Product Development Process and New Product Development Explained: Key Steps & Pro Tips

Once upon a time, things that are now part of our daily lives were just idea that appeared in someone’s head. It was only after going through the full product development process, that companies such as Amazon, Airbnb, and Tesla became world-famous.

According to statistics from the McKinsey Global Institute, for every 7 product ideas, only 1 succeeds. This results not from bad ideas but due to the wrong product development process and lack of market promotion.

In this article, Sloboda Studio shares several tips to successfully bring your ideas to life and effectively deliver your project.

What is a Product Development Process?

The product development process is certain stages that each company makes when building its own product. The process of product creation in different companies differs depending on 

• industry and its specificity
• type of product
• timing of its implementation 

The product development process is complex. It comprises all the steps required to transform an idea into a successful market-available project. Commonly the PDP includes:

• idea generation
• market research
• MVP creation
• quality assurance
• launch
• maintenance

Product Development Process:  TOP 5 Methodologies

A product development methodology is a prototype framework. It is used during the creation to manage, structure, plan, and control the work process.

Every project is different. It has its own requirements and limitations like costs, building time, team size, and tech stack. Thus your project may require a particular building methodology. And we’ll start our guide by overviewing the top available frameworks.

Waterfall

A waterfall methodology is a linear approach to project management. Using Waterfall management, both team and customer set up management requirements at the beginning of the project. Then they create a sequential project plan for the whole product.

Flexible Product Development

This product development methodology is about being Agile. Using the flexible management method, the companies are able to continually make changes whether they appear at the beginning or at the late stages of product creation.

Using the Agile product development process, the companies can keep the cost changes low. But at the same time, it is possible to conduct such steps as modular architecture changes, management experimentations, and checking various designs. 

The most popular Agile management prototype frameworks are Scrum and Kanban:

• Scrum 
• Kanban 

This management methodology focuses on usability and the user experience of the products. Using a user-driven approach, a building team should pay particular attention to the established behavioral patterns of customers and implement a user-friendly design. 

Lean Product Development

Lean product development methodology strives to deliver the products in a short time. The process has fewer testing cycles and lower building costs. 

In general, lean product development is based on innovation management principles. It divides the building process into three parts depending on what customers need and require. Or what they want your product to have and what they wish it would have.

Extreme Programming

Extreme programming is another software creation strategy. This management method is perfect for products that require constant improvement in accordance with changing customer requirements.

Extreme programming also operates Agile management techniques. 

How Extreme management methodology works: 

The building management process consists of so-called feedback loops. During the building management process, a team makes frequent product releases in short cycles. And analyses clients’ and customers’ feedback. 

Such a methodology helps to develop a user-friendly product. Such a product is adapted to the target audience’s requirements and has an easy management structure.

Feature-Driven Development

This product management strategy also operates in short iterations. 

As a rule, the FDD model consists of five basic steps:

Concept & Initiation

This early stage includes the concept of building ideas for an actual project launch.

Product Planning

This stage consists of scope and budget planning. It may also include scheduling work, communication, management, or risk predictions.

Execution

At this management stage, the team starts the creation of the product. It tracks tasks and analyses the performance of each iteration.

Performance & Control

During the performance stage, the team analyses the quality of the project. It also analyses the costs and general performance.

Сlosure

Naturally, the end of the project stage management.

What Is the Product Development Process

The product development process involves idea generation, validation, concept development, design and prototyping, testing and evaluation, manufacturing and production, marketing and launch, sales and distribution, customer feedback and iteration, and continuous improvement. It encompasses steps from idea generation to market launch, ensuring a systematic approach to product development.

Product Development Process: Key Stages

Throughout the software development process, every product starts with an idea. Then it goes through discovery, development, and testing to the final maintainable service. Let’s dive into some details about product creation steps and their strategy.

1. Idea Generation

Idea generation is about problem definition and specific ways to solve it. When companies start a product creation cycle with an in-house or outsourced team with high-quality management, they need a clear and detailed vision of their future project and its ideas. 

All businesses should get started with defining the problem they are going to solve. It’s vital to search for competitors and their products. All of the products solve some audience problems. Don’t forget about it when your business develops new ideas.

The 3W is a variety of problem statement techniques that helps businesses to define the problems of the target audience, but basically, companies should answer just 3W questions:

• What is the problem?
• Who has this problem?
• Why is this a problem?

Another good strategy was “The 5 Whys” created by a Japanese investor and founder of Toyota Sakichi Toyoda. His advice was to ask five times about the product’s importance, ideas, and goals for its building. The businesses should ask why until a clear answer about ideas comes. This strategy is very effective.

Companies will be able to determine ways to solve the problem after they get to know their customers. Sometimes finding solutions to problems usually turns out to be much easier than expected.

When businesses find a solution to a problem, they need to ask themselves an important question: Will the audience pay for this decision? And how much are customers willing to pay?

Here at Sloboda Studio, we are confident that clear problems, ideas, and goals are the cornerstones of successful project implementation.

2. Idea Screening, or Discovery Phase

The Discovery phase is a process of evaluating the client’s thoughts and strategy. It is done by collecting information and various resources about the future project. During the discovery prototype in the second step, a team analyzes the market and target audience of the future product and its strategy. As well as goals, the scope of work, and even possible challenges or limitations.

The Discovery phase is one of the most important product phases. It helps to formalize the requirements for your future product.

Only after answering this question, you will know what exactly you are building. 

2 Parts of the Discovery Phase: 

Business part

• Market and strategy research
• UVP creation
• Requirements Definition
• Roadmap and Management Tools

Technical part     

• UX Concept Creation
• Choosing tech stack & architecture
• MVP Scope estimation

As a result of the discovery phase you have to obtain:

• Software Requirements Specification (SRS Document)
• Technology stack
• Platform architecture
• Product functionality
• User journey map
• Wireframes

NB: To create an efficient concept for the project, consider creating a business model canvas for your future project. 

Business model canvas helps to understand all your project goals, target audience, revenue models, and costs. 

Market Research

The market research may or may not be included in the idea screening step. It depends on whether the clients did this research earlier. Or maybe they would like to conduct it with the help of the building expert team.

In Sloboda Studio, we usually involve quality project management services, business analysts, and senior developers. Optionally we engage marketing specialists and CTO.

Market research helps to understand:

• Market demand
• Your customer needs
• Current & future trends
• Possible company risks 
• Competitors and their advantages
• Must-have features

UVP development

UVP or a unique selling proposition stands for the creation of your unique value proposition. In simple words, your UVP describes what specific benefits your customer will get by using your product.

Simply put, you have to answer the question. What will your product do for your customer that nothing else can?

3. Concept Development & Testing

All the research is complete. Now it is time to come up with the prototype functionality and gather product requirements. There are two kinds of requirements: functional and non-functional. 

NB: There’s one common mistake for lots of startup teams. Most of them start the new product development with the features that founders like. Later, the team finally analyzes the market needs. And it often turns out that the choice of features was wrong. Many founders realize that their favorite features aren’t needed at all. A solid requirements definition helps to save money resources and time.

Functional requirements

Functional requirements are such requirements and resources that tell us what services your product should give. In short, those are technical requirements about such things as an indication of how the system responds to certain input data on this step. Plus, its behavior in particular situations. And sometimes even prototype indications of what your product shouldn’t do.

Some examples of functional requirements:

• External Interfaces
• Authorization
• Regulatory Requirements
• Authentication
• Certification Requirements
• Historical Data
• Admin functions
• Business rules

Non-functional requirements

Non-functional requirements are such requirements that show the properties the product should have on this step. Besides, non-functional requirements can also include the restrictions your product should comply with. Like some bugs or functions that aren’t related to the system’s behavior. 

Some examples of non-functional requirements:

• Environment
• Security
• Data Integration
• Regulatory
• Performance
• Scalability
• Availability
• Usability

Read More: Functional and Non-Functional Requirements

Roadmap Development

A product roadmap is a high-level prototype of your future product development process. Moreover, the roadmap may also be used as a checker for your team. It shows the major steps of your development process. So it can help to compare what is going on at the moment. And analyze if the situation goes wrong.

3 tips for developing a roadmap in this step:

• Give top priority to your strategy
• Start with Product Vision 
• Determine your product goals
• Only then develop your product roadmap

Thus we move to the technical part of the discovery phase.

UX Concept Creation

Next, we move on to UX concept creation.  In this step, companies decide on how exactly their product should look. And how it would be interacting with the customers.

The final expression of the UX solutions is represented by a set of wireframes. As usual, they can be prototyped. 

Choosing the Tech Stack & Architecture

At this stage, we are taking into account all the features we chose earlier. We select a technology stack that is the best fit for their implementation

So, how to choose the right technologies for your product? The next step depends on what you want to implement.

In this step your tech stack will depend on:

• Budget. Some technologies are more expensive than others
• Time. Sometimes it is faster to use some out-ot-the box tools than use custom development
• General complexity of the features -the more complex one will require more sophisticated technologies

In Sloboda Studio, we love working with the Ruby on Rails framework and PHP programming language. These technologies give us an opportunity to develop projects way faster. And, provide better speed and scalability.

Scope Estimation

At this stage, we analyze the technology stack we chose earlier. Also, we define how much time it would take to develop architecture.

This stage consists of:

• Scope of work creation
• Prioritization of tasks
• Scope estimation
• Scope specification
• Roadmap compilation

NB: Depending on the financial state of your project, the next step of the development process might be seeking investments or moving to the next stage right away.

Fundraising 

This is about looking for funds for your project.  Once you have decided on each fundraising step:

• what your project is about
• which user problems it solves
• what features it has
• how much time the building will take

Companies can start pitching their product thoughts and plans to investors.

NB: Use your business model canvas to pitch a product.

4. Market Strategy & Business Analysis

Step 4 in the 7-step product development process is Market Strategy & Business Analysis, a critical phase where the feasibility and profitability of the product concept are thoroughly evaluated. This stage bridges the gap between concept development and actual product creation by ensuring that the product aligns with both market needs and the company’s business objectives.

Market Strategy Development

In this phase, a comprehensive market strategy is crafted to position the product effectively. This involves:

• Defining the Target Market:
  • Identifying the specific customer segments that the product will serve.
  • Understanding the demographics, preferences, and buying behaviors of potential customers.

• Positioning and Messaging:
  • Establishing a unique value proposition that differentiates the product from competitors.
  • Developing key messages that resonate with the target audience.

• Marketing Mix Planning (4 Ps):
  • Product: Refining features, design, and quality to meet customer expectations.
  • Price: Setting a pricing strategy that reflects the product’s value while remaining competitive.
  • Place: Determining distribution channels to ensure product availability to the target market.
  • Promotion: Planning advertising, public relations, and promotional activities to generate awareness and interest.

Business Analysis

The business analysis component assesses the financial viability and potential return on investment of the product. Key activities include:

• Cost Estimation:
  • Calculating production costs, including materials, labor, and overhead.
  • Estimating marketing and distribution expenses.

• Revenue Projections:
  • Forecasting sales volume based on market research and testing data.
  • Estimating revenue over a specific period to evaluate profitability.

• Profitability Analysis:
  • Conducting break-even analysis to determine when the product will become profitable.
  • Assessing profit margins and return on investment to ensure financial goals are met.

• Risk Assessment:
  • Identifying potential risks such as market fluctuations, competitive responses, and regulatory challenges.
  • Developing contingency plans to mitigate identified risks.

By meticulously analyzing both market dynamics and financial implications, companies can make informed decisions about proceeding with product development. This step ensures that resources are invested wisely, the product meets market demands, and business objectives are achievable.

5. Product Development

Up to this point, you’ve conducted a discovery phase and business analysis, came up with a tech stack, features to develop, UX concept, and maybe even raised investments… And only now it is time to start developing your product. 

At Sloboda Studio, our teams prefer developing products using Agile principles. This means working in sprints, meeting daily to control our current progress, and holding weekly or monthly sessions to discuss our results and future plans. This helps us deliver better quality for the products we work on. So we can test it right away, fix issues as fast as we notice them, and make rapid changes.

The product development stage includes such steps:

• Back-End
• Front-End
• UI/UX Design
• Quality Assurance
• Maintenance

In Sloboda Studio, we also advise our customers to launch an MVP prototype. Firstly, Minimal Viable Product helps our clients to launch their products faster than their competitors. Secondly, we can analyze the customers’ reactions through different resources. So, the project has a special client test. Entrepreneurs can add or fix some features in accordance with people’s feedback.

After developing the MVP, a project moves to post-production activities. Usually, these are marketing, getting users’ feedback, developing a fully-featured product, and promoting.

6. Market Testing

Testing is a pivotal stage in the 7-step product development process that bridges the gap between product development and full-scale commercialization. This phase involves introducing the product to a limited audience or specific market segment to evaluate its performance, gather customer feedback, and refine marketing strategies before a widespread launch.

Objectives of Market Testing:

• Assess Product Performance:
  • Identify any technical issues or defects in real-world usage.
  • Evaluate the product’s usability and functionality from the consumer’s perspective.
• Gather Customer Feedback:
  • Understand customer satisfaction and identify areas for improvement.
  • Collect insights on consumer preferences and purchasing behavior.
• Refine Marketing Strategies:
  • Test different pricing models and promotional tactics.
  • Gauge the effectiveness of distribution channels and sales approaches.

During this stage, companies leverage various methods to evaluate the product’s readiness for launch. One common approach is launching the product in controlled test markets, such as specific geographic areas, to closely monitor sales performance and audience reactions. Another method involves simulated test markets, where a virtual shopping environment is created to observe consumer behavior and purchasing decisions without incurring the costs of a full launch. Additionally, beta testing is often used, releasing the product to a select group of users who can provide detailed feedback on their experience, highlighting any usability issues or areas for improvement.

Benefits of Market Testing:

• Risk Mitigation:
  • Reduce the likelihood of product failure by identifying issues early.
  • Save costs associated with large-scale recalls or rebranding efforts.
• Niche Insight:
  • Gain valuable data on demand and potential sales volume.
  • Understand competitive positioning and unique selling propositions.
• Strategic Decision-Making:
  • Inform production scaling and inventory management decisions.
  • Optimize marketing and advertising campaigns for better ROI.

By conducting thorough market testing, companies can make informed adjustments that enhance product appeal, improve customer satisfaction, and increase the chances of a successful full-scale launch.

7. Market Entry: Commercialization Through Marketing Activities

The last step is marketing activities. They are at the end of the building phase. But in the real-life product development process we would recommend starting promoting a product once you begin the development phase. 

Some may say it’s too early to start a marketing campaign when you do not even have a product to promote. And that’s where they make a big mistake. There are a variety of available marketing tech activities. The choice always depends on the product type, target audience, and, surely, budget.

Typical steps of a marketing campaign would be:

• Defining the goals of the campaign
• Analyzing and segmenting the target audience
• Setting a budget
• Selecting media and social channels
• Analyzing competitors’ campaigns
• Developing your wording
• Designing the creatives
• Evaluation

New Product Development Process

The new product development process is a step-by-step process of validating a new product idea by the means of researching, planning, designing, and testing it, before launching a product. 

The new product development (NDP) also differs from the product development process (PDP). New development process involves more idea validation before companies can start their product.

Nevertheless, the product development process can include the product discovery phase, a vital step before product development, which assesses the project’s competitiveness, its design, and its use in the industry. 

PDP is a more complex process than the new development process and it includes product validation and testing, launch, and customer success involvement. 

According to McKinsey global research, the failure rates for newly launched products are between 25%-45% and only one of 7 projects become successful. Using a structured step-by-step new product development process, new companies have a great chance to avoid risks and possible pitfalls. 

The ability to check new products and services before wasting time and money resources is a wonderful opportunity for new businesses to survive.

Pros of New Product Development Process

Here are some of the main advantages companies can get from a new product development process.

Better Idea Validation

With the start of new product development, business companies can build a better idea validation process by collecting evidence and testing different new product step hypotheses.

The purpose of idea validation is to introduce the realization plan to the practicality of the real world before companies create and release the final product.

Improving Reputation

Creating a new product from scratch with attention to your new product increases user trust and creates a better reputation.

Cons of New Product Development Process

Changeability of New Functions

A new product may be subject to feature creep or scope creep, an ongoing addition of features that are out of scope. As a result, new features that weren’t estimated initially can make businesses plunge into financial turmoil.  

To avoid the changeability of functions, new businesses should only choose vendors based on honest clients’ reviews.

Product Development Process Challenges You May Face

When you are just starting your product development process, you will probably make some mistakes. And it’s OK! They are needed so you can gain experience and determine what is needed to upgrade.

Challenges are great as long as you are learning to make business decisions.

But still, some mistakes are pleasant to avoid when you are working on the software product development process flow.

Unclear requirements

Want a faster and more structured software development phase? Make sure you understand what you would actually want to get to each step. Still do not have a clear understanding of what features are required? Or how to monetize the business idea, discuss it with the team, or at least conduct a basic discovery phase by yourself.

Different expectations

When starting the new product, both the client and the team may have different expectations and points of view, and step vision. Different perceptions may cause problems later. For example, a team may insist on the deployment of some core features, but the clients just won’t understand the necessity of them just because of the lack of experience or step vision with this type of business project. 

To avoid misunderstandings, we recommend discussing clients’ and team’s expectations to synchronize and make sure you understand the future projects equally.

Redundancy

When the business project is brand-new, people often strive to include unnecessary functionality or start to develop more features than needed. This steals time and money resources but does not always make the prototype and the project itself better for the market.

For a lean product development process, focus on the core features, and start implementing your market plan with an MVP. Thus you can save valuable business time using the right step number, money, evaluate the idea, and only then build a fully-featured product. 

Ineffective communication

Lack of communication or various kinds of misunderstandings can provoke delays in the development phase and crash all the deadlines.

First, try to hire a team that is easy to communicate with. The agile method may also simplify the interaction issues. This methodology helps to track the tasks to see what your team is doing and to use regular meetings to get a clear vision of the working process and software team management.

Code coverage with automated tests

Admittedly, test coverage can be expensive and take about +50% of the time you need to implement a feature. That’s why sometimes you need to cover only the basic features.

On the other hand, this is an important feature, as far as test coverage is a key to a well-functioning code, and you can be sure that you can fix the product in case of a break.

Change of Scope

Sometimes customers change their minds about what features they want to implement too rapidly. We’re not against the changes, but an unexpected change of scope when the work is in full swing may slow down the product development process and demand an extra phase budget.

Another benefit of Agile – it allows all the changes with the developers to make sure everything goes as planned. The dev team constantly checks the backlog and monitors the workflow and informs our clients about the progress.

5 Tips: How to deliver successful products

People say, there are no universal business rules. That’s right, but still, we can give you some business tips to make the software development process and each stage more effective regardless of the type of your project.

Think about your users’ needs

Whatever question you tackle, think about what your clients need, which features would help them the best, how to make your product useful and comfortable for them. Remember that the users are the people who breathe life (and profit) and the product does not have to be admired by them, but not by your team or even you.

Conduct a discovery phase 

And only then jump on to the development business process. Don’t create a product in a vacuum. You should also remember to set realistic business deadlines: it is better to spend more time on development but come up with a quality product than hurry and get a product that nobody actually needs.

Communicate!

Use daily, weekly, or monthly meetings, organize calls and video business chats, but keep on discussing the product with your team: when you have a clear vision, it is easy to make changes, share insights, and avoid any issues.

Start with an MVP

If you plan to develop a massive product with lots of features, don’t try to implement everything at once. Focus on the core features and launch – this will help you to reduce the costs at the beginning phase, and attract first customers and investors. Later on, you can add all the advanced functionality to your already existing project.

Don’t forget about marketing

Let’s face it- no matter how great your product is nobody is going to see it on the market. And here again, starting developing your project with an MVP you save budget and can invest it in marketing activities.

Business owners would like to know the effectiveness and efficiency of their financial investments. Here comes marketing performance.

MP helps to improve your product’s Return on investment (ROI). And analyze how effective your marketing campaigns are.

The marketing performance process includes measurement of the existing market performance and planning of your future campaigns during different phases.

Analytics

The vast majority of businesses use several different MarTech tools. These are advertising, and direct market research to boost their sales. The three key types of data analytics are:

• Descriptive analytics. Descriptive analytics describes the use of a range of historical data to draw comparisons.
• Predictive analytics. Predictive analytics uses various statistical techniques. These are data mining, machine learning, or predictive modeling. They are needed to analyze data and predict future events on the market.
• Prescriptive analytics. Prescriptive analytics also uses machine learning techniques to work with predictive analytics to determine the most possible market outcome.

Defining Metrics

This type of analytics uses various metrics to measure the performance of marketing initiatives.

During your market performance, you can also consider such factors as:

• Feedback. Constructive communication with your customers will help you to understand what issues your product has. Or what features you may need to upgrade on the next step of improvement.
• Activity. Or Inactivity. At this point, monitor how active your users are. Analyze this data. So you can understand whether your business ideas, design, and features are beneficial for your audience.
• User Management. That metric is whether your users are satisfied with your product and find it useful. You can track the engagement to improve your product’s convenience and user-friendliness on each step. 
• Customer experience. Analyze your user’s experience in general and may be on each dev step. Ask them not only about what they are satisfied with. But also what they would like to add or improve. This information will give you a vector for further improvement actions and, maybe, design.

Our Experience

Salita

Salita is a Norwegian marketplace that allows interpreters to communicate using video and phone conferences and share their thoughts. When we met our client in the first phase, he had only a project idea. So our main goal was to turn it into an MVP (like the first prototype of Salita).

When we started, we needed a team of at least one backend developer, one frontend developer, and one QA. But we started only with one frontend developer. At the first step, we worked with some design features and first frames. After this, we grew the team with a backend developer and QAs.

Initially, we had Rails monolith with JQuery. In the next phase, we split this application into Rails backend and VueJS frontend. This allowed us to create design features faster and separately for the front-end and for the back-end. 

We also tried task record systems and different processes and in the end, we came and stayed with Gitlab.

Today, Salita is a finished marketplace that provides customers with online translation services.

CityFALCON

CityFALCON is a 21st-century financial news aggregator. Its score rates financial tweets, market news, and authors by using Natural Language Processing

The Client met Sloboda Studio at the very early stages of the project, and we’re happy to say we’re still working on CityFALCON’s growth. The story started when our client decided to create a financial news website: he even studied Ruby and developed the MVP himself. But then decided that the project requires more scalability and started looking for new developers. So then we did find each other.

Our client wanted to launch a new and improved MVP with a focus on clean and simple UX design to demonstrate the huge potential of his social media aggregator.

Our Solutions:

In the first phase, we have improved the initial MVP by improving the design, building a scalable architecture, adding new processing, connecting GNIP API and basic scoring algorithm.

In the next stage, we launched the private beta, which included enterprise API scoring algorithm improvement and UX design analysis.

The public beta stage comprised adding scalable infrastructure, connecting voice devices, optimization of response time, upgrading scoring algorithm 2.0, and increasing the number of data sources and topics’ coverage.

And the final live product stage included a mobile application for Android & iOS platforms, voice assistants integration, and cryptocurrency coverage launch.

CityFALCON Homepage

Conclusion

Product development is a complex process that requires your attention at most stages. However, it is not that hard to create a project of your dreams and have a reliable expert team to bring your product to life.

The core steps of your project creation would be:

• Developing your idea
• Conducting a thorough discovery phase
• Carrying out business analysis
• Set key functional and non-functional requirements
• Choosing tech stack and set tasks for a team
• MVP developing and testing
• Providing a decent market promotion

In Sloboda Studio, we pay particular attention to business analysis and research. We are clearing up all the clients’ requirements to ensure that both clients and their users would get the dream products. 

Another thing we focus on is clear architecture and the most fitting tech stack to make products scalable and time-cost efficient.

Our experts are open to a free consultation. So companies can share their ideas below and book a time slot for a free consultation for their products.