Product development relieves great number of customer pain points | Daily News
From crisis to sustenance – part 33

Product development relieves great number of customer pain points

Business leaders must be innovative in managing the needs of the customer segments they serve. No company can afford to take their customers for granted. The onus is for the company to explore the most cost-effective way to be “creative” in delivering new products to satisfy changing customer needs.

There are 3 ways to pursue this:

1. Invention (create from scratch through research and development)

2. Innovation (improve current products or technologies)

3. Imitation (choose to use inventions and innovations that are successful)

The strategy adopted will depend on the size and strategic intention of the business. A company with limited resources may choose to imitate and customize the solution to meet its customers’ specific requirement with a technology that has worked. A market leader may prefer a quantum leap invention to overwhelm its customers while changing the rules of the play. A differentiator may use innovation to his product to come up with better product.

Procedure

Developing new products and services is an inherently risky process. You must plan any investment carefully and strictly control your costs. You need to plan exactly where this investment will be directed. You must justify the expenditure on every project segment. And above all, you must manage your costs at every point.

Project managers are responsible for controlling costs and allocating resources, drawing up the key parameters for the product or service’s specification and coordinating the product development team. In addition, they should timetable the development process and troubleshoot when issues crop up.

Before making investment decisions, consider how much your business stands to gain from a completed product or service. Weigh this against the risks you face.

There are 3 steps to be taken in the development of a new product.

1.Idea Generation

New product development is erroneously perceived as the exclusive domain of the Managing Director, or in Big companies - Research and Development team (R&D). It is not so. If a company has to launch successful products, the role and importance of marketing team have to be as important as that of developers during the product development process.

(a) Marketing should work with MD or R&D to establish clear, mutually agreed project priorities to reduce chances of failure. Left alone, MD or R&D people will have plenty of fanciful ideas to pursue and marketers will have plenty of mysterious customer needs they would like to serve. Product development finally should come up with solutions to fulfil customers’ needs which can be sold profitably.

(b). Marketing must give MD or R&D people timely and quality information. It is the responsibility of the marketing department to ensure that customers’ latest needs are incorporated in the new product.

Any product developer (whether team or individual) who listens carefully to customer requirements, will be able to play the possible solution and seek clarification from customers regarding its suitability. The loop will continue to go on till the right solution is figured out.

(c). MD or the members of the R&D team should become more customer centric and understand that the products developed by them must ultimately be accepted by the target customers of the company.

The marketing department in the organization should undertake the responsibility of passing customer related information to the MD or R&D team and ensure that either of them interacts with customers as often as possible by participating in customer visits and trade shows.

(d). There are important personality and value differences between MD or R&D and marketing. The most important difference is that while marketers are fixated on customer requirements, MD or developers sometimes want to pursue ideas which interest them. It is important for marketing to develop an informal relationship with MD or R&D department.

Few Tips

To minimize risks and allocate investment and resources wisely, you should consider a number of factors: Will your new product or service meet customers’ specifications? How technologically feasible is the product or service? Can you meet the design, resource and manufacturing requirements? Are you clear about what you hope to achieve with the new product or service? The clearer you are about your plans, the better you can analyze the risks involved.

A few tips may be helpful. Consult members of your team about your development plans - they may contribute insights that you’ve overlooked. Seek the views of suppliers and other business associates - their specialist expertise could be invaluable. Test lots of ideas at the start of a project - but make sure you stop work on ideas that don’t meet your criteria before committing a lot of time and resources.

Ask your dedicated customers what they think of your plans. Consider the regulatory framework within which your new product or service will operate. Don’t overlook the environmental impact of your plans. Look beyond a new product or service’s immediate potential and consider the longer term.

2. Matching market needs

New products and services have to offer benefits that meet your customers’ needs. You need to discover what these are. Market research will help you do this. Remember that although the end user of your product or service might be your most important customer, you may have to take the needs of other parties into account. For example, if you were planning a new DIY product, you would need to consider how retailers would stock it as well as how it would benefit professional decorators.

Not only must you meet your customers’ needs, you have to do so in a way that is better than the alternatives offered by the competition. Your new product or service needs a unique selling proposition - a feature or property that makes it stand out in the marketplace.

Before entering the market, you need to determine: How customers’ needs are currently met; why customers would choose your product or service rather than the competitions, both now and in the future.

3.Price right

Establishing a pricing strategy for a new product or service is an important part of the development process. You should consider pricing the moment you decide to take an idea forward as it will determine how much you can afford to invest in the project.

You will need to take the following factors into account:

Special benefits to the customer compared with what the competition has to offer. Will the price be one that customers are prepared to pay? Whether or not you’re first to market. Is your product or service revolutionary or are you following a market trend? The selling channels you want to use, which will affect your promotional spending and distribution costs; The speed with which you want to establish your product or service; The expected lifecycle of your product or service; Whether you are covering your costs; Strategic pricing can be used to drive sales and regulate demand. See our guide on how to price your product or service.

4. Timing

There are times it does not pay to be the first to come up with new ideas. The timing is as important as the innovation itself. Good timing maximizes opportunities and profits. The classical product life cycle concept offers clues on how to exploit timing.

There are five key stages in the lifecycle of any product or service.

1. Development - At this point your product or service is only an idea. You’re investing heavily in research and development.

2. Introduction - You launch your product or service. You’re spending heavily on marketing.

3. Growth - your product or service is establishing itself. You have few competitors, sales are growing and profit margins are good. Now’s the time to work out how you can reduce the costs of delivering the new product.

4. Maturity - Sales growth is slowing or has even stopped. You’ve been able to reduce production and marketing costs, but increased competition has driven down prices. Now is likely to be the best time to invest in a new product.

5. Decline - New and improved products or services are on the market and competition is high. Sales fall and profit margins decline. Increased marketing will have little impact on sales and won’t be cost-effective new markets are identified.

Extension

Identify where products or services are in their lifecycle is central to your profitability. Effective research into your markets and competitors will help you do this. You can extend the lifecycle of a product or service by investing in an “extension strategy”.

You could increase your promotional spending; you introduce minor innovations - perhaps by adding extra features or updating the design; you could seek new markets. But ultimately this only delays a product or service’s decline. It will just buy you a little breather.

Ideally, you should always have new products or services to introduce as others decline so that at least one part of your range is showing a sales peak.

Dedicated Team

Every potential new product or service requires a dedicated development team. In creating your team, you need to include people with a variety of skills. You may need a creative ideas person, a technical expert, a marketing specialist, someone who can source components and someone who understands the supply-chain difficulties you could encounter.

Teams also need someone in a project management role to lead, co-ordinate and motivate the members.

(Lionel Wijesiri is a retired company director with over 30 years’ experience in senior business management. Presently he is a freelance writer)


 

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