Strategic Planning: Product Development
When you hear the term product development, you may think about brand new products, but that’s not necessarily the case. Executing a product development strategy can happen by adding more value to your existing product through features, upselling, or cross selling.
The best things about this strategy are you’ve already established yourself in your current markets and you know what your customers want. You have the distribution channels, and you know how to reach them.
Consider the following questions if you’re thinking about expanding your product line or developing new products:
Will your customers benefit from the added value or new feature? Are they asking for additions to the current product line?
Do potential manufacturing, marketing, and distribution cost efficiencies exist from an expanded product line? Can you share current costs across the new products or services?
Can your current assets, brand, marketing, and distribution be used with the new product?
Do you have the skills and capabilities to develop and produce the products proposed?
After you’ve given product development some consideration and have decided to proceed full steam ahead, here’s how to develop new products and services to meet your market’s needs:
Add new features or services by extending your current products. For example, cellphone companies add on media packages for text messaging, additional ring tones, and Internet access. Here are a few ways to extend your current offering:
Adapt (adapt to other ideas and developments)
Modify (change color, motion, sound, odor, form, or shape)
Magnify (provide more for a higher price or provide stronger, longer, or extra value)
Reduce (make smaller, shorter, or lighter, or make a trial version)
Substitute (swap out other ingredients, processes, or power)
Combine (join other options, products, ideas, or assortments)
Develop additional models and sizes of your current products. For example, the iPod expanded to the iPod mini and the iPod nano.
Develop totally new products. In this case, you usually leverage your brand recognition. Some good examples of this development are Gerber producing baby clothes and a CPA firm expanding from tax work into financial planning.
Your success with your current products in a market doesn’t guarantee success with new ones. The classic failed product development strategy was New Coke, which Coke introduced in the 1980s as a replacement for Coke. Coke assumed that its customers would gravitate toward a newly-developed formula only to realize, too late, that its cola drinkers were fiercely loyal to the traditional flavor. Needless to say, the new product fizzled.
Nowadays, Coke introduces new products along with existing products, even if they overlap (like Coke Zero and Diet Coke — both diet sodas, but one isn’t replacing the other). The lesson here is don’t trash what’s been working just fine when trying something new.