In our next startup guide, we are going to look at How to Come Up With the Best Products That Won’t Fail In the Market. Deciding on what products to make and how to make them is always a constant challenge that firms have to deal with. Startups must choose from multiple strategies for developing new and improved products that generate corporate growth.
Due to rapid advances in technology in different areas, the rate of new product introduction is high and even good ideas are insufficient to be turned into winning products. A Good example is how technology based companies must continue to innovate their products to meet demands of the market.
We have created this guide to help firms understand how to come up with best products that can stand the test of market and not fail.
What is a Product
A product is simply an item that satisfies a desire or need. It is an item that is offered for sale. It can be tangible or in virtual and is made at a cost and each is sold at a price. The price that can be charged on a product depends on the market, the quality, marketing and the target. Each product has its useful life cycle after which, it needs to be replaced.
In retail, products are called merchandise. When it comes to manufacturing, products are purchased as raw materials and sold as finished products.
Goods, Services or Ideas
Goods are physical items that are capable of being delivered to a purchaser and will involve transfer of ownership from seller to customer.
A service is a non-material action that results in a measurable change of state from the purchaser, caused by the provider.
When it comes to ideas, they are what we call intellectual property and are any creation of the intellect that has a commercial value. However, it is sold or traded only as ideas and not as a resulting service or good.
It may include copyrighted products such as artistic or literary works, ideation property such as patents as well as business methods and industrial processes.
A successful product must be able to fill the needs of the market. In terms of functionality, a product should perform its functions as promised. There should be a clear communication between users and potential customers when it comes to benefits and features. When it comes to products classification, there are three distinct ones;
A product is classified as tangible if it can be perceived by touch such as a building, a gadget, a vehicle among others. Most products fall under the tangible category.
A product is classified intangible if it can only be perceived indirectly, an example being insurance policy. When it comes to data products, it gets interesting. Intangible data products can further be classified as virtual digital goods such as those located on computer’s operating system. On the other hand, real digital goods may exist within the presentation elements of a data and are independent of conventional file types.
Services are also intangible products but come as a result of economic activity that does not result in ownership. It is normally a process that generates benefits for customers. In most cases, services depend highly on who is producing them and may remain very difficult to be exactly reproduced.
Features and Value Proposition
For any product to survive, it must have unique features that separate it from competitors. During envisioning of a product, it has to answer a certain need that needs to be filled in the market. Characteristics of a system should help in determining the subsequent actions involved in products including pricing, communication strategy, features, and add-ons among others.
Unique Selling Proposition
When it comes to unique selling proposition, any product must have a factor that is better than its competitors. The unique selling proposition is a set of characters that help in solidifying a company’s market position to allow products to stand tall above their competitors.
Normally, there are very few products that do not have a clear competition in the market. In many cases, there are identical products with almost the same features. Creating a differentiation is key to ensuring products have the uttermost important to users.
Understanding and Creating Benefits
Any startup of business looking forward to introduce a product in the market should be prepared to make products that create benefits to users. To understand benefit creation, we are tempted to look at the principles of Philip Kotler. Here are three ways to look at a products.
Core is normally the first level to be defined and explored. It attempts to look at the main or core benefit that a product offers to customers. It is very important to understand that one main benefit that any product will offer to a customer.
At this level, any additional benefits are added, in order to differentiate the product and highlight its unique selling propositions. Related products may offer benefits that are not different from each other, but there are small elements of features that may provide an edge from one product to another.
This level calls for the need to assess any further benefits that can be offered to the customer in order to ensure a loyalty. It can be after sales service, product support blogs, helplines, extended warranties among others. If you are a startup and you are looking forward to bring a new product to the market, you must look at all the augmented benefits that your products will offer, for it to stand out.
Understanding the Marketing Mix
Introduction of new products to the market goes hand in hand with marketing. The marketing function comprise of the analysis of the market intensities and aspects as well as the expansion of company’s status in order to enhance its market dominance.
According to the Chartered Institute of Marketing, there are four marketing mix, and include the following;
Product defined the heart and core of a marketing mix. It forms the strategic element of the marketing mix. Without a product, it can be challenging for marketers to plan and choose on the methods of advertising. When a product is well defined, services such as packaging, service contract, service after sales, image of the company, brand name among others, can be planned.
Price defines the value of a product that the buyer has to pay in order to gain ownership of a product. Pricing defines one of the most flexible elements of marketing, because it can be changed quickly. It can be easy to alter the price of products according to modifications made in product mix.
Price is considered as one of the most crucial elements of the marketing mix as it is the one that defined revenue that a product can attract.
Place or distribution defines the engagements that make the product easily obtainable to the market. It is concerned with the strategies that are implemented to make products accessible to customers anytime they want.
The ultimate concern of place strategy is to make certain goods reach their desired locations without inconveniences. A product is desired to be sent to its right market after it is fully developed at competitive price.
In the marketing mix, promotion strategy is concerned with the decisions that pertain to meeting sales targets. Promotion is one of the most influential features in the marketing mix. Activities such as public relations, publicity, demonstrations and exhibitions all come under promotion.
Understanding Product Life Cycle
All products and services have certain life cycles. A life cycle refers to the period from the first launch of a product into the market until its final withdrawal. The life cycle of a product is divided into different phases.
For companies to be able to successfully handle the life cycle of a product, it needs to develop strategies and methodologies that help in introducing and withdrawing products from the market. There are five phases to product life cycle and include the following;
Product Development Phase
The product development phase begins when a company finds and develops new product ideas. It involves the translation of various pieces of information and incorporating them into new products. During this time, a product is normally undergoing different changes that commit to time and money resources. During the product development phase, sales are zero and revenue is negative as it involves a time of spending with absolute no return.
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The introduction phase is the second step in a product development phase. It includes product launch with its requirements in a way that it gets the maximum traction in the market.
This stage is normally referred to as money sinkhole when compared to maturity stage, because it involves large expenditures in terms of promotion and advertising. A company must be prepared to spend handsomely to get a small proportion of its spending back.
This phase involves arrangement and defining of distribution. Having the product in every sales center or counter is important to ensure many potential customers are introduced to the product. This state also includes redefining of pricing as early adopters may need a discounted price to accept something new.
The growth phase is very important and offers the satisfaction of seeing the product take off in the market. When coupled with appropriate timing, it can offer a unique value in increasing the market share. If a company has different products on the market, it must follow all product offerings and try to differentiate them from that of competitors.
There is need to offer a frequent modification process of the product as it acts as a effective policy to discourage competitors from gaining market share through coping or offering similar products. Products at this stage can also be protected from competitors by other barriers such as licenses and copyrights, availability of product components and product complexities.
Maturity phase occurs when a product becomes saturated in reference to variations of the basic product. In terms of alternative products, all competitors are well represented. In this phase, the market share growth is at the expense of another company’s market share.
This period defines the period of highest returns of a product. A company that is at maturity stage and has a superior market share enjoys the highest returns of a product. On the other hand, a company that falls behind its market share must reconsider its marketing and positioning in the marketplace.
The maturity stage also sees pricing and discounted policies that vary in relation to competition policies. Pricing will move up and down accordingly in relation to what the competition is doing. Promotion and advertising will relocate from the scope of getting new products to the scope of differentiation in terms of quality and reliability.
The decision to withdraw a product from the market may be a painful one, but it has to happen anyway. There are a lot of issues that needs to be resolved before deciding to remove product from the market. There are dilemmas such as maintenance, service competition reactions, spare part availability, and market gap among others that needs to be resolved before a product can be removed from the market.
It is important for a company to conceptualize and notice the decline signals of a product. In most cases, the decline signals of a product is accompanied by a decline in market sales. When you recognize decline signals, it is important to start withdrawing variations of the product from the market and start preparing on bring new products to the market.
Product Development Process
Product development is the process of creating a new or different product that offers innovating benefits to desired users. The development process includes both the creation of an entirely new product and modification of an existing one. Any changes or new introductions may be targeting a newly defined customer requirement or a new niche category that emerges.
Any startup looking forward to introduce a new product to the market may follow the below traditional approach of introducing products to the market.
Step 1: Generating Ideas
Step 2: Screening the Ideas
Step 3: Developing and Testing Ideas
Step 4: Analyzing for Profitability Potentials
Step 5: Conducting Market Research
Step 6: Finalizing Technical Aspects
Step 7: Finalizing Commercial Aspects
Step 8: Conducting Post Launch Review
Product Development Consideration for New Business
For a company to make important product decisions, it needs to have a solid understanding of product mix and benefits. If you are a startup and you are looking to introduce new products to the market, here are a few things you must get right.
The most basic decision you have to make under this category is to identify how strong the design will be in the entire product mix. Ask yourself is a product will be a supplement to the features or if the features will be designed around a unique design.
The quality of a product needs to match and exceed that offered by other products in the market. If the product has far superior qualities, a higher price may be charged.
Under this category, you need to ask yourself what will be the final features of a given product. Will these features add to the perceived and actual benefits of the product? Note that as a startup, you can charge a premium price for additional desired benefits and features.
Branding decisions remain some of the hardest decisions you will have to make, to introduce to the market a product that stands out among many others. Branding turns a product into something beyond just a good product. A brand can have all the powers to generate instant sales as well as cementing confidence when it comes to a products quality and reliability.
How to Develop a Product Strategy for Startups
Product management functions continue to evolve for both startups and established companies. It is important for product leaders to develop effective product strategies that can aid in introducing and maintaining superior products in the market.
A good product strategy should define who your customers are, how your products fits into your market and how you will achieve your business goals. Such a strategy will help your team focus on the most significant issues which are your customers and business.
A product strategy is normally set by the head of product. It defines how product management will help the company in achieving its vision and business goals. A good product strategy must have at least the following four key elements;
The foundation of a successful business is having a product that customers like and want. Your product strategy must first define who your customers are. Note that many customers serve different customers and all these elements must be properly aligned.
Most companies have direct competitors they can clearly define. Your product strategy must define how you position your products to your customers in relation to other products and services.
For profit businesses aim to generate revenue and make profit from their endeavors. Your product strategy must define how your product will make money as well as achieving your business goals. There are different business models that can be applied in revenue generation.
The macro environment defines the economic, technological, political and cultural forces that may affect your market as well as your products. These elements normally referred to PESTEL factors may have a short or long term effect on your product offerings. Your product strategy must factor in several factors including; the emerging markets where your product may have demand, the emerging technologies that impact your customers, any economic forces that may have an impact on your customers budget and needs and all evolving customer needs and behavior.
For all products or services you develop, they must be in line with the company vision and mission, This is the reason any chief product manager must work and consult keenly with the company CEO to develop products that are in line with the requirements of the board and other stakeholders involved in the company.
We have covered exhaustively on all important elements that need to be figured out in order to bring a new product to the market. Of key importance is to understand what a product is, the life cycle of a product, the marketing mix and the product development phase.
Any startup looking forward to introduce new products to the market must aspire at ensuring their products have core or main benefits, have actual benefits as well as augmented benefits as defined by Philip Kotler.
The four Ps of a marketing mix are very important. There is the product itself and defines the key features and benefits it offers to the customer. There is the pricing aspect, which needs to be variable and highly competitive to meet ideal customer spending expectations. Additionally, there is the place aspect which requires finished goods to reach their ideal destinations with ease and without inconveniences. The last is promotion aspect, which requires all forms of advertising to ensure customers are aware of what is being offered to the market.
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