Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.

What is a Product Development Strategy?

Product development strategy is the process of bringing a new or existing product into the market via continuous market research, testing, and product concept planning. It’s aimed at bringing an existing product to a new market, new products to an existing market, or a new product to a new market.


A viable product development strategy involves:

-      A product vision or a broad idea as to why the product should be developed.

-      A strategic product development plan and the steps you need to take in order to achieve your product vision.

-      Product roadmaps with well-defined roles and timeframes.

Product Development Strategy Types

A chart that shows different product development strategy types

In 1980, Glen Urban and John Houser released their book Design and Marketing of New Products. In the book, they defined nine types of product development strategies and divided them into two categories, proactive strategies, and reactive strategies.

Proactive Strategies

  1. Invest in market research
  2. Invest in R&D (Research and Development)
  3. Invest in entrepreneurship
  4. Form alliances
  5. Acquire other companies

Reactive Strategies

  1. Respond to customer requests
  2. Defend against competition
  3. Copy competition
  4. Position as second, but best

Stages of a Product Development Strategy

Modify Existing Products

People love legacy products, but they love to see and try something different. Introducing a better and newer version of an existing product can give your business a massive boost. You can do that by introducing new features, marketing, and upgrading certain aspects of the product. It’s also a great opportunity to find out what features your customers want, and give them just that!

Improve Upon Your Ideas

“Customers don’t expect you to be perfect. They do expect you to fix things when they go wrong.”

— Donald Porter


When it comes to innovative ideas, it’s difficult to predict exactly how your customers will respond. If they don’t respond well, then find out what they want and change accordingly. For example, when smartphone companies removed the 3.5 mm jack from smartphones, the consumers didn’t take it well. To counter that, companies anticipated consumer needs and produced smartphones with a Type-C cable. For any business, it’s important to

Offer Product Trial

People are always hesitant in trying new things, especially if they have to pay for them. A great way to encourage people to try your product is by offering free trials or samples. It can show them what a great product it is and how they can benefit from it.


Although, if you know that your product will convert, then you can use sampling or trials as an early onboarding technique. If someone tries and likes one of your products, then they're more likely to try other products as well.

Increase Product Value

An excellent way to engage customers is by offering additional value to the product. You can increase product value by offering more quantity, discounts, customer support, warranty, or premium features. When competing with a product that offers no additional value, people are more likely to buy your product.


Besides, people love to talk about how they got such a great discount or how their experience went with the friendly customer support that listened to and resolved their issues. The increased product value can lead to you getting the best kind of advertising — word of mouth. The CEO of Facebook, Mark Zuckerburg said:


“Nothing influences people more than a recommendation from a trusted friend.”

— Mark Zuckerburg, Facebook CEO


Increasing product value will not only attract new customers but turn them into return customers. With so much competition, it’s natural to want a better deal for the same product in the same price bracket.

Set Yourself Apart via Customization and Specialization

In this highly-competitive market, every company needs to ask themselves,


“What sets us apart from the rest?”


If every other company is offering the same product at the same price, why would a consumer choose your product over the others?


Build New Products and Product Lines

Product development is subject to change, and the best way to start is by launching new Products. When doing so, remember to build products that the customers need without discouraging them from buying your other Products. The goal is to encourage customers to put their trust in all your products. Therefore, try creating new products that supplement the current ones instead of replacing the original.

Focus More on Package Deals

Even though you have an awesome product, people tend to look for package deals. When it comes to making the final buying choice, package deals are great motivators.


Package deals do more than just motivate customers to buy your product. They also expose customers to more product varieties that they wouldn’t normally try. Once they’ve tried a product that solved some problem, they’re more likely to buy it in the future.

Find and Explore New Markets

Almost every product has the potential to make its place in more than one market. Your product development strategy must take that into account and target people from various demographics, locations, etc. The best way to explore new markets is by targeting businesses instead of individual customers and marketing to different groups.

5 Steps to Create Your Product Development Strategy

Step 1: Conduct Research

Everyone loves trends and it’s always tempting for businesses to go after them. However, before spending any time, money, or resources on something, conduct some research to make sure that the expansion is worthwhile. Research is the foundation of any great product development strategy.


There are three main areas that you should research: customer, competitor, and market. Let’s dive deeper into each to see how and why they matter.


Customer Research

Brands are built around customers! Decades ago, home appliances manufacturers adopted a simple strategy that helped them see the world through the eyes of their consumers. They would send their product managers to the homes of their consumers to observe how they used their products. This allowed companies to empathize with their consumers and find out their pain points and areas of growth for their customers.


So, before diving into anything, start with conducting some research to find out what your customer wants. Survey your existing and potential customers to find growth opportunities.


Competitor Research

For any business, it’s paramount to know their competition and stay ahead of them. There are several competitor analysis frameworks but the best one is SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It’s used to evaluate the different internal (strengths and weaknesses) and external (threats and opportunities) factors that can impact a business.


Macroenvironment research

Last but not least comes macro-environment research of the external uncontrollable forces (natural, demographic, political, legal, social, and cultural) that affect an organization’s decision-making.  Researching into the macro-environment factors allows you to detect aspects that can significantly influence your product development strategy.

Step 2: Define the Problem

After conducting your research and exploring the world through your consumer’s eyes, you’ve found various challenges that they face. An important part of any product development strategy is to have a plan that outlines the main pain points of your consumer. Here’s how you can clearly define your customer’s problems:

  1. Make a list of all the pain points that your team identified.
  2. Shortlist and prioritize the list of pain points, and focus on issues that are either urgent or can be resolved quickly. If you feel like taking a risk, then go for a combination of both.
  3. Collaborate with your product team to get additional input and finalize the choice.

Step 3: Brainstorm Potential Solutions

Once you’ve found and prioritized your consumer’s pain points, it’s time to brainstorm potential solutions. Brainstorming does not mean sitting in a room by yourself and thinking of ideas. Build a process around it and keep our team involved every step of the way. Here’s how you can get started:

  1. Call a cross-functional team meeting to brainstorm ideas.
  2. Before starting the meeting, share the research findings with the team to help them understand your consumer’s pain points better.
  3. Set criteria to get maximum input from maximum team members within a small frame of time. For example, give each attendee five minutes to present their idea, and convince the     team that it’s viable. If the majority agrees to the viability of the idea, then proceed to the next level.
  4. List the product concepts and narrow them down to a manageable number. Now, do a rough calculation of time, budget, and resources required to develop an MVP (minimum viable product).

Step 4: Build a Prototype

After finding a solution, the next step is to build a prototype. The goal of prototyping is to develop a product that can be used as a sample for mass production. Getting the finished product right in one attempt is quite unlikely. With the prototype, you can experiment with different versions, eliminate options, and make improvements until you’re satisfied. If you like several options, then you can always use a decision matrix to pick the best from among the front-runners.

Step 5: Test Your Solution

The last step in product development is testing your solution on the consumers. However, you won’t be testing the product on a paid customer. A great way to test your solution is by using user personas or getting reviews from a group of beta testers. This will help you use the feedback to make appropriate adjustments to improve the product functionality before going to market.

Product Development Strategy Best Practices

If you’re creating a product development strategy for the very first time, then there are certain best practices that you can follow to avoid mistakes and pitfalls.

Stay in Touch with Your Customer

Many organizations lose touch with their customers as soon as they step out of the research phase. However, staying in touch with your customers throughout the way can guide you in the right direction. Though you don’t need to act on each and every customer opinion, responding to repetitive ones can give you a strong competitive advantage.

Maintain Balance between Speed and Quality

Every business wants to be the first and fastest to bring its product to the market. However, what’s even more important is to maintain a balance between speed and quality. Opting for an MVP is a great way to reduce time to market as you can (initially) focus only on the most important features and expand later.

Use the Hype to Test New Products

Every year, we see people line up to get their hands on the latest iPhone. That is exactly the kind of hype you should be aiming for with your product. Remember, people are willing to test innovative products from a company they trust that meets their needs and wants.

Ignore (Some) Feedback

In both life and in business, remember that you can't make everyone happy! While collecting consumer feedback can do wonders, you cannot respond to all the feedback. On the other hand, the trend is always changing and the people change with it! If you consider every feedback, then you'll end up with a product that is no longer needed. Instead, work faster to get the product to market while the demand is still high.

Set SMART Goals

In product development, it's natural to set high expectations and get carried away with your goals. In such a case, set up SMART (specific, measurable, attainable, realistic, and timely) goals and breakdown the strategy into small milestones that are easy to meet.

Examples of Product Development Strategy


With more than 40 subsidiaries, Amazon is the market leader in e-commerce and the largest cloud-computing service in the world. They take a Work Backwards approach to their product development strategy. They write a press release and then work towards making it so simple that anyone can understand. That includes removing all technical jargon and using simple language. Then they work backward from product release to the product itself.


As the world’s largest streaming service, Netflix has to work extra hard to retain its customers. Their key metric is customer retention and they use high-quality original content to keep up the interest. They use AI (artificial intelligence) to constantly provide feedback regarding user engagement. Over time, it has established a strong brand and its reliability, ease of use, and personalization are hard to copy for a competitor.


The world’s leading retail furniture brand, IKEA’s strategy focuses on providing quality products and product experience at a low price. Its core competency is supply chain management. As it became an international brand, IKEA intelligently organized its supply chain to manage the geographical dispersion and large volume of suppliers.


Who doesn’t know Google? The trillion-dollar company believes in solving big problems in a big way. They encourage their teams to think bigger and take risks to accelerate innovation. Google’s product development strategy is all about long-term growth, which is typical for a company that has been the market leader for years.


Apple is one of the tech giants that believes in developing the product first and then finding a market for it. The co-founder of Apple, Steve Jobs famously suggested that customers don’t always know what they want. They think that customers will pay top dollar for premium products and focus mainly on optimizing their existing products. Over the years, Apple has relied on brand loyalty and has happily allowed other brands to thrive in the lower-price bracket market.

Coca Cola

The COO of Coca Cola, James Quincy once said:


“If we embrace where the consumer is going, our brands will thrive, and our system will continue to grow. This is Our Way Forward,”  — James Quincy


Coca Cola is a brand that is all about the Voice of the Customer. Their consumer-centric strategy focuses on going where the customer goes and adjusting their products to the taste of the consumer. From juices to herbal teas, and coconut water, Coca Cola rolls out new products in response to consumer demands. They have and plan to continue to listen to the voice of customers and respond accordingly!

Getting Started with Product Development Strategy

In business, there is no one-size-fits-all formula for anything, and that includes a product development strategy. To create a great product development strategy for your business, it’s critical to conduct thorough research and make data-driven decisions. Starlight Analytics offers services like product concept testing, product price testing, and social listening services to gather data that can help you create the best product development strategy.