Lets look at three reasons why product development is undertaken for the correct reasons. In part one of this four part series we looked at the high failure rate of new products.
- 1. Customers are asking for a product:
Customers are best able to articulate their own needs. A conscientious supplier will build and maintain a two-way channel of communications with the customer in an attempt to learn about its customer’s needs. Focus groups and in-depth interviews are just two avenues to explore these needs.
Frequent discussions with customers as well as members of your distribution channel – wholesalers and company sales reps – provide a pulse of the market. Unmet or underserved needs are identified and filled before other players in the market are able to respond.
Proactively solving unmet needs at an equitable price should result in profitable relationships and improved bottom line.
- 2. Gaps in the product line:
A product or line of products may serve a number of niches but not generate enough volume to remain competitive in the overall line of business. The goal is to avoid becoming perceived as a niche player when you should be – or already consider yourself – a broad based supplier.
A full array of products halts encroachment by competitors into your customer base. A void in the product mix is often difficult to defend against in the struggle to maintain and hopefully, increase market share in competitive situations.
Identifying the gaps in a product line and filling them yields a more complete array of products to satisfy a larger percentage of buyers in your target markets.
- 3. An identified need exists in the marketplace which the product will fill:
Once companies identify unmet needs they need to create a list of new product ideas. After utilizing high-level screening criteria, several concepts look promising. Applying all the necessary background work, revenue and share projections yield a product idea that is a winner.
The follow-up analysis confirms that manufacturing can deliver, financial analysts are convinced the product can make money, marketing is prepared with the necessary support for introduction and sales believes that the product can be sold. Even with the support and collective knowledge of the organization, the product is delivered into an ever-changing and fickle marketplace.
However, making sure that all the myriad or mundane details have been addressed, an adequate supply of the product has been produced, and that you are armed with the ability to “ramp up” production are critical steps to ensuring the groundwork has been laid. Proper planning and execution should improve the odds of your new product gaining profitable market share and positively contributing to the Income Statement.
Product Development that is driven by solid analysis coupled with considered ideas and opportunities has a higher opportunity for success.
That is what is on my mind. What do you think? Please respond in Comments below.
- Have you created new products for these reasons?
- Were the products successful?
- How has your approach to product development changed over time?