There was a time in the not-too-distant past when a company could create a notable product and reap the benefits of that product for many, many years. Unfortunately, today’s market is far more competitive than it used to be, and companies now face the prospect of market saturation for single product designs, causing revenues and profits to falter or fall. Savvy companies are now understanding how product evolution or product diversification is needed to stay at the top of the game in their industry. To do that, you need a product development strategy. The question then becomes, what is a product development strategy?
Product Development Strategy Definition
A product development strategy is a strategy based on developing new products or modifying existing products so they appear new, and offering those products to current or new markets. These strategies typically come about when there is little to no opportunity for new growth in a company’s current market. At that point, a company has one of three choices: create an updated product for a current product in a current market, enhance an existing product for a new market, or simply move away from the product altogether, and cease growth. Most competitive companies won’t opt for the third choice so a strategy is therefore designed to either evolve a product for its existing market, or enhance it to introduce into a new market.
Updating a Product – Product Evolution
Depending on the product a company offers, there may be little opportunity to introduce that product into new markets. With that limitation, a company must instead look at updating an existing product for its current market. This is known as product evolution. Product evolution is used by companies who have the vision to not only see a product idea, but how that product can evolve over time. It’s the idea of mapping out, often before the first product is even manufactured, what future iterations of a product might be as it improves and grows. For others, that vision may have not been initially in place, but a competitive marketplace has demanded it to happen in order to survive. Another term used for this is “product modification”. Product modification strategies are generally aimed at existing markets, although a side benefit may be the capturing of new users for the new product.
Creating a New Product for a New Market
This approach is actually much more common than most people may think. This is the idea of a company going outside its existing business model or approach and developing new product for a new market. Unlike updating a product for an existing marketing, creating or enhancing a product for a new market requires steps similar to designing a brand new product. Steps to create a new product (or enhance an existing one) for a new market may include all or some of the following steps: product design, product analysis, design documentation, prototyping, and of course product production. Though a more comprehensive undertaking than simply evolving a product for an existing market, adding new markets into a product development strategy can serve to stabilize a volatile product offering portfolio and open the doors for new opportunities. Also, depending on the new market, it may in turn create more opportunities for product evolution than an existing market may offer.
Each company is different in how they approach their product development strategy. A product development strategy provides the outline to position a company’s product development projects as well as its process. It takes into consideration the company’s capabilities as well as their competitors’. Regardless of which path a company chooses to take, a product development strategy is critical to the ongoing growth and success of a company.