Today, most companies want to implement their product on time and within a specified budget. However, it is almost impossible to achieve this without developing a product development strategy.
All new projects start with an interesting idea that will appeal to many. Any idea is a hypothesis that needs to be turned into a fact by searching for evidence. Then proving it through observations, expert opinions, and a clear development plan.
Over 90% of businesses fail due to a lack of clear product development strategies. So, this article will discuss product development strategy and why it is essential to prepare a plan for a successful project.
What is a Product Development Strategy?
Business leaders want to figure out what solutions work effectively in a constantly changing business environment that is constantly changing.
Businesses are looking for faster ways to make more accurate product development decisions. In this case, a product development strategy is what they need.
Before choosing the right product development strategy, let’s start with a product strategy description.
Product development strategy includes actions, different activities, and methods used to build a new product and successfully launch it to the market.
A product development strategy is a subset of a corporate strategy. It is often confused with a new product development process. However, confusion arises because of the word “new,” which adds more activities to the process itself.
New product development needs to clarify the goal of creating a project. However, the product development strategy is to gain a competitive advantage for the product. It also involves developing ways to achieve the best business goals for the product:
- sales growth,
- earning a profit goal, etc.
The product development strategy allows the creation of a stream of innovative proposals. It aims to minimize competition and ultimately, please customers.
Why Is Product Development Strategy So Important?
A product development strategy helps businesses gain an advantage over their competitors. This is possible by giving businesses a crucial guide to putting their product in the best possible light.
Previously, companies did not consider creating a product development strategy. This is because there were no visible results from companies that could be trusted.
However, market research became mainstream in product software building.
For example, in 2018, Apple accelerated investments in market research and innovations by spending more than $3B. It allowed the company to create the best and most popular solutions for the rapidly changing technology market.
In 2021, Apple broke its market research record by spending almost $22B on market research and various effective development strategies.
So, it is essential to develop a product development strategy because it helps to:
- study the market and competitors better;
- determine all product development risks;
- choose the best solutions for development;
- form a team of experts to discuss and consider new ideas.
With the help of a product development strategy, companies have great opportunities to build the desired product on time without unnecessary budget expenses.
Having a solid product development strategy is essential to turning an idea into a profitable product that can successfully thrive in the competitive market.
The product development strategy is based on the business strategy. The product development process may differ in methods and tasks. However, if there is no comprehensive, well-founded strategy, the product will be less successful.
When creating a strategy, areas for product improvement are usually identified. After this, the team determines the best methods for improvement. To get the most out of the product development strategy, companies should consider how the techniques will work at each stage.
Advantages of Product Development Strategy
The product development strategy is crucial for several reasons. We have identified three essential points that will help companies create a product development strategy.
Building a Strong Team Around Common Goals and Priorities
A product development strategy helps companies make strategic decisions during development. It helps think through problems and issues in advance that may hinder or delay each stage of development.
Getting Quality Feedback and Recommendations for Each Development Stage
For companies, a created product must carry additional value for its users. However, that value is not always immediately visible, and it may even turn out that the level of interest in the product is lower than expected.
Such bad luck can be avoided if the team works according to a particular strategy. The steps are thought out in advance to prevent a loss of interest from users. It is also a good idea to create a development plan with priority functions. There should also be descriptions of those features that can wait and are not critical.
Creating Efficient Development Without Crucial Failures
By having a specific, clear development strategy, the company knows what resources should be used. It also sets what time frames should be met at each development stage.
In an agile development organization, it will also help to clarify which task-level initiatives have priority at any given time, and which should be included in the upcoming sprint.
Companies developing something new and attractive can take advantage of all the benefits of the internet and media. Media coverage will attract more attention to the business than paid advertising.
If the product is genuinely innovative, advertising platforms will be eager to post stories about an attractive product development strategy to attract more audiences. There is a clear advantage to this – companies get recognition before the project is launched.
Product Development Strategy Examples
Successful product development strategies need to start with marketplace research. With a strong grasp of the market and precise information about the target audience, companies can build solutions or provide services that meet their needs. Let us take a look at how leading brands are breaking into the market and reacting to customer demands.
Netflix has developed a product development strategy focused on profit and margin from retaining its customers.
The company focuses on providing legal and high-quality content. They go under the slogan “it’s easy to enjoy watching,” winning over many people worldwide. Today, Netflix is the largest streaming service globally. Its main application is subscriptions to its content.
Google prefers a scaling strategy. They have created new technological processes that solve big global problems. This is an approach focused on the worldwide market. Google’s goal is to expand its sphere of influence and increase coverage. The company also strives for growth, and later, profit. Thus, in its development strategy, Google is focused on long-term prospects and not on instant results.
Coca-Cola has a product development strategy entirely based on the customer’s voice. This means that the company is wholly focused on consumers and their needs for drinks. This strategy is always relevant because people’s tastes change, and companies need to follow changing trends.
Since 2017, Coca-Cola has made a move towards a sugar-free product by customer request, and made a bet on drinks that bring benefits and health, not just delicious water. Some require more small and more convenient packages than the classic Coca-Cola can. Coca-Cola’s strategy is to continue listening to and responding to customers’ voices.
After analyzing purchasing power, IKEA developed a strategy to focus on low cost with a constant level of quality. The company previously leased equipment to suppliers and conducted the training. It later reorganized its supply chain to cope with the large volume and geographical distribution of its suppliers.
With its core competencies in supply chain management, Ikea can pursue a product differentiation strategy. They offer furniture for any buyer and a flexible system of discounts on samples, products with minor flaws, or products from old collections.
Product development strategies are not always complex maps or activities that companies need to decipher. It may be as simple as rebranding, slightly modifying, and selling an existing product. This adds more value for customers who are tempted to get the rebranded product. Apple is an expert at doing this.
Every year, Apple releases new phones, which are not very different from the previous version. They may just make some slight modifications. Even though these changes are minimal, Apple’s customers are willing to pay the full amount for these newly developed products. Apple uses this strategy to continuously generate income from “the same” product yearly.
Mailchimp, a SaaS company, also executed one of the best product development strategies. They introduced a CRM that integrates with their email software. An application or product’s lifecycle is affected by user requirements and advances in technology.
This online era has tightened the competition among SaaS. That is why they need to be able to quickly respond to customer needs and changes in preferences.
Mailchimp was agile enough to respond to the needs of users who required a more flexible solution for their work by adding CRM functionality.
Spotify & Uber
Product development strategies can also evolve as a collaboration between companies.
One such collaboration is between Spotify and Uber, which partners to provide a better and more personalized rideshare experience for users. This, in turn, boosted their individual brands and increased the popularity of their services.
Planning product development strategy?
Product Development Strategy Types by Approach
There are many approaches to product development strategies, which are usually focused on building a new product and organizing its development.
Companies often use three categories when choosing a specific development strategy:
- Innovative – high-tech products with no equivalents on the market, such as Apple.
- Competitive – products that differ slightly in components but have a cheaper cost (Crest toothpaste)
- Low price value – products with good quality and inexpensive products
Product development strategies usually enhance project development and marketing promotion. It helps companies create the best solutions for internal and external product development processes. However, let’s talk about the main types of product development strategy by approach:
One of the most common approaches to a product development strategy is to measure the target audience. Market-oriented approaches to research have five different types of product development strategies:
- Innovators who use their development and business resources to create new robust technologies
- Technology investors who acquire projects or companies with research centers
- Researchers who create a product and look for ways to promote it in new markets
- Business as usual for companies that continue to promote existing products to current markets. They also try to compete with other brands due to low-cost, product alternatives, etc
- Mid-level companies are happy to use a step-by-step approach to modifying existing products
This approach is based on the control and timely release of the product to the market, regardless of whether the product is analog or innovative.
Time-oriented product strategies are often described as:
- First to market for innovators and innovative ideas
- Fast follower (if we are talking about companies that create an analog product)
As a rule, companies that are the first to enter the market reap the benefits. Of course, there is fierce competition between innovative and followers of projects. This occurs along with differentiation in the modern world. Innovative products claim to have more expensive research and development efforts. Consistency in these efforts should create additional value and a competitive marketing strategy so as not to burn out.