Stages and Benefits of Developing a Product Strategy

By Indeed Editorial Team

Published June 1, 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

A product development strategy refers to the stages and actions involved in bringing new products to a market or changing existing products to generate sales. Developing products involves steps from creating an idea to sending or presenting them to potential or existing customers. Learning more about creating a product strategy can help you analyze customer needs and behaviour to create a product that generates a lot of profit. In this article, we learn about developing a product strategy, discover the stages involved, review the benefits, and consider types of product development strategies.

Developing a product strategy

Developing a product strategy involves using market research to create a plan for selling products. Your overall strategy can also include the methods and techniques for product development. Product development may involve creating new products or adjusting existing products to expand interest among current or new customers. Strategies for product development include proactive and reactive approaches. A proactive approach involves investing in market research and development, or acquiring other companies to make a technological or scientific breakthrough. A reactive approach involves companies responding to market changes and customer requests to adjust their products and compete in the market.

Related: What Is Product Differentiation? A Complete Guide

Stages of developing a product

Product development starts with considering a new concept for production and ends when the final product reaches customers. Here's a list of stages that are involved in product development:

Generate ideas

This represents the initial stage of product development and considers the target market or consumer profile to create the product concept. During this phase, you typically generate ideas to identify needs for new products and how they may apply to customers. You can analyze your ideas according to their strengths, and the areas requiring improvement, opportunities, and challenges to help ensure that the product meets a need in the market while considering the competition.

Related: 6 Steps to Build an Effective Human Centric Design Process

Edit and select products

During the selection process, the product development team determines which ideas have the most potential to do well in the market. You can conduct a business analysis that includes a more in-depth understanding of competitors, distribution, and e-commerce strategies. During this stage, you can create a value proposition that details the challenge the product may resolve and how it differs from similar ones. You can then create metrics to evaluate and measure the level of success during the product launch and a marketing strategy involving social media, news media, and other channels to promote the product.

Create a prototype

During the prototype stage, you typically conduct research and document the results to create a detailed business plan and the first draft version of the product. This prototype, which may be a drawing or a more complete computer design, provides you with the first opportunity to see if the product functions well and appeals to your potential customers. Producing a prototype allows you to analyze any risks involved in manufacturing the product, particularly at a larger scale, review the production costs, and develop a minimum viable product, or one with the functional features necessary to launch.

Create an initial design

During the initial design stage, you can produce a product model using the information you obtained in the prototype stage. The initial design considers the target customer, includes key product functions, and involves talking with distributors to source materials. This stage may require several versions to perfect the product before launching it. Documenting each section of the initial design stage allows you to keep track of suppliers, customer needs, approvals, feedback, and product validation.

Validate and test the product

During the validation and testing stage, you can test each phase of the product, from development to marketing, for proper functionality before launch. You can resolve any issues that arose while developing the prototype and initial design, such as software development and physical production. You can test for any errors that customers may experience, including e-commerce functions that connect to product sales or services, and examine your marketing plan for any issues, incorrect assumptions, or overlooked opportunities.

Commercialize the product

Commercializing the product involves launching it and implementing your marketing strategy to generate sales. This stage includes preparing your product for release, which may involve checking the specifications for the prototype and initial design. You can help increase your chances of success with additional testing to see that the product works to the customers' satisfaction.

Benefits of a product development strategy

A product development strategy develops an idea into a profitable product and works to keep it competitive in the market or across several markets. These strategies can help a company meet goals, enter new markets, sell more products to existing customers, attract the attention of a competitor's customers, and reduce the likelihood of costly issues arising. Your product development strategy can also improve existing products' performance, cost, and quality.

Related: 8 Types of Product Positioning (Plus Examples and Tips)

Types of product development strategies

A product development strategy is a continuous process, helping you to create new products that attract customers. It can help you gain a competitive advantage by positioning product offerings to improve business goals and targets, such as sales growth, revenue, and profits. Here's a list of different types of product development strategies to help you stay competitive in your market:

Change an existing product

Creating a new version of an existing product by making small changes may interest new customers or existing customers looking to make an upgrade. Changes may include the size, packaging, colour, quantity, or other product characteristics. This strategy focuses on gathering insights from customers to find out how the product can improve to increase utilization and purchases.

Increase product value

Companies typically appeal to potential and existing customers by adding value to the product purchase. This strategy may involve bundling several products together, providing higher levels of customer support, or offering premium features. New customers may purchase the product because of the added value, while existing customers may make another purchase to take advantage of the higher value.

Offer a trial

Free trials of new products may persuade customers to sample an item and then purchase it. This strategy appeals to customers who otherwise might not have tried the product because of its price or availability. Offering a trial allows customers to learn the product's benefits and consider other product lines, while giving away free items can increase a company's popularity with customers.

Customize products

You can use products that allow for the customization of certain elements or items to target people who enjoy having more control of their purchasing decisions. For example, you can use this approach to create personal and unique gift ideas. This can include offering several colours, flavours, materials, or sizes and a variety of packaging options for gifts or delivery.

Create package deals

Package deals that include new products encourage customers to try a variety of products and make more purchases. This strategy informs customers about the different available options in a product line through an assortment of items or sample packs. For example, a package of six products may include two new products and four existing ones to encourage customers to buy the new products after sampling them.

Related: A Guide to Marketing as a Career

Create new products

Creating new products that build on the success of existing ones is another type of a product development strategy. New products may complement a company's other offers by appealing to new or existing customers. You can monitor trends, popular culture, and competitor offerings to develop new products based on already successful products, which can introduce new revenue streams.

Change ideas

Changing your product idea even after its development can increase your chances of success and help you to move ahead with new concepts. A market may not respond to a new or modified product, and a company may shift its resources towards more marketable ideas, so it's important to be flexible. Changing product ideas can reduce financial risk and displays an ability to adapt to market demand and changing customer needs.

Related: How to Conduct a Risk Assessment (Tips and Definition)

Find new markets

One product development strategy involves researching a wider or new geographic location or customer demographic. Certain products may be more successful in different markets in a region, country, or continent. It may be a good idea to consider whether your product or service appeals to new customers by analyzing the economy's strength in that area, the competition in that market, and customer behaviour towards similar products.

Explore more articles