Product or Service Development
Product and service development (PSD) is more than simply manufacturing a product or devising procedures for carrying out at service. PSD involves strategic assessment of your concept and how it delivers value to the customer. Likewise, you will have to compare the value delivered to customers against the value received for the product.
In the previous lectures, you examined the needs and wants of your target customers. Your job in PSD is to develop a product or service that meets those needs or wants without including additional features that don’t earn additional return from customers. This concept is known as developing a Minimum Viable Product (MVP).
We begin by examining in detail the research and development process for a product or service. Process generally includes the following steps:
- Initial Research and Development
- Alpha Testing
- Strategic Assessment
- Beta Testing
- The Launch
The above process is most commonly associated with products rather than services and is most commonly used in the technology field. This is due to the high need for continued research and development of technology products. In any event, this process can be applied to a product or service.
Initial Research and Development
In previous lectures we made the distinction between entrepreneurs and inventors. Often, these two individuals are not the same person. If so, however, the inventor often partners with another entrepreneur who can work on building a business while the inventor entrepreneur works on further developing the product.
The non-inventor entrepreneur should serve as a source of input and sounding board for ideas about the product. The market analysis helps determine the need or want that the product solves, but it takes a great deal of trial and error to develop the product to a stage that adequately meets customer expectations. This is why the product concept from the feasibility analysis is so important and is a continuously changing item in the business plan.
Once you have a product that meets the needs and wants of the customer, it is time to test the product for functionality and other necessary changes or modifications necessary to meet customer expectation. This process can be tricky because, in any product, there is a point where additional features do not add to the value that certain target customers are will to give for the product. That is, at some point there are diminishing returns for investing more time and capital into adding features to the product. This is generally known as developing a “Minimum Viable Product” (MVP).
The manner of arriving at the MVP is through product testing and continued development. The following sections outline the typical process for testing and developing a new product or service.