Things Your Competitors Can Teach You About Product Development

The principal product development concern for startups is that of increasing production and reaching scale. Product-development capabilities should cover prototyping, sourcing materials, and customer acquisition. These activities need to be supported with skilled technology personnel. For startups, this calls for various product design and technology teams to lead these activities. They need to identify and address problems encountered while developing the product. For instance, companies with very low gross margins may create niche markets, such as instant cameras. In this case, the product is manufactured entirely in a low-cost environment (unlike normal cameras), and no inventory is kept on hand. Thus, product development represents the startup’s most critical opportunity to gain more profits.

At the other extreme, many startups only produce one product. When that happens, they may end up failing because they lacked the resources to launch that one product. The initial product is normally a small piece of marketing capital for a startup. Without strong marketing efforts, however, it would end up having a very small market. Other considerations for product development are identifying trends or better ways to do things in order to maintain the product in the market. For instance, other startups have proven that the printing technology used by other companies is no longer economical to produce. They may change to new technologies and methods.

Marketing Strategy

Another critical product development component is marketing. A startup usually creates a complete product in its head, but it needs to acquire the resources and expertise needed to realize that dream. When product development is completed, startup managers look to put together a marketing plan. This can include marketing, marketing/advertising, brand building, sales, and product management. The strategy for product development requires attention to multiple marketing factors, such as improving product pricing or the marketing mix to take advantage of any economic or marketing trends. These initiatives take time to implement. The time frame varies between startups and other businesses. For instance, you may be able to figure out how to offer a premium product, even though the product will only be marketed at a low cost.

I don’t consider sales as a product development concern, although marketing and marketing plans should cover sales and marketing plans. Sales is usually not so critical until you have established the first few product lines. At that point, the sales channel becomes the primary marketing channel. Marketing plans may cover sales, pricing, and sales and marketing plans. For instance, in a startup, the product sales will be coming from a different channel. Sales will be coming from customers who are entering the product from a different sales channel, such as retailers, online, or direct sales. Even if you plan to sell a product through traditional distribution, your marketing and sales efforts are directed to that particular sales channel.

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