk through this, completing each step, to ultimately be successful.
Step One. What Does the Customer Want?
If your idea is not going to satisfy customers, it will have to stay in the world of imagination. Product is something which has to be used and sold. You have to begin the cycle by finding out what it is that customers want. The effort is going to require a fair amount of research and compromise.
By compromise we mean your idea may have to be fine-tuned and changed. The reason is to fit better the demand of customers. It will require swallowing your pride a little bit and being humble, and that is perfectly fine. You want people to be able to buy the product and use it. The more who can do that, the better your sales. You should not hesitate to make needed changes because every inventor, including Edison, has done that.
Step Two. Financing and Manufacturing
Financing is pretty straightforward. You have to have the money to produce that widget or gadget you have in mind. You have to spend time developing a business plan which you will show to financial institutions and banks. The business plan is your primary marketing piece, and it is critical. Take your time developing the language. You will be required to develop individual objectives and benchmarks as part of the business. Those can change if necessary.
Manufacturing requires choices. You can either make the product yourself in your factory or have a third-party work for you. Outsourcing is something business uses frequently. It cut the costs of manufacturing particularly if the actual work happens in another country. If you take this route, you have to be very careful.
Different countries have alternative views of copyright and intellectual property protection. It is essential that you have an attorney well-versed in the business law of the other nation to develop a contract and set the guidelines. You may want to have the final assembly of the product manufactured your shop, having the parts created elsewhere. Prototypes require testing because these trials make sure there are no design problems or flaws. Step Two is also the time any finishing touches to the design are done.
Step Three. Materials and Intellectual Property
Your product requires certain materials, such as plastic or perhaps nonferrous metals. Either you source them or the party to whom you outsourced manufacturing handles that situation. Intellectual property is a critical part of Step Three. Any issues which remain about design and copyrights must be resolved.
Step Four Introducing the Product to the Market
Marketing is going to be a crucial part of the introduction. You will need to identify those markets where your product has the best chance of drawing interest. If you don’t have an existing market, you may wish to work with an outside agency. This company may already have the tools necessary to identify the right staging platforms. The marketing agency also may have the advertising capability to broadcast the product brand to the public. You may want to consider working with independent marketing representatives. These people know the territory and can provide good advice as well as create sales orders.
Distribution will concentrate on the initial markets for a given period, and emphasis may or may not focus on different seasons of the year. There is nothing wrong with starting out small and expanding your distribution as the product is more visible and accepted. There is nothing that requires you to go with a major freight carrier.
Because you are working with smaller markets the beginning, you can save some money in distribution by going with regional carriers. You can also negotiate contracts where you rent only a certain amount of space in a boxcar or the back of a truck. Distribution is an area where you can realize some very substantial cost savings if you do your research, and are willing to negotiate.
This stage of the cycle is going to require lots of patience. Do not expect your product to go flying off the shelf on the first day. It perhaps will take some time and a fair amount of advertising before what you are selling gains popular acceptance. Understanding that the initial weeks may be slow is a justification for prior planning. You need to have enough capital to survive the slow times, and you should budget accordingly.
Step Five. Product Maturity and Growth
Reaching this step assumes that your product has survived the initial stages, is beginning to be accepted by the public. You now can work on market share and perhaps introduce pricing that encourages more purchases. Step Five is a time when you are increasing your distribution and doing even more advertising. You also need to begin listening to your customers because they are going to be telling you if your product is having some problems you will want to address.
Step Six. Protecting Your Market Share
The competition will sooner or later introduce something comparable to what you are offering. At this point, you will protect your market share. The defense may include lowering prices, offering special incentives, and highlighting the value of your product to a consumer. Step Six also a time when you can take a look at the initial design and make improvements. One of the most common defenses is what is called enhancement innovation, for instance you might make the model available in a different size or color. Product innovation involves adding new features that helps set it apart from the competition and line extension innovation would involve creating a new line geared specifically to one class (for instance the GoPro Surf). The more competitive separation you have the more you’ll be able to charge.
Your existing customer base is your best source of guidance. These people can tell you whether or not more is needed to sell a large volume. Do not hesitate to survey the customer. What is great about social media is that permits any company to look closely at the tastes of consumers, and find out what they like and don’t like.
You should make a habit of checking Yelp and other consumer comment websites. If there’s anything negative said about your product, respond as quickly as possible in a positive way. You can do all these things to protect your market share, but you have to remember there will come a point when your product starts to go into a decline.
Step Seven. Managing the Decline
Sales will eventually drop, and you should not be overly upset by this at all. Consumer preferences are going to change, and the demand for what you have is no longer high. An example of this is the automobile industry. A particular model of car is not going to be popular for decades. At this point of product development cycle, you need to make a few decisions.
You can keep the product on the market without making significant investments anymore in design or refinements. Marketing may have to be redirected to other products, and the advertising for this particular product is going to a decline. Something that is very true in the software industry is the successor product.
You can maintain Version 1 for a given period and then replace it with Version 2. Once you introduce the latest model, the older one can be discontinued. That happens about the time any profit from the original design has disappeared. While you may have a particular affection for the original product once it ceases to make more profit than cost, it is time to let go. It’s much better to be the disruptor or of your original product than for the competition to come in and take over your market share.
Product cycles can last months or years depending on what the merchandise happens to be. Some products may last only one or two buying seasons, and this is not a problem. On the other hand, there are any number of creations that can sell profitably for years on end. The product cycle is not an exact science, but each step has its assignments and tasks.
There is no time to rest during product development cycle. You have to keep your eyes and ears open to the market is telling you. No step of the cycle is cast in granite. You may discover that you have to make alterations and changes along the way. Do not hesitate to do that if it is necessary. Ultimate profitability is the goal that you are striving to achieve. It is an accepted business practice that when the expense outweighs the profit, the cycle may stop right there.
You can think of every step as a learning stage for you. As you go along will discover ideas you have not followed before. The marketplace is always changing and so is technology. You may be surprised to learn that latest innovations are going to allow you significant profits. If you follow the product development cycle outlined above, you will have a systematic way of achieving your goals.