Product Development – Definition and Processes – All You Need to Know

One of the biggest challenges for the entrepreneurs of today is to ensure that they see the vision of the product being brought to fruition, ensuring that all the specifications and features are incorporated according to plan.

One of the most critical processes for the establishment of new businesses, the product development process is quite a mystery. The journey from origin to the creation of even the best products in the market seldom follow a straight-line trajectory. Most of these stories are filled with challenges, hurdles, and further improvisations down the path.

The development stories, on their own, do not provide an idea about the course of the product journey, but some of the steps taken by them can be used to establish a product creation path. This trajectory is based on the similarities between the nature of the measures that the founders adopted during the development of products across the different product categories.

Before we understand the different product development steps, let us first understand the definition of product development.

What is product development?

The process of new product development is defined as the one that results in bringing an original idea for a product into the market. Even though the procedures vary across the different industries, the core steps behind the process are usually the same throughout the different product categories. These steps can be broken down into:

1. Ideation

2. Research

3. Planning

4. Prototyping

5. Sourcing

6. Costing

Now let us take a look at the above steps in detail and study the process of developing an idea and understanding the things that need to be considered at each stage.

Steps behind the product development process:

1. Ideation:

A majority of the entrepreneurs tend to get stuck at this very stage most of the time because they are usually waiting to find the perfect product that they should be selling in the market. Building a product that is entirely new in the market can be a great idea, which is also creatively fulfilling. Even then, the best business models usually result from entrepreneurs improving upon the already-existing products in the market.

A model that can be useful in guiding companies to come up with product ideas quickly is the SCAMPER model. This model is based on these entrepreneurs asking questions about the presence of some existing products in the market. In this model, each of the initials stands for a particular step. Let us look at some product development examples in each of the categories.

• Substitute (trying to find an alternative; e.g., going for faux fur instead of fur)
• Combine (finding combinations of products that go together; e.g., a phone case fitted with a power bank)
• Adapt (looking at solutions that can be adapted to suit multiple scenarios; e.g., bras with nursing clasps at the front)
• Modify (enhancing the features of existing products to make them more attractive to the users; e.g., electric toothbrushes with more compact designs)
• Put to other uses (increasing the diversity of the scenarios in which the solutions can be used; e.g., dog beds with memory foam)
• Eliminate (remove the middleman in the business to pass on the benefits of the savings to the customers; e.g., going from an offline sunglass business to an online one)
• Rearrange or Reverse (allowing customers to recycle their goods to transform them into other products; e.g., making a duffle bag out of old hoodies)

Through these questions, businesses can form ideas or even come up with newer ways to transform existing ideas. These ideas can then be used to target a new demographic segment of customers or target the same customers through different platforms.

The best way to go about this process is to come up with a list of potential ideas to adapt and work through the list via the process of elimination.

2. Research:

When a concrete idea is formed, it is tempting just to go ahead and proceed to the manufacturing process, but this is the wrong way to go about this problem. When any concrete idea is formed, it is essential to validate the same through conducting proper market research.

So, this step of the process entails the stage of validating a product to ensure that the business is creating something that will be of use to the consumer. If the customers are unwilling to pay for the product, then the product won’t sell in the market.

Failure to conduct product validation can lead to businesses spending time, money, and efforts on products bound to fail when launched in the market. Other ways of carrying out the product validation process include processes such as

• Discussing the idea with your family and friends, seeking their honest feedback on the same, and discussing the feasibility of the concept.
• Using different market research tools such as online surveys to gain feedback on an idea and test out whether the customer might be reluctant to use such a product or a solution.
• Starting a campaign to gather crowdfunding for the concept to understand how online users might perceive such an idea
• Using online forums such as Reddit to seek feedback from the online community
• Using analytical software such as Google Trends to research online demand about the product using graphical data
• Launching ‘Coming soon’ pages on different social media platforms, launching websites for the same to generate some hype among the users, and gauging the response from inquiries, email opt-ins, and pre-orders.

Whichever is your preferred way of going about the data validation process, it is crucial to opt for feedback from a large group of people across the target groups who are unbiased in their opinions. This process will result in the developer getting a good idea about whether the people will be interested in buying the product. If so, it will also help in identifying the specific target groups.

While conducting research, it is essential to be aware of customers who state that they would ‘buy the product’ and ensure that they do not overvalue the opinions of these customers. It is hard to understand who will actually purchase the product until money changes hands, and hence, we can’t always count on them to be the customers.

This type of validation research will involve competitive analysis since any idea that is a good one will have other businesses flocking in to explore that sphere of activity. This factor is another indicator that there is a good chance for the idea to take off.

An excellent way to go about the competitor analysis in this domain is to sign up for their email list, which will give an idea about how the company goes about attracting their customers and selling its products. Another way to gain a competitive advantage in this sphere is to ask your target customers about their preferences and what they like or dislike about their competitors’ products.

This information gathered from conducting market research, and the process of product validation will help the business to understand the current demand for your product as well as the level of existing competition. This process will be helpful in the long run for the companies to engage in long term planning as well as beating the competitors in the game.

3. Planning:

At this point in the product development process, it is vital to engage in long-term business planning since, from this point onwards, the path can become more complicated. Therefore, before starting with building the prototype, the business needs to plan and set goals accordingly.

The next processes will entail approaching the different manufacturing plants and sourcing raw materials for the manufacturing process. If at this point, the developer does not have a clear idea about the specifications of the product, how it is supposed to look like, as well as its functions, they can lose sight of the finished products in the subsequent steps.

The best way to start doing this is to come up with a hand-drawn sketch of the product, which will fit all the necessary features. This sketch needs to be extremely detailed, with every tiny element being incorporated into the diagram and subsequent labels explaining each of these features.

This diagram does not need to be a professional-quality sketch at this stage since this is not going to be submitted to the manufacturer as of yet. Yet, if you are still not confident about the diagram being legible and offering the most authentic idea about the product, you can easily hire web illustrators online who can help you get the work done efficiently.

This sketch will also help the developer list down the different materials or components required to create the product from scratch. This list should chalk out all the significant elements needed to develop the product to give an idea about the parts that need to be sourced to create the final product.

Making a list of the same also helps to understand which of the components might require separate licenses. It will need to be assembled separately before being incorporated into the final product. This list will also help to understand which of the products can be manufactured in-house as compared to the ones that need to be sourced from other places.

Apart from the components, such a list can also compile the retail prices of the categories in which the product should fall. Whether this product is meant for daily use or intended for special occasions, whether it will be a premium item or made in a sustainable and eco-friendly manner, these questions also need to be addressed at this stage of the production process.

Going forward, the answers to these questions will help provide a sense of direction during the product development stages and help define the positioning and marketing strategies for the brand. This process helps us understand the role of product development in marketing.

It is also at this stage that the post-production decisions also need to be taken. Such decisions would include ones regarding the quality control mechanisms, packaging, and labeling directions, etc. These processes need to be completed before proceeding to the sourcing, manufacturing and costing stages.

All these stages are bound to affect how the businesses price their products and market them to their target customers. Hence these are essential aspects that need to be taken into consideration by the planners during this phase.

At this stage, it will also be crucial to understand the channel through which the product will be marketed. If it should be sold using online modes then the costs of hiring an eCommerce website development company also have to be incorporated since hiring an expert eCommerce developer will yield better results in the long term,

4. Prototyping:

The main idea behind the prototyping phase at the time of product development strategy is to aim towards creating a finished good which can be used as a sample to facilitate mass production.

Although it is highly unlikely to obtain the finished product from a single attempt, this process entails a lot of experimentation. This stage is involved in coming up with many versions of the same product where some of the options will be eliminated, and improvements will be made to the others until the developer feels satisfied with the final version.

Although common across all product categories, this process varies widely according to the type of product the developer is aiming to manufacture.

The prototypes that incur the least costs are the ones that can be manufactured by the developer. This category primarily includes some recipes of food and other cosmetics that are home-made. The DIY prototypes cover a wide range of products across several verticals such as design, pottery, fashion, home décor, and many more depending on the amount of training the developer has in any of the disciplines mentioned above.

Although, in most cases, entrepreneurs will seek out other third-party operators to design the prototypes of the products. This process would involve the developers to approach a local expert engaged in such a form of business. In the fashion industry, this would most likely be a seamstress, for the shoemaking industry, this would be a cobbler or a pattern-maker when it comes to the clothing industry.

All these services can be found through an online search by using a search engine to find out which of the local businesses are operational in these fields. Most of the major cities in the world will have schools providing education in fashion, art, and design, and the students in these schools are usually trained in prototyping methods. Administrators at these universities typically allow access to their internal job boards from where these companies can seek to hire designers who can carry out the prototyping process.

For other objects such as home accessories, toys, electronic items, and other objects with a hard exterior, 3D rendering might be required to construct a prototype. Engineers and designers who have been trained in CAD (Computer-Aided Design and Drafting) software can be hired to do this work through various freelancing websites on the internet.

For founders who would want to learn how to use software to generate the models by themselves, online tools such as Vectary, TinkerCad, and SketchUp are usually easy to navigate through. These tools can be easily used by the founders to create 3D models for themselves.

To turn a 3D model into a physical one, the creators have to make sure that they have the correct kinds of molds made for each of the parts. These kinds of frames are usually expensive and usually involve fees to cover the set-up costs for objects such as tools and dies. These materials are used to cut and give shape to the pieces of plastic and other durable materials.

Thanks to innovations such as 3D printing, the designs can be converted to physical models, incurring much lower costs and facing a shorter turnaround time.

5. Sourcing:

The next process in this line of business is the process of sourcing. Now, when the company has a product prototype that yields satisfactory results, the following procedure to follow would be to start searching for the suppliers who will be able to provide your business with the raw materials required for carrying out the production process. This step is referred to as the supply chain building process relating to the suppliers, resources, and activities necessary to formulate a product and ensure that it reaches the hands of the end consumers.

This phase of the product development process will involve searching for manufacturing-related services where you factor in stages such as storage, warehousing, and shipping into the execution process.

At this stage, it is essential to come up with a list of multiple suppliers. They can offer different materials that will be required for the business as well as a list of potential manufacturing houses. This step allows the firms to compare the potential costs of doing business with these suppliers and manufacturers and decide on the most profitable course of action.

These processes also have the added advantage of making room for backup options in case the contract with one of the suppliers or manufacturers does not work out. This business stage is vital for the survival of the company since it allows for the safeguarding of the business in the long run.

Going through the list of suppliers from both offline and online sources can reveal plenty of options. Other traditional sourcing methods mainly involve the companies attending trade fairs to set up better deals with the suppliers. These trade fairs offer a massive advantage since they accumulate a vast number of suppliers under a single roof who provide a large variety of products at a competitive or slightly lower price as compared to the prices being offered through other offline and online prices.

The presence of a vast number of vendors under a single roof ensures that the business gets access to the best available deals. The personal relationships formed at these trade shows also ensure that the company receives an added benefit while negotiating the prices with the vendors and setting up long-term contracts with them.

Another issue that might crop up during this sourcing phase is the decision that dictates whether the companies should produce the products locally or through overseas sources. Sometimes, foreign sources might be an excellent option to opt for when manufacturing goods in bulk, which can help the company save up on a lot of costs associated with the production process.

Hence, this step is advantageous for the businesses to ask for the quotations from these overseas companies and compare the two options to compare the pros and cons of engaging in activity with these companies.

Alibaba is one of the platforms that are most frequently used for contacting overseas production facilities. It forms a marketplace for Chinese manufacturers and suppliers of raw materials. These companies list the products on offer in the segments of raw materials and finished goods.

The most commonly used way of navigating through the marketplace is to find manufacturers offering product listings similar to the ones that the business plans to develop. Then the company can directly contact these manufacturers and enquire if they can produce the products according to the specifications provided by you.

6. Costing:

After going through the stages, as mentioned earlier of ideation, research, planning, prototyping, and sourcing, the business should have a clear idea of the exact cost of production. The process of costing will ensure that the company takes up all the data that has been gathered so far to generate the cost of goods sold (COGS) to determine both the gross margin and the tentative retail price for the product.

The way to go about this process is by creating a spreadsheet with all the additional costs being broken down under a separate header as a different line item. These headers should include all the costs incurred as raw material prices, factory costs, manufacturing, as well as shipping costs.

Aside from these heads, other factors that need to be considered in this scenario are the import fees, shipping charges, and any other duties that need to be paid to ensure that the products reach your customers’ hands safely. Most of these factors depend on the geographical location where the products are being manufactured.

After securing multiple quotes for the various materials or the manufacturers while going ahead with the sourcing process, different columns can be incorporated to compare the costs. Or the second version of this spreadsheet can be created, which allows the business to compare the local prices for the production process pitted against the global prices.

Once the total cost of goods sold is calculated, the business can come up with the price at which the product is expected to be sold in the market, and then the cost of goods sold (COGS) can be subtracted from the retail price to come up with the potential profit margin that can be generated through the sale of one unit of the product.

This step concludes the stages and the steps behind the product development process and needs to be followed while developing the products for each one of the industries. Some additional stages might come into play, keeping the primary levels constant, and depending on the product’s complexity.

Let us take a look at the product development process in some of the popular industries.

Industry-based product development processes

In this section, we will consider the case of some of the largest and the most established industries – Food and Beverage, Beauty and Cosmetics and, Fashion and Apparel.

The three industries, as mentioned above, have a product development process that is relatively uncomplicated. Besides this, most of these industries have several case studies that have been documented for the development and growth of the companies that operate in this sector, which can be used as inspiration to fuel their growth.

Food and Beverage

This industry is the best sector to go for if you want to go into developing products at a marginal cost sitting in the comfort of your residence. Developing food products and beverages can start from a process that is as simple as buying the raw materials from the nearest grocery store and coming up with a new recipe using the products that you purchased.

Starting from spice mixes, nutrition bars, smoothies, this process can deal with the development of any product.  

Ultimately, to move from a home-made product to packaged goods that can be sold in the stores or using online modes of marketing, the company will need to find a commercial facility that can manufacture the products in bulk. These facilities usually require a license to produce food and also need to gain approval from the department of health and safety.

Most of these kitchens are equipped with various cooking equipment and large ovens, which can accommodate more substantial batches of food products being manufactured at the same time. But in case you are looking for a mass producer and packaging units which can produce goods in bulk, going for a co-manufacturer or a co-packer would be a better choice. These production facilities are the ones who are experts in using large quantities of raw materials to produce food and beverage items in bulk.

Some other factors that should be considered:

Warnings and labels: These labels comprise of the nutritional information, the list of ingredients, warnings about the presence of allergens, etc.

Laws and Regulations: Most countries have several regulations regarding the ingredients of these products, the dietary information, and health claims that the businesses will need to conform to strictly.

Date of Expiry: This stage of the production process is necessary to understand the shelf life of the product, the process of production, and how the item needs to be packaged and stocked to accommodate these dates.

Beauty and Cosmetics

This industry is involved in the production of a wide variety of products continually expanding to accommodate the fast-developing trends in the sphere of wellness and personal care. The range of products that come under the purview of this industry includes everything starting from makeup, to personal hygiene products.

Many beauty brands under this umbrella are shifting towards an all-natural and sustainable approach towards the product development process. Such a move makes the prototyping process easier as these brands can just create product prototypes using readily available ingredients.

Another method to go about the product development process, which is quite popular in this particular industry, is white labeling. Through this process, the companies aim to find an existing product or a manufacturer who then packages or rebrands the products that these establishments already produce.

Irrespective of the route you choose to opt for, the mass manufacturing process usually occurs by working with a laboratory and a chemist. This measure helps to ensure that the product quality remains consistent irrespective of the scale at which it is being manufactured.

Some other factors that need to be considered:

Warnings and labels: Identify the different ingredients used in the product and the potential allergens that might affect the user.

Rules and Regulations: The FDA rules regarding the products might vary depending on the place of manufacture as well as the market in which the product is going to be sold. The company needs to make sure that they are fulfilling all the criteria.

Date of Expiry: The companies need to determine the expiration date of the products depending on the shelf life and stability of the products over time.

Fashion and Apparel

In this industry, product development begins in the old school way – by starting with a sketch of the products – usually hand-drawn by the designer or graphically developed by a graphic designer using design software.

This sketch is then converted into a sample by taking the help of a seamstress. Each of the prototypes developed during the prototyping stage comes with a range of examples complete with one sample for every one of the sizes that are going to be offered. Once the designs for each of these sets are finalized, the production process starts.

Instead of manufacturing in bulk at the very beginning, some of the companies in the fashion and retail sector go for a print-on-demand model. In this kind of model, the company can upload the designs onto a third-party app that connects your business with another warehouse as well as a screen-printing company.

When an order for print-on-demand services is placed online, the design uploaded by you is printed on any pre-stocked material of clothing as per your specifications. A finished product is created from the same instead of having to design a whole new outfit from scratch.

Some other factors that need to be considered:

Labels: These are the tags made of fabric that are stitched or stamped into any item of clothing and contains information about the size, material, cleaning instructions, etc.

Hang Tags: These are the tags that hang from the clothing and mention information about the size and price of the garment.

Conducting wash tests: Wash tests are essential to determine the best way to clean, dry, and take care of the fabric and also test the durability of the material over time.

Concluding lines

The journey that starts from the process of ideation and ends at a finished good, each industry is equipped with its own set of specifications that it would prefer in any new product. If the process is still a bit confusing, it is essential to remind yourself that every product that was ever created had to go through the same stages before they gained dominance in the market.

The importance of product development is manifold. By following the steps mentioned above, the arduous task of developing and introducing a new product in the market can become a little less overwhelming. The process is broken down into processes that are easier to follow.

No matter the kind of product you plan to introduce into the market, guiding the product through the stages of preparation will ensure that you come up with a product that is sure to be successful in the market.