How to create a product development strategy for entrepreneurs

Whether you're starting from scratch or re-inventing an existing product, defining your approach from the onset and setting clear goals will maximise your chances of success. In other words, you need a product development strategy.

In this guide, we'll go over what a product development strategy is, why it's important, and what you should include.

What is a product development strategy?

A product development strategy sets the direction of a product launch, all the way from idea conception to release. It’s your market research plan, testing agenda, and go-to-market strategy all in one. Entrepreneurs use this strategy to help them build or refine an existing product. It covers both trend predictions and upfront planning, plus market responses and planning future market penetration tactics. Covering the timeline from idea development to launch and beyond, a product development strategy typically includes proactive initiatives (market research, R&D, market alliances, and acquisitions) and reactive strategies (handling customers and responding to competitor offerings).The best product development strategies have a core goal and message. IKEA focuses on consistent quality at low prices, Coca-Cola embraces the customer's voice, and Netflix has a market-driven strategy focusing on retention.

Why do you need a product development strategy?

As a young entrepreneur, the lack of a properly constructed plan can be a significant hurdle to success. The best time to start planning a project is right at the beginning, it sets you up for both consistency and longevity.

A strong product development strategy will ensure that you're planning for sustainable innovation - ensuring that your product remains relevant.

Continuous learning plays a crucial role in this process, as it allows you to adapt to evolving consumer preferences and industry dynamics.

By predicting industry trends and understanding consumer needs in the long term, you're more likely to achieve strong sales and a positive ROI. The best product development strategies help you differentiate yourself in crowded markets and support growth.

Your strategy will also uncover areas for improvement and show you which marketing methods are most successful.

Types of product development strategies

As young entrepreneurs, your first strategies will focus on different goals from those created by big brands. But here are five strategies that work for any business:

Product improvement

This strategy involves making changes to an existing product in line with consumer needs/wants. You might create a new version based on feedback, or modify an upcoming product y to make it more appealing .

Organising a focus group will help you collect feedback, and you can check up on consumer reviews, surveys, and social media tags to see what people are saying about your product.

Product line extensions

Once you've identified your niche, you can expand one successful product into a whole line of similar or related items. A good example would be Coca-Cola adding Diet Coke and other flavours alongside the original drink.

Upgrades count as product line extensions, especially in the tech industry. You could offer component updates, software upgrades, or offshoot apps/programmes. Think Apple's iPhone line or Adobe's Creative Suite.

Market Expansion

A market expansion strategy means selling to new consumers in new demographics or geographies. To succeed here, you may need to update brand aesthetics and marketing strategies alongside planning for growth.

Additionally, you might want to consider incorporating DEIB (Diversity, Equity, Inclusion, and Belonging) principles into your market expansion efforts to ensure inclusivity and representation across diverse customer segments.

Diversification

Diversification means expanding your offering beyond one niche or industry, like Dyson did when they moved from a focus on vacuums to hair products.

If you've created tech that's widely applicable, consider diversification for long-term growth. You might pursue industry certifications in other fields to build knowledge in new areas.

Disruptive innovation

Disruptive innovation means targeting ignored markets or creating them with entirely new and innovative products. It has the power to change entire industries. Netflix is a great example, revolutionising the way people watch television.

This kind of strategy often involves undercutting competitor pricing or cutting out the middleman with direct-to-consumer sales. It's vital that you adopt an accountability framework to make sure you remain compliant with privacy regulations.

What are the 7 key stages of product development?

Before you get started, evaluate your current business and IT capabilities. Ardoq explains enterprise architecture as the starting point for a company road trip from point A (your current state) to point B (your future state).

Once you know that your resources align with your goals, you can embark on the key stages:

1. Idea development: This involves brainstorming new product ideas or ways to make existing products more relevant. Consider gaps in the market, your own knowledge base and specialisms, and your manufacturing capabilities.
2. Editing and selection: Narrow down your ideas and decide which product has the most potential. Focus groups, networking opportunities, and market analysis can help.
3. Prototype: Your prototype will determine what the product does, the most appealing aesthetic design, and who your core customer will be.
4. Market research/testing: This stage involves releasing your products to a small test group and collecting feedback to make changes and inform your marketing strategies.
5. Product development: Here, you're producing your item to scale, ensuring you have all the raw materials to create your product and that you’ve made the business connections necessary for manufacturing and going to market.
6. Product launch: Now it's time to launch your product! List it on your ecommerce site, have your partner stores put it on the shelves, and promote it through social media and advertising.
7. Improvements: The final and most important stage is to t understand your successes and failures so far. Track sales, read customer reviews, and make timely adjustments to meet evolving market demands. All this will help you determine the next steps for your business.

Start creating a product development strategy today

Young entrepreneurs have an edge when it comes to innovation. With ambition, determination, and an alertness to new trends, they have the potential to make big changes to the industry and produce dynamic new products.

Creating a product development strategy helps to harness this natural drive by planning ahead and alerting entrepreneurs to potential pitfalls and challenges. Strategising is paramount in sustaining innovation and long-term success.