The journey to creating a unique, widely-loved product is hardly ever a straight line. Every great company started somewhere, and their beginning might be more humble than you think — Amazon started out selling books.
Product development refers to every step in the process of releasing a new product. The steps involved in the product development process can also translate to renewing an existing product and introducing an old product to a new market. While you might not have the resources to start developing your own ecommerce product, it doesn’t hurt to know what goes into the process.
In this article, we’ll go through the six steps involved in developing a new product — and hopefully make it less intimidating for you.
Stage 1: Conceptualization
Have you ever had a great product idea in the shower? Congratulations, you’ve conceptualized something. Unfortunately, most people never get past this stage of the product development process.
According to Harvard Business School professor Clayton Christensen, 95% of new products fail. This is less about the idea itself and more about poor research, planning and execution.
When innovators rely solely on their initial idea instead of doing the proper research, they miss out on important data that would have helped them fully conceptualize their product.
As you begin to strengthen your idea, you need to sit down and ask the hard questions:
- Will this be solving a problem? Be wary of ideas that aren't rooted in solving a problem.
- Who will buy this product? It’s okay to be so innovative that people don’t even know they need your product until they come across it. But you might end up making something no one wants.
- Who is your competition, and are you making a better version of what they offer?
- Can it be manufactured? It may be tempting to want to be the first to create a commercial android, but if the market demand, materials, and technology to do it don’t exist, then it’s probably not a viable idea.
Once you can justify your idea, it’s time for the scary part — asking for other people’s opinions.
Stage 2: Product validation
“I would pay good money for this.” Those are seven words that would make any entrepreneur swoon — and product validation involves finding which customers will say that about your product.
Product validation ensures you're building a product people will pay for and you won't waste time, money or effort on a flop.
Pepsi famously misstepped with their Crystal Pepsi product because they didn’t run it by their audience first. Don’t be Pepsi.
You can validate your product ideas in a variety of ways, including:
- Running it by family and friends
- Using an online survey or forum for feedback
- Starting a crowdfunding campaign
- Conducting market research using Google Trends
You can also conduct a SWOT analysis to determine whether your proposed idea is worth investing in — or not.
Highlighting the strengths, weaknesses, opportunities, and threats of your idea will allow you to understand whether your new product makes strategic sense.
Stage 3: Design and prototyping
Based on the feedback you gathered while validating your product, you can move on to visualizing a detailed version of your idea.
Understanding what the product might look like and incorporating audience feedback can help you discover potential problems or create an even better version of your idea.
The goal of the prototyping phase is to create a finished product to use as a sample for mass production. Prototyping involves creating and improving different versions of your product until you have a satisfactory sample.
You can choose to DIY your prototype if you have the materials and money to put them together. To get started visualizing your idea, here are some tips:
- Nothing beats pen and paper — take your idea to the page to create a rough draft of your product.
- Although they have a learning curve, digital or 3D modeling programs will make the process easier. You can try POP and InVision.
- Use a 3D printer to develop your physical prototype. This method of prototyping has become more popular as 3D printers become more mainstream.
Considering the increasing levels of tool difficulty and how expensive it might get to invest in physical prototypes, consider outsourcing your prototype. Most entrepreneurs choose to start building a relationship with third-party manufacturers at this point. You can send them your designs and review the prototypes they return.
Bonus Tip: Creating a prototype is a level of commitment to your idea, so if you don’t want legal issues in the future, invest in a legal consultant from this point on. The last thing you want is a third-party stealing your idea — or worse, finding out someone has registered a patent for your product.
Stage 4: Sourcing
Once you’re satisfied with your prototype, it's time to start acquiring materials and securing the production partners you'll need. Building your supply chain refers to the vendors, activities, and resources required to develop a product and get it to your customers.
Concentrate on diversifying your supply chain, as this will allow you to compare costs by identifying multiple suppliers for the various materials you'll require, as well as different potential manufacturers.
As you start looking for suppliers, here are some important questions to ask:
- How much will the materials, manufacturing, and shipping cost per product? This will help you as you put together costing, search for funding, and determine your pricing strategy.
- What’s the minimum order quantity you need to order from the manufacturer to start working with them? If you can order frequently, in low quantities, you can save on storage space and the initial capital needed to start.
- What quality of materials are you looking for, and do they offer them? Discovering this will likely involve asking potential suppliers to send the materials for you to review or visiting them directly.
- Do they offer quick and helpful customer service? If you can’t trust that you’ll get quick responses from your supplier, they are likely not a great fit.
- Do they deliver on time? You can test this by ordering from them and tracking the amount of time it takes the product to get to you.
Although it may seem like a lot of work, developing a good foundation with your supplier can help you through many twists and turns of entrepreneurship. Knowing you can rely on your suppliers to do their jobs will help you focus on other aspects of running your business. For more advice, check out this in-depth guide to searching for a supplier.
Bonus Tip: Old school as it is, trade shows are still a highly recommended path for finding suppliers. They’re also a great place to get a pulse on which suppliers are trusted and reputable in the industry. You may not be able to attend a physical one, but virtual ones happen on a regular basis. To get started attending trade shows, check out 10Times’ virtual directory.
Stage 5: Costing and funding
With your manufacturer, audience approval, and a physical visualization of what your idea will look like, you’ll need to determine the cost of mass production.
Once you've determined how much everything's going to cost, you'll know how much funding you need to ask for.
Costing is the business analysis process that will help you figure out how much everything will cost. This is where you take all information gathered and add up what your cost of goods sold (COGS) will be. This information will help when figuring out your pricing and gross margin.
The best part is, you can do costing all by yourself in a spreadsheet. If you can get multiple quotes from different manufacturers in the sourcing phase, you can better compare costs and make more informed decisions. You can also use your sheet to compare local production versus overseas production. (Resource)
After doing product costing, you might find that you don’t have the capital to invest in developing your product. Seeking funding is a part of the entrepreneurial experience, and there are more options than ever. Some ways to get funding for product development include:
- Loans from family and friends
- SBA or other small business and startup loans
- Crowdfunding through Patreon or GoFundMe
- Angel investments
- Small business grants
- Business credit cards or credit lines
When pitching to anyone for money, you’ll need to have a business plan set up, especially if you’re starting from scratch. How will their investment be spent? How do you envision your business growing?
Check out A quick-start guide to writing a business plan for the first time to help create yours.
Once you have funding in place, you can move on to mass production.
Related: 10 small business funding options — from angel investment to traditional loans
Stage 6: Product launch
This is the stage of the product development process when your product is finally released to the world. Most likely, the version you launch will be what’s known as the minimum viable product or MVP. This refers to the initial release, which contains only the most essential features so your product can start generating revenue.
By the time you launch, your supporting operations should be in place. Your customer support should be in place, as well as your pricing, branding, sales and marketing strategies.
Launching a new product is just the first step of a long journey. Involving your audience at every stage is vital for success. Use your previous research and testing rounds to determine which channels you’ll use to reach your target audience.
As the product evolves with your audience’s feedback, so should the rest of your operations.
Be sure you have a website to promote and sell your product. With GoDaddy Websites + Marketing, you can quickly create a website, sell online, use email marketing, and more, all with 24/7 customer support and website security.
Be flexible in your approach to the product development process
Your product will likely go through many iterations before it becomes a household name or takes off in the media — and that’s OK! As much as innovation is important, execution is what will get you the best result — having your product released to the world.
Don’t wait till you have a perfect version of your product in hand. As long as you create a solid foundation, you will have time to evolve with your audience and create something even better.
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