If you’ve got ideas for a new good your business could sell or a new service it could provide, it’s probably a good idea to spend significant effort on developing new product ideas before moving ahead to a product launch. You need to go through a systematic, thorough process of research and planning before you reach the point at which you’re ready to commit and unleash your idea onto the marketplace. Find out more about that process below.
Developing new product ideas
Most new product ideas are dismal failures. According to Clayton Christianson, a renowned expert in new product development from Harvard Business School, 95% of the more than 3000 new product ideas introduced each year fail to deliver on their promise, resulting in significant financial costs that might sink a company. As you can see in the graphic above, new product development is a complex process with many intertwined activities that must align effectively to generate profits.
In this post, we discuss ways to increase your chances of developing new product ideas that lead to success. So, read on.
Ideas, especially for new products, are a dime a dozen. Your task, should you choose to accept it, is developing new product ideas that solve customer problems or do it better than existing products. That means listening to customers and prospective customers to discover unmet needs. Social media is the perfect tool for uncovering these needs if you invest in active social listening and carefully analyze what consumers say.
Not every good idea is worth developing. You must weigh the costs and potential sales to justify developing new product ideas into realities. Part of that analysis should include your expertise in the market you’ll sell new products into as well as your experience making similar products. Marketers developed a grid to represent the risk inherent in developing new products based on these two criteria, called the product-market grid, which is shown below. In general, risk increases based on the criteria as reflected by the color. So, market penetration, which means selling more of your existing products to your existing market, which isn’t new product development, generates the least risk but often doesn’t generate a high reward. Diversification represents the highest risk but might also generate the greatest rewards. Product development and market development offer intermediate levels of risk and reward.
Conduct thorough market research
First of all, you must take a closer look at the market and what’s already out there in the world. Although you might think you came up with a perfectly original idea, you might find others are on the same wavelength and developing a similar product or one that satisfied the same need. Unless you have a strong brand image, going into head-to-head competition isn’t a great idea.
Your research must also build a business case for developing product ideas into real products. You need to answer the following questions with concrete numbers:
- Does the new product fit your mission and expertise?
- What is the size of the anticipated market and volume of product they demand?
- How much they’re willing to pay for the product if developed?
- What it will cost for you to develop the idea to completion then build the product at various quantity levels?
- Will the new product cannibalize your existing products by allowing customers to switch to the new product?
- How long will it take for you to bring the idea to market?
- Does the product have the potential to damage your existing brand image?
- What does the lifespan of the product look like (see below)?
To help answer the questions posed above, you must build a prototype of those product ideas that appear to have legs based on an initial business analysis. Prototypes can be anything from a flow chart to a wireframe to a scaled-down version of the finished product. Commonly, prototyping goes through various phases to control expenses in the early stages before you can prove viability. Thus, your firm my go through each of these types of prototyping before moving into production of the new product.
Prototyping allows you to better assess how much it will cost to manufacture the product, thus supporting the business case for new product development. Potentially even more important, prototyping allows you to assess consumer attitudes toward the new product based on something they can touch. For instance, I once worked with a team of undergraduates to survey residents regarding a proposed new aquarium. Based on that analysis, city leaders authorized construction, since survey results showed a sufficiently large number of visitors willing to pay a sufficient price for admission to compensate for the cost of building, operating, and maintaining the aquarium. Once constructed, the aquarium failed miserably because it’s much harder to convince folks to hand over cash than it is to say they’ll hand over cash. The more realism you can build into your prototype, the better you can judge consumer acceptance and willingness to buy.
Prepare the team
Preparing the team for what’s going to happen next and getting them all involved in the development of this new idea is vital for its success. The more involved employees are in the development, the more committed they are to its success. Plus, the more diverse the group involved in developing new product ideas, the more likely you are to develop a successful product. Two minds are better than one.
Assuming you already have a team working inside your business, you should delegate tasks carefully and try to make sure that you’re making the most of every specialist skill that your employees have to offer. Getting that right will improve outcomes massively.
Find out what potential customers think of your new product
It’s always a good idea to hear the views of your target customers at every stage in the new product development. Incorporating their ideas early and often delivers a superior product for your intended market. Plus, you gain their buy-in that supports sales of the product once launched. A key tenet of lean manufacturing involves testing prototypes at various stages and incorporating ideas into the next iteration.
You can use focus groups and similar research methods to gain those consumer insights and learn what potential buyers think about your new product and their willingness to buy it once developed. Of course, you can’t base every decision you make on focus groups because there’s more to a product’s success than that, as you can see from my aquarium example. But insights of this kind can still be very useful.
Testing product performance ensures you provide the durability and performance customers expect from their purchases. By incorporating rigorous testing throughout the production process both ensures product quality and reduces production costs. TQM (total quality management) includes a process for testing during the manufacturing process.
Preparing an idea for a new product isn’t easy, and where you end up might be a long way from where you started. That’s why it’s a process and you should embrace the changes and improvements that evolve along the way because they’re what make it viable as a product on the market.
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