Published: 22 November 2023
Contributors: Alice Gomstyn, Alexandra Jonker
Product development is the creation and launch of products to meet customer needs. The product development process includes stages such as ideation, marketing strategy and commercialization. It’s used for new product development (NPD) and the improvement of existing products.
Product development is a collaborative and interdisciplinary endeavor. While the composition of a product development team may differ depending on the product being developed and the company behind it, specialists from functions such as product marketing, product design and engineering play key roles in a successful product development process. In addition, product managers may convene cross-functional teams and fill various other roles in the product development process.1 While product managers may sound similar to project managers, product managers tend to work on more strategic tasks, while project managers focus more on logistics and tactics.2
External stakeholders also participate in product development. Customer feedback following a product’s launch and over a product’s lifecycle helps inform and influence subsequent product development cycles, when product development teams refine the product in new iterations.
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Moving from product idea to go-to-market happens during the stages of product development. How many stages there are and how they are defined varies depending on the source you consult or what template you follow. In their book Marketing Management, marketing professors Philip Kohler and Kevin Lane Keller list eight stages of the new product development process, while various companies count as few as four and as many as nine.
A product development plan known as a product roadmap often delineates exactly which product development process and stages that a product development team will undertake. The common stages of product development include:
The conceptualization of ways to improve existing products or create new ones to meet customer needs happens during the ideation, or idea generation, stage. Teams can use different techniques for coming up with product ideas, such as brainstorming and storyboarding.
Ideation is often considered the first stage of product development, although some companies consider the first stage to be defining goals for the product. The early stages of product development may be referred to as the "fuzzy front end" or FFE because of their typically unstructured nature.
Not all new product ideas that surface during the early stages of product development are viable. Idea screening can provide important validation for a product idea. Teams can conduct market research to evaluate a product idea, determining, for instance, whether it meets a market need and would appeal to potential customers.
In this stage, the product idea evolves into a product concept: something that a company can present to target audiences for gauging customer feedback. This presentation can take the form of a detailed description or a prototype that demonstrates the feasibility of the product vision but with more limited functionality.
Marketing is often associated with product messaging, social media and marketing campaigns geared toward target markets. But a marketing strategy could also include sales and market share goals and product pricing and distribution strategy, among other facets.3
Will the product under development be good for business? This is determined during the business analysis stage, where teams calculate projections for sales, costs and profits.3
Companies may choose to roll out the product in a limited fashion in specific markets before engaging in a wider product launch. In traditional test marketing, sales results are compared among multiple cities for a duration of six months to a year. What product development teams learn from user feedback during test marketing can lead to adjustments in marketing strategy.4
The commercialization stage entails the mass production of the product and the introduction of the final product to the general market—in other words, the official, scaled product launch.
Because each stage in the traditional product development life cycle can take months, some entrepreneurs and businesses—especially startups—pursue product development strategies and milestones on a more compressed timeline. They undertake repeated product development cycles to create minimum viable products (MVPs)—products containing only critical features. Companies introduce MVPs to users, gather their feedback and then use it in the next product development cycle to improve the MVP.5 An MVP is the foundation upon which to iterate to deliver measurable business outcomes.
In addition to general product development processes, specific methodologies are often used in the development of software. These methodologies provide a framework for workflow, including how teams and different functions work together, as well as how and when specific steps are taken. Software development methodologies include Agile development, DevOps, Rapid Application Development (RAD), Scaled Agile Framework (SAFe) and Waterfall.
Making the product development process sustainable is a challenge for many companies. A lack of visibility into product components or design elements that underperform or consume too much energy can hamper efforts to meet environmental compliance objectives and slow a product’s time to market.
Fortunately, integrated software solutions can help product development teams improve traceability across processes, including concept testing and prototyping. Such solutions can empower teams to optimize product lifecycle management (PLM) and application lifecycle management (ALM), including areas such as requirements management, systems design management and workflow management. This optimization can enable the adoption of sustainable designs earlier the product development process, helping companies accelerate innovation and time to market while resulting in higher-quality products developed at lower costs.
How can a company determine if its product development process has been successful? In a study of more than 40 companies by McKinsey, researchers determined that product volume, revenue, unit cost and time-to-market key performance indicators (KPIs) were the most widely used metrics.
Researchers found that companies that rely on these metrics tend to see better short-term performance than companies that don’t. This apparent competitive advantage notwithstanding, researchers recommended that companies concerned with long-term success should also evaluate customer satisfaction, team morale and relationships with suppliers and partners in product development processes.6
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Footnotes
1"Modern CPG product development calls for a new kind of product manager”(link resides outside ibm.com) McKinsey, Oct. 22, 2020
2"Project Manager vs. Product Manager: Similarities And Differences”(link resides outside ibm.com) Forbes, Nov. 8, 2022
3Marketing Management, 14th Edition. Prentice Hall, 2012
4"Test Marketing: A Primer”(link resides outside ibm.com) NM State University Business Outlook, 2016
5"Why the Lean Start-Up Changes Everything”(link resides outside ibm.com) Harvard Business Review, May 2013
6"Taking the measure of product development”(link resides outside ibm.com) McKinsey, Oct. 16, 2018