A business starts with a need. It is this need of a specific market that the company should provide the solution to. This solution is a product or a service that the company has the resources to provide. Product is one of the P's referred to in the marketing mix enumerated in basic marketing theories.
Companies have to take time to develop a quality product that is responsive to the needs of its desired target market. It also has to be relevant, accessible, and affordable to their market.
What Constitutes a Product?
A product can be tangible in the form of goods or intangible in the form of a service. Goods can also be categorized into three groups. These are convenience goods, shopping goods, and specialty goods.
Convenience goods are those which are readily available and do not require much time or effort for the consumers to make a purchase decision on. Basic necessities may fall under this category. Shopping goods, on the other hand, are those products that consumers tend to spend a little more time deciding on.
These are high involvement products that require time and effort for research before customers can make an informed purchase decision. Finally, there are specialty goods which cater to the needs of a narrow segment of the consumer market.
How Do Products Start?
There are basically 7 steps involved in the development of a new product. These are the following: Strategy Development, Generation of Ideas, Screening and Evaluation, Business Analysis, Product Development, Market Testing, and Commercialization.
Although following these steps is ideal, the reality of it is that new product development tends to be more complicated. Rather than a step by step process, companies do tend to go back and forth between stages.
- Strategy Development
Before pondering on creating a new product, a company has to refer to its own strategy. Firms do use various approaches. In some cases, stockholders have to interfere with questions on the prudence of the investment in an effort to manage and reduce risks.
After all, developing a new product requires huge expenses and the ultimate aim should be to create something profitable for the company.
- Generation of Ideas
Ideas do not just come from internal parties or the higher level management. Ideas can come from different departments. It may come about as a response to the demand of the market.
It can come as a suggestion from a regular employee, etc. In the end, the company has to decide which idea is worth investing on.
- Screening and Evaluation
There are plenty of great ideas that may be thrown in but some are not feasible. Excellent ideas may also be discarded for the simple reason that it does not blend well with the company's core competencies.
Validating new product ideas through market research is also a good idea.
- Business Analysis
After determining which ideas are consistent with the core competencies of the company and determining feasibility, further evaluation and analysis of how the product can help the company reach its business goals is necessary.
Factors such as risks, potential market size, profit projections, and possible competitive response among others have to be duly considered.
- Product Development
Based on the identified features of the “best” product to meet the customers’ needs, a team of experts should be able to come up with a product design.
The process of product development differs from one industry to another.
No matter what industry the company belongs to, however, the product development process will have to conform to industry quality standards.
The prototype or samples from product development will then have to go through market testing.
- Market Testing
To ensure that the product will be well received by the company’s target market, it is necessary to conduct market testing. As compared to the initial product tests conducted in laboratories or company premises, this test is conducted in a specific marketplace.
Some companies do sampling in retail outlets and ask consumers for feedback. There are also those who test the market by having pre-launch offers. This will determine whether the product is good enough to attract market attention and consumer purchase.
Depending on the result of market testing, a company may decide to widen its distribution and release the product to a broader market, either nationally or internationally.
Differentiating Your Product from Competition
One of the challenges in this element of marketing mix is standing out among competitor brands. The consumer market is filled with numerous products under the same category fighting for customer attention.
To get as much interest and market share as possible, a product needs to find its differentiating factor. A SWOT analysis can help with this matter.
SWOT stands for Strength, Weakness, Opportunities and Threat. Strengths and weaknesses can come in the form of features and benefits. It can also be based on price.
Opportunities refer to possibilities in terms of improving the product or for increasing revenues. Threats, on the other hand, include anything that could hamper the way the product is received by the market or generates revenues for the company.
The best way to differentiate one product from another is to look at them from the perspective of the customers. It is important to know why customers prefer one brand over the other and what other features they are looking for in the product.
With this information, companies can enhance their products and make them more appealing to their customers. At the end of the day, it is the customer's opinion about what makes the product stand out from the rest that matters.
When it comes to product and all other elements of the marketing mix, the ultimate goal for sustained marketability is unparalleled customer satisfaction.