At a certain point in your business, a growth plateau will be reached. This may happen due to changing market trends, new competitors, or shifting consumer behavior. No matter the reasons, this is the time when you’ll need to examine new strategies to increase your revenue.
Improving your existing products, or creating fresh new products that have a demand in your market can help keep your growth curve looking healthy.
In this blog, we’re covering product development strategy and some examples of this in practice.
Product development strategy definition
This is a strategy where your company plans and develops new products, or upgrades current products, and introduces them to an existing market. It’s a particularly useful strategy in SaaS due to the need to find differentiators to maintain a competitive edge.
A successful product development strategy places emphasis on market and consumer research, conceptualizing, building, testing, launching, and marketing to eager customers where there is an existing or increasing demand for a solution.
This strategy can take varied approaches, such as:
Developing a new product similar to your current product
Reinventing or improving your existing product
Creating a new product based on your customers’ purchasing behaviors
The Ansoff Matrix
The product development strategy forms part of the Ansoff Matrix. The matrix framework was created in 1957 by Igor Ansoff as a guide to help companies plan their future growth. It contains four alternative business growth strategies which are useful when a company is seeking to enter into a new or existing market, with either current or newly developed products.
Measuring your new product development strategy
Having a new product development strategy in place helps determine your updated product pricing model, enhanced features, and the amount of profit your company will make.
There’s a lot at stake for your company. Developing a new product needs to be weighed up against the risk involved, overall costs, pressure on your team’s resources, and time to market.
Will your product development meet the needs of your customers? Will it stack up against your competitors’ own product development offerings? Will it have the ultimate payoff of boosting your bottom line?
Tracking your product development process means you can manage the progress and measure the outcomes of creating new products and modifying existing ones. There’s no standardized way to measure product development, but it’s important that you agree with your development team on the appropriate KPIs to attach to your project as you move along the roadmap from strategizing to completion.
Product development strategy examples
Strategies for successful product development start with research in the marketplace. If your business has solid data for your target market, you can assess and aim to meet their needs by building solutions. It’s always worth looking at how leading brands are solving emerging problems or reacting to changes in consumer trends.
Product development can often be as simple as taking an existing product, modifying it slightly and selling it into your existing market. This adds value for customers, who may well buy your new product, even though they have the current version. Apple is a prime example of this.
A new iPhone is released every couple of years, and the upgraded features are often quite minimal. A better camera, thinner design, wireless charging. Despite these seemingly small improvements, Apple enthusiasts are always keen to get their hands on these newly developed products and are happy to pay increasingly large sums for the privilege.
With this development strategy, Apple can continue to drive revenue with a single product that they gradually adapt over time as technology and consumer demands change.
In SaaS, a product development strategy might look like Mailchimp working towards introducing a CRM that integrates with its email software, for example. The lifecycle of software is affected by both advances in technology, and the daily requirements of users. To survive in the competitive online arena, SaaS companies must be agile enough to anticipate and respond to these changes to ensure they remain on the cutting edge. Mailchimp responded to the needs of its many users who required a more flexible, all-in-one solution to manage their work, and so the CRM functionality was born.
We can also look at product development strategies evolving as collaborations between companies, such as Spotify and Uber. These market leaders partnered to provide a richer, more personalized rideshare experience for users, and in turn, boosted their own brands and increased demand for their services.
However your company chooses to go about product development, it’s important to lay out a strategy that spans from collecting data through to building, testing, launching, and then measuring the results. Having a solid roadmap ensures that your team and key stakeholders are aligned in their product development mission, and that the end result is a success.