Whatever you are providing to the marketplace, sooner or later someone will introduce something that will take some of your market share. In certain cases, particularly in mobile devices technology the effect can be rapid and almost catastrophic. You only have to look at the effect that companies like Apple and Samsung have had in the area of technology and electronics to see that if a business is not developing continually then bad things might happen. Even with constant monitoring of the market and your own offerings you may still feel the effects of change, however being aware and acting upon the needs of customers and the market in general will at least prepare you for attacks upon your business.
New Product Development
Somewhere along the line your business will have to respond to market pressures and engage in the process of New Product Development (NPD). New products may not be new to the marketplace but they could be new to your business, you will be producing them to meet the needs of your loyal customers to avoid them going to another source (where they may be tempted to look at other products) so to keep them on board with you.
NPD may take the form of completely new innovations that you are introducing to the market or modifications to an exist product or range of products to keep up with the competition.
You may also choose to add products and services to your existing range under a licence agreement where you can rapidly expand your offering to the marketplace and gain a march on the competition, particularly if you have negotiated a period of exclusivity with a licensor.
An NPD strategy that is planned effectively will maximize available business resources and save time and money. Your strategy will be the blueprint for product planning, research into market and customers needs, timescales, milestones, availability of finance and the effect on general cash flow for the rest of the business.
Your strategy will also enable you to avoid being overly optimistic regarding your actual manufacturing costs for instance and what the market will pay for each unit. Many new products have hit the rocks not because they were not good, but the market did not see the value in the product at the asking price.
So one of the key issues to avoid is allowing the NPD team to "champion" a product/service that although creates massive excitement internally, just doesn't meet the needs of the marketplace.
Identifying the needs of the marketplace
Do you have a thorough knowledge of the market you are targeting its needs and wants? It is crucial that your NPD strategy is designed to meet the market needs.
- Identify how your product/service is different from the current offerings. What is your USP.
- Does the market actually "need" what we are developing
- What problems does it solve for the market in comparison to what is currently on offer
- Will the market pay the price. Is there enough value in this product.
Key Tasks for the NPD Team
Of course, the type of business that you have will be a determining factor in what tasks are needed to bring your product to fruition. Some of the tasks will include;
- Brainstorming and filtering initial ideas
- Developing and filtering models/concepts
- Testing the concepts
- Approach to market analysis- sales strategy,promotion/advertising/licensing?
- Developing a business plan to include sales forecasts, margins, cash flow for the product
- Market testing the product
- Bringing the product to market- initial launch vehicles/strategic alliances etc
Have you introduced an NPD strategy into your business? What benefits have you seen to date?