If you have a good understanding of your market, another way to leverage your knowledge is to develop new products and services to meet this market’s needs. If you hear the term product development, you may think about brand new products, but that’s not necessarily the case.
Executing a product development strategy can happen by adding more value to your existing product through features, upselling, or cross selling. The best thing about this strategy is you’ve already established yourself in your current markets and you know what your customers want. You have the distribution channels, and you know how to reach them.
Consider the following questions if you’re thinking about expanding your product line or developing new products:
- Will your customer benefit from the added value or new feature? Are they asking for additions to the current product line?
- Do potential manufacturing, marketing, and distribution cost efficiencies exist from an expanded product line? Can you share current costs across the new products or services?
- Can your current assets, brand, marketing, and distribution be used with the new product?
- Do you have the skills and capabilities to develop and produce the products proposed?
After you’ve given product development some consideration, and you’ve decided to proceed full steam ahead, here’s how to develop new products and services to meet your market’s needs:
- Add new features or services by extending your current products. For example, cell phone companies add on media packages for text messaging, additional ring tones, and Internet access. Here are a few ways to extend your current offering:
- Adapt (to other ideas and developments)
- Modify (change color, motion, sound, odor, form, shape)
- Magnify (more for a higher price, stronger, longer, extra value)
- Reduce (smaller, trial version, shorter, lighter)
- Substitute (other ingredients, processes, power)
- Combine (other options, products, ideas, assortments)
- Develop additional models and sizes of your current products. For example, the iPod expanded to the iPod mini and the iPod nano.
- Develop totally new products. In this case, you usually leverage your brand recognition. Some good examples of this development are Gerber producing baby clothes and a CPA firm expanding from tax work into financial planning.
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