To build a successful product, you need a practical approach, and, in my view, a customer-centric strategy. From my experience, the best way to start would be with your clients. To do this, you need to have in place a product development strategy.
Table of Contents
What should be your step-by-step approach to building a product development strategy?
Market Research and Analysis
You need to identify your target market and understand their needs, preferences, and pain points. We have talked about this steps in the previews articles:
Further, analyze your competitors’ products and determine gaps, strengths, weaknesses, and opportunities. We have talked about this in detail in #2 How to do an industry analysis?.
Conduct a VOC
When it comes to understanding customer needs, my go-to method is to design and conduct a VoC – Voice of the Customer.
What is Voice of the Customer?
Voice Of the Customer means the collection, analysis, and dissemination of customer data, collected from your target audience. The main scope of this activity is to gather the necessary information for building a strategy that speaks directly to your target audience.
It is used to describe the customer needs, and how they may perceive your product or your service, their satisfaction, and their expectations.
The scope of the VoC is to come up with a list of CTQ (critical to quality) requirements that will guide you in the right direction. You need to make sure that the CTQ requirements are aligned with your aim and goals. If not, you will need to restructure your product/service, to meet customer expectations, otherwise, your product will have a hard time getting traction.
Why do you need to conduct a VOC for product development strategy?
You can’t solve problems, practically and efficiently, without involving the people that are most impacted by that problem. If you want to build a product that best fits the customer’s needs, and that you are remaining competitive in the long term, you need to involve the customer in the process of developing the product.
No matter if you are trying to solve a problem from scratch, or you’re trying to improve a product/service that already exists, you need to listen and learn from the people who encounter that problem regularly. In this cases, your customers.
The individuals who have that problem, and spend the most time trying to find a solution, will have the best insight on what you need to do to find the root cause of a problem, the solution for it, or to find ways to improve that product/service.
How can a VOC can help you shape your product development strategy?
Customer-Centric Approach
VOC will help you adopt a customer-centric approach. It gives you the structure you need to listen, understand, and prioritize customer needs, preferences, and expectations. It ensures that your product development strategy is aligned with customers’ expectations.
Improved Product Quality
Gathering insights from customers helps you in creating products that better meet customer needs. This leads to higher satisfaction, increased adoption, and potentially higher sales.
Enhanced Customer Experience
One of the best ways to engage your customers, and build a community, is by constantly having an open conversation with them. Ideally, you should have a conversation about their needs and expectations. Further, you need to show that you are listening and paying attention, by introducing new product attributes, that fill the gap between what your product offers at the moment, and what the customers need.
This approach will increase customer loyalty, retention, and positive word-of-mouth referrals.
Competitive Advantage
Understanding the Voice of the Customer can provide a competitive edge. If you actively listen and adapt to customer feedback your business will be better positioned to expect market trends, innovate faster, and stay ahead of competitors.
Effective Marketing and Communication
VoC can help you understand the real struggles that your customers are facing. Also, it will help you understand the perceived value of different attributes that your product has. Further, this will help you design better marketing messages, that underline the real emotional benefits that your product brings to the customer.
Reduced Risk of Product Failure
By involving customers in the development process and considering their feedback, businesses can reduce the risk of launching products or services that do not resonate with the market. You can have real-time feedback, on the entire development process, if you have an open discussion with your future customers. This will considerably minimize the risk of failure.
Data-Driven Decision Making
VoC will help you gather crucial data for the success of your product. Will give you insights that support informed decision-making across various business functions, including product development, marketing, sales, and customer service.
How to build a Voice of the Customer?
Because we assume that you are starting to build your first business and first product, we will consider that you have no clients. If this is the case, your best chance of succeeding would be to identify the customers of your future competition. After that you can use the following steps:
- Understand your customer. Try to build a draft, of a Buyer Persona #6 How to create a Buyer Persona template? Start conversations with them and create relationships.
- Build a database, or buy one, with contacts of people that match your description.
- After you have established a relationship with at least 30 ideal clients that use your competitors’ products regularly, you can start to design and conduct a VOC.
- Gather all the data you need to understand what is important for them, from the standpoint of product attributes. You can do this through various methods.
- The best way would be to already have a database of customers, with various information in it, that you can analyze.
- The second method will be to organize a focus group, with the main scope of understanding better what “Value added” means for your future customers.
- Also, you can use a combination of these methods.
- Interviews
- Focus Group
- Surveys
- Social media interactions
- Customer Complains
- Observations
- Field reports
- Customer reviews
For you to benefit from the power of a VOC, you need to pay special attention to your target audience. You must first know your main target audience and design the VOC with that customer audience in mind. Don’t do VOC with your friends or family if they are not the ideal client for your business. The results will not be useful. More than that, they can distort your customer’s reality and push you in the wrong direction.
This is especially true for interviews, focus groups, and surveys.
- After gathering all the data, and putting them together:
- You will need to analyze the data and create a list of critical Customer Requirements that will help you move forward in the right direction.
- Order the list of CTQs (critical to quality) obtained in order of their importance.
- Make a list of “possible delights”
- Make a visual map.
- Make a plan to implement all the CTQ necessary, and analyze what would be the best “delights” to implement. Analyzing the cost of implanting them, vs the perceived value added from the point of view of the customer.
- Implement the changes
- Monitor
- Measure
- Repeat
Product development strategy
Now you need to get started on really developing the product. I will suggest that you use the following approach presented below. Keep an open mind and remember that different business models and different situations may require deferent approaches.
Idea Generation
This phase involves brainstorming and generating ideas for new products or improvements to existing ones.
Ideas can stem from observations, market research, customer feedback, technological advancements, or internal innovation initiatives.
Idea Screening
Evaluate and filter the generated ideas based on various criteria like feasibility, market potential, alignment with company goals, and resources required.
Select the most promising ideas to move forward to the next stage.
Concept Development and Testing
You can do this best by implementing all you learned above about the VOC. Keep your future customers involved. Ideally, design a feedback loop that can allow you to have an ongoing discussion with your customers. This will help you put in place a system for constantly improving your product.
Business Analysis
Conduct a thorough analysis of the potential market, including the size, competition, customer needs, and pricing strategies.
Assess the financial feasibility, estimated costs, potential profits, and ROI of bringing the product to the market. We have talked about this in the #2 How to do an industry analysis?.
Product Development
Once the concept receives positive feedback and passes the business analysis phase, the actual product development begins.
This involves designing the product, engineering, creating prototypes, and making iterations based on testing and feedback.
Testing and Validation
Perform extensive testing of the product to ensure it meets quality standards, functionality requirements, and user expectations.
Testing phases may include alpha and beta testing to gather user feedback and fix any issues.
Marketing Strategy and Planning
Start by building the ideal Positioning Strategy. Once you have that clear, you can build your Branding Strategy, and further develop a comprehensive marketing strategy aligned with the product’s positioning, target audience, and unique selling propositions.
Plan the marketing campaigns, branding, distribution channels, and promotional activities for the product launch.
You can read more about this in the following articles:
- How to develop a brand positioning strategy?
- #10 How to make a brand strategy?
- How to use marketing mix for successful marketing strategies?
Commercialization and Launch
Prepare for the full-scale production of the product after finalizing the design, testing, and marketing plans.
Launch the product into the market, considering the timing, channels, and promotional efforts outlined in the marketing strategy.
Post-launch Evaluation and Improvement
Gather customer feedback and analyze the product’s performance post-launch.
Use data and insights to make improvements, introduce updates, and address any issues that arise.
Have a constant way of communicating with the customer. No matter if you have a dedicated phone line, a chat on your website, or a community on one of the social platforms preferred by your target audience, make sure that you are there for them. Answer all the questions they have, thanks them for all the positive reviews, and most importantly, answer all the negative reviews.
Answering all the negative reviews will have a great impact on the success of your business.
First, you will start a conversation, with people that tasted your product and they found defects.
Second, you will win the trust of the people that didn’t try your product yet. They will see that you are active and eager to listen and resolve any issue that may appear after the purchase.
Sustaining and Managing the Product Lifecycle
Continuously manage the product throughout its lifecycle by monitoring its performance, market changes, and customer needs.
Make strategic decisions regarding product updates, enhancements, or even discontinuation based on ongoing analysis. You need to understand the following stages of a product life cycle to be able to adapt your product development strategy accordingly.
Introduction
This stage involves launching the product into the market.
At this stage, sales typically start slowly as consumers become aware of the new product.
You need to invest heavily in marketing and promotion to create awareness and stimulate demand.
Growth
In this stage, the product experiences rapid sales growth as it gains acceptance in the market.
Consumer awareness increases, and positive word-of-mouth contributes to higher sales.
Competitors may enter the market with similar offerings, intensifying competition.
Maturity
The maturity stage is characterized by a slowdown in the growth rate.
Sales continue, but at a slower pace as the market becomes saturated.
Competition is fierce, and companies might focus on product differentiation, pricing strategies, or expanding target markets to maintain market share.
Decline
In this stage, sales and profits start to decline as the market becomes saturated, consumer preferences change or new technologies emerge.
Companies might face tough decisions, such as whether to maintain the product with minimal support or discontinue it altogether.
Withdrawal or Extension
At this point, companies decide whether to remove the product from the market or extend its life.
Extension strategies might involve rebranding, adding new features, targeting new markets, or repackaging to revitalize interest and prolong the product’s life.
It’s important to note that not all products follow a predictable or linear life cycle. Some products may skip certain stages, while others might experience an extended life cycle due to continual innovation, effective marketing strategies, or adaptations to changing consumer needs.
Understanding where a product stands in its life cycle is crucial for businesses to make informed decisions regarding marketing strategies, resource allocation, pricing, and product development efforts. Different strategies are applicable at different stages of the product life cycle to maximize profitability and maintain competitiveness in the market.
Why do you need to understand and use PLC (product life cycle) in your product development strategy?
Idea Generation and Conceptualization
If you understand the PLC, you will be able to generate ideas aligned with different stages of the cycle. For example, you will see emerging trends or technologies. You will be able to create products that are designed for future market demands (early stages) or improve existing products to extend their maturity phase.
Strategic Planning
The PLC will guide your strategic planning. It will help you anticipate potential challenges and opportunities. For example, if you enter an industry that is already in the maturity phase, strategies might focus on differentiation, cost efficiencies, or diversification into new market segments.
Resource Allocation and Investment
Depending on where the product fits within the PLC, you will be able to allocate resources effectively. During the introduction phase, you will need more investment for marketing and R&D, whereas, in the maturity phase, resources might shift towards sustaining market share and improving efficiency.
Product Positioning and Marketing Strategy
You will need to tailor marketing strategies based on the product’s position in the life cycle. For example, during the growth phase, you need to do aggressive marketing to capitalize on increasing demand, whereas during maturity, you probably will need to focus on differentiation or emphasizing value.
Decision-Making for Product Portfolio
Considering the PLC aids in portfolio management decisions. Balancing the product portfolio with items in different life cycle stages helps spread risks and maintain a healthy mix of new and established products.
Exit or Revitalization Strategies
If you understand the decline phase, you will be able to make informed decisions regarding whether to discontinue the product, extend its life through rebranding or upgrades, or replace it with a new offering.
By leveraging insights from the PLC, you can make informed decisions at each stage of the product development process, and constantly adapt your product development strategy. This will result in more effective strategies, optimized resource allocation, and increased chances of success in the market.
Conclusion
To succeed in any market environment, you need to have a product development strategy in place. You need to have well-designed ways of measuring customer satisfaction, market share, the quality of your product, the life cycle phase of your product, etc.
Ideally, to stay in business, you should try to build:
- Unconscious association between a specific customer activity and your product – through Branding.
- Build a community – by giving your clients a way of sharing their imputes, and making sure that they know that you are listening.
- Constant innovation – by improving your product, or introducing new ones.
- Entry barriers for newcomers – by offering a quality that exceeds the expectation, at a competitive price.
- Building entry barriers – by creating switching costs.
Additional resources for building a compelling product development strategy
If you are interesting in building a business strategy, you can read How to build a business strategy? A step-by-step strategic framework for long term success!
Also, you can use a VoC software like MonkeyLearn.
