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What is Product Development? 7 Steps to Creating a Product in 2023

Even for the most successful ecommerce businesses, the journey to a finished product rarely resembles a straight line. If you’re an aspiring entrepreneur, the product development process might even seem shrouded in mystery—how does an idea in your head become a 3D object you can hold in your hands?

Effective product development involves market research, product management, and plenty of trial and error. While every story is different, there are a few best practices founders take on the road to starting a business and shipping a finished product.

In this guide, learn everything you need to know about the product development lifecycle as well as tactics to improve your workflow to help you bring your vision to life.

What is product development?

Product development refers to the complete process of taking a product from idea to market. It also describes the process of renewing an existing product or introducing an old product to a new market. This includes identifying market needs, conceptualizing the product, building a product roadmap, launching a product, and collecting feedback.

New product development (NPD) specifically refers to creating a new product from scratch and bringing it to a market. The process doesn’t end until the product life cycle is over. And, you can continue the product development process after launch by collecting user feedback and iterating on the product and developing new versions.

Who is responsible for product development?

A diverse group of people works together at a long tableIn any company, whether an early stage business or an established corporation, product development unites every department, including design, engineering, manufacturing, product marketing, UI/UX, and more. Each group within the product development team plays an essential part in the process to define, design, build, test, and deliver the product. The complexities of the product development lifecycle makes product management all that more important.

How to create a product development plan

A product development plan (or product development strategy) is the methodology that a business will use to guide its product development. It is a detailed plan with milestones and checkpoints that keeps a multi-disciplinary team on track and heading toward the same goal until product launch.

Before starting any stage of product development, put your plan to paper. Ask: How long do we need? What are the deadlines? How often will we meet? What are our goals?

Later on in this guide, we’ll walk through the product development process. You can use this as an outline to map mini-goals, ways of working, and areas of responsibility to each stage.

Why is a product development plan important?

A product development plan is a critical stage in the process for the following reasons:

  • It aligns the team. Having everyone on the same page from the get-go ensures that team members can have autonomy and move quickly toward the same end product.
  • It creates checkpoints. Your plan should have a meeting cadence and goals to reach at each stage. This allows the team to come together periodically to stay on track.
  • It eliminates risk. Having a plan in place that accounts for all competitive research, market research, and target audience research means you’ll leave no stone unturned.
  • It contains success metrics. How do you know if your process is successful? Your plan sets out exactly what success looks like and how it will be measured.
  • It lets you get more creative. With guardrails in place, you don’t need to micromanage the process. The teams will have clear guidelines to innovate within. 

📦 Read more: How To Create a Successful Product Development Strategy

The 7-step new product development process

  1. Generate an idea
  2. Conduct market research
  3. Develop a plan
  4. Create a prototype
  5. Source materials and production partners
  6. Determine your costs
  7. Launch your product

Although the product development process differs by industry, it can essentially be broken down into seven stages: idea generation, research, planning, prototyping, sourcing, costing, and commercialization.

Use the following development framework to bring your own product idea to market.

An infographic showing the 7-step product development process outlined in the article

1. Generate an idea

Many aspiring entrepreneurs get stuck on the first stage: ideation and brainstorming. This is often because they’re waiting for a stroke of genius to reveal the perfect product they should sell. While building something fundamentally “new” can be creatively fulfilling, many of the best ideas are the result of iterating on an existing product.

The SCAMPER model is a useful tool for quickly coming up with product ideas by asking questions about existing products. Each letter stands for a prompt:

  • Substitute (e.g., faux fur for fur)
  • Combine (e.g., a phone case and a battery pack)
  • Adapt (e.g., a nursing bra with front clasps)
  • Modify (e.g., an electric toothbrush with a sleeker design)
  • Put to another use (e.g., memory-foam dog beds)
  • Eliminate (e.g., get rid of the middleman to sell sunglasses and pass the savings on to consumers)
  • Reverse/rearrange (e.g., a duffle bag that doesn’t wrinkle your suits)

By considering these prompts, you can come up with novel ways to transform existing ideas or even adapt them for a new target audience or problem. Using insights from business analysis can also be helpful to better understand the opportunities in the market.

📦 Read more: Product Ideas: 17 Places To Find Profitable Products

2. Conduct market research

Starting production before you validate your idea can lead to failure. Product validation ensures you won’t waste time, money, and effort on an idea that won’’t sell. There are several ways you can validate your product ideas, including:

  • Sending out an online survey to get feedback
  • Starting a crowdfunding campaign
  • Test marketing, releasing your idea to a very small group of your target market
  • Researching market demand using Google Trends
  • Gauge interest via email opt-ins or pre-orders
  • Asking for initial feedback on forums like Reddit
  • Running a feasibility study to assess whether your proposed idea is worth investing in

It’s important to get feedback from a substantial and unbiased audience. Be wary of overvaluing feedback from people who “definitely would buy”—until money changes hands, you can’t count someone as a customer. Asking advice from your family and friends (unless they have prior experience in your industry) is also something to avoid.

Validation research will also involve competitive analysis. If your idea or niche has the potential to take up market share, there are likely competitors already operating in that space.

Researching competitors will help you understand how they attract customers and make sales. Ask your potential customers what they like or dislike about your competitors to define your competitive advantage.

The information compiled from doing product validation and market research will gauge the demand for your product and the level of competition before you start planning. 

3. Develop a plan

Since product development can quickly become complicated, it’s important to take the time to plan before you begin to build your prototype. At this stage, it can often be helpful to have a clear product roadmap.

The best place to begin planning is with a hand-drawn sketch of what your product will look like. The sketch should be as detailed as possible, with labels explaining the various features and functions.

Technical drawings from a product development exercise
Product sketches from the crowdfunding campaign for a bluetooth speaker. Hidden Radio

You don’t need a professional quality drawing, since you won’t be submitting it to a manufacturer at this stage. However, you can outsource this stage to a technical illustrator. Dribbble and UpWork are two sites that list freelancers for hire.

As part of your diagram, create a running list of parts or materials needed. For example, a purse design could be accompanied by this list:

  • Zippers (large and small)
  • Metal clasps
  • Leather straps
  • Protection pouch
  • Embossed label
  • Interior wallet

Your plan should also answer the following questions to inform pricing, brand positioning, costs, and marketing strategy:

  • Will the product be an everyday item or for special occasions? 
  • Will it be a luxury or price-accessible product?
  • Will it use premium materials or be environmentally friendly
  • What will the packaging and labels look like?

4. Create a prototype

Group of basic 3D shapes arranged on a plain backgroundThe goal of the prototyping phase during product development is to create a finished product to use as a sample for mass production. Prototyping usually involves experimenting with several versions of your product, slowly eliminating options and making improvements until you’re satisfied with a final sample. 

Prototyping difficulty depends on the type of product you are developing. The least expensive and simplest cases are products you can prototype yourself, such as:

  • Food recipes
  • Cosmetic or personal care formulations
  • Some fashion and jewelry designs

However, more often than not, entrepreneurs will work with a third party to prototype their product. If you’re starting a clothing brand, work with local seamstresses, cobblers, or pattern makers. These services usually can be found online by Googling local services or reaching out to design or fashion schools for prototyping help.

For objects like toys, household accessories, electronics, and many other hard-exterior objects, you may require a 3D rendering in order to make a prototype. Use UpWork or Freelancer to find artists or engineers who are trained in computer-aided design and drafting (CAD) software. Or, try SketchUp, Tinkercad, or Vectary to create 3D models on your own.

A 3D rendering created in Tinkercad
Tinkercad/Marta Redondo Luengo

With the innovation of 3D printing, digital designs can be turned into physical samples at a much lower cost and quicker turnaround time than the traditional method of mold-making.

The first usable version of your prototype (or minimum viable product) can be released to a small test group to gauge interest and test price sensitivity and messaging. The feedback gathered at this stage allows you to create iterations of the product and build something more valuable for your target market.

Founded in 2019 by childhood friends Charlie Bowes-Lyon and Freddy Ward, Wild wants to eliminate plastic and single-use waste from bathrooms across the world.

🌸 Podcast: Why Perfecting Product Design Was Key to This Brand’s Success

Charlie Bowes-Lyon and Freddy Ward launched Wild to eliminate single-use plastic deodorant packaging. Their product development process spanned 35 iterations before launch. 👉 Learn more

5. Source materials and production partners 

Once you have a product prototype you’re satisfied with, it’’s time to start gathering the materials and securing the partners needed for production. This is also referred to as building your supply chain: the vendors, activities, and resources needed to create a product and get it into a customer’s hands. 

When finding manufacturers or suppliers, follow these sourcing best practices:

  • Factor in storage, shipping, and warehousing partners.
  • Find multiple suppliers for the different materials you will need to compare costs and create backups.
  • Attend trade shows dedicated to sourcing. Discuss materials and build a personal relationship with suppliers, which can be valuable when it comes time to negotiate prices.
  • Compare advantages and disadvantages of sourcing locally or internationally.
  • Look for Alibaba listings with similar products to your own and then contact the factory to see if they can produce your specific design.

6. Determine your costs

You should now have a clearer picture of what it will cost to produce your product. Costing is a business analysis process where you take all information gathered to find your cost of goods sold (COGS) and determine a retail price and gross margin.

Your calculation should include raw materials, factory setup costs, manufacturing costs, and shipping costs. Factor in other costs such as shipping, import fees, and any duties you will need to pay in order to get your final product into the customer’s hands. These fees can have a significant impact on your COGS, depending on where you’re producing the product.

A spreadsheet demo of a product costing sheet
A product costing example. You can copy and adapt this spreadsheet to create your own.

If you were able to secure multiple quotes for different materials or manufacturers during the sourcing phase, you can include different columns for each line item that compare the cost. Another option is to create a second version of the spreadsheet, so you can compare local production versus overseas production.

Once you have your total COGS calculated, you can come up with a pricing strategy for your product.

7. Launch your product

At this point you’ve got a profitable and successful product ready for the world. The last step in this methodology is to introduce your product to the market. At this point, a product development team will hand the reins over to marketing for a product launch.

If you don’t have the budget for expensive ads, don’t sweat it. You can still run a successful go-to-market strategy by using the following tactics:

  • Sending product launch emails to your subscriber list
  • Working with influencers on an affiliate marketing campaign
  • Getting your product featured in gift guides
  • Enabling Instagram Shopping
  • Gathering reviews from early customers

📦 Read more: 25 Alternatives to Running Paid Ads to Promote Your Business

Free Guide: How to Find a Profitable Product to Sell Online

Excited about starting a business, but not sure where to start? This free, comprehensive guide will teach you how to find great, newly trending products with high sales potential.

Product development examples

In the based-on-a-true-story 2023 film BlackBerry, the founders of Research in Motion (RIM) assemble a crude prototype of their mobile smart phone to accompany a pitch to investors. Although the final product looked nothing like the first iteration, the prototype serves as a proof of concept and a jumping off point to get funding or test the market. 

Product development became a key part of RIM’s (later named BlackBerry) business in the race against Apple, which the company ultimately lost by failing to understand the market and racing to final product without adequate testing.

Don’t make the same mistakes—understand your industry and market. The product development cycle will naturally vary by industry, so let’s take a brief look at what you might have to consider with case studies for each.

Fashion and apparel development

In the fashion industry, product development usually begins the old-school way: with a hand-drawn sketch or the digital equivalent made using a program like Procreate.

A sketch is then developed into a sample using a pattern maker or seamstress. During the prototyping phase, a size set is created, which means a range of samples with different measurements for each size you want to sell. 

Production will either be handmade by the designer, produced by a factory, or printed by a print-on-demand company (in the case of graphic t-shirts or accessories). 

Other factors to consider:

  • Hang tags: The branded tags that hang from a garment and usually contain information like price, size, etc.
  • Labels: The fabric tags sewed or stamped into a garment that usually contain information about fabric contents and care instructions.
  • Wash tests: Putting your product through wash tests to understand whether it holds up over time and how it should be cared for.

👗 Case Study: From Sketch to Sample to Successful Business

Sarah Donofrio dedicated her life to fashion working for major brands before launching her own clothing line. 👉 Read Sarah’s story

Beauty and personal care development

From makeup to bath products to skin care, much of the beauty industry’s hottest new labels started in a kitchen. Founders experiment with ingredients, some even launching handmade products, before mass producing through a manufacturer.

White labeling is also popular in the beauty and cosmetics industry. It’s the process of finding an existing product or manufacturer, then packaging and branding the products they already produce. Whichever route you decide to take, mass manufacturing for cosmetics is usually done by working with a lab and a chemist to make sure quality stays consistent at scale.

Other factors to consider:

  • Labels and warnings. Identify all materials used in the product and any potential reactions.
  • Laws and regulations. Research FDA regulations and how they pertain to your product and packaging, both where they are produced and where you intend to sell them.
  • Shelf life. Conduct tests and add necessary expiration dates to products.

🏭 Case Study: Making the Leap to Manufacturing

In this guide to starting a skin care line, Meghan Cox discusses the early days of starting her business, Amalie. While she launched on handmade formulations, she eventually made the move to manufacturing—and then opened her own lab. 👉 Read Meghan’s story

Food and beverage

Food and beverage products are among the easiest to start developing at a low cost from home. Creating a new energy bar can be as simple as buying ingredients and tweaking the recipe in your own kitchen, like Lara Merriken did when she started Lärabar.

In order to move from recipe to packaged goods you can sell in stores or online, you will need to find a commercial kitchen that is licensed to produce food and has passed a health and safety inspection. These are manufacturing facilities that specialize in processing raw materials and producing food and beverage products at scale.

Other factors to consider:

  • Labels and warnings. You will need to display ingredient lists and nutritional information.
  • Laws and regulations. Many countries have regulations around dietary information, allergen warnings, and health claims that you will need to comply with.
  • Expiry dates. You will need to understand your product lifetime and how you will produce, package, and stock the product to accommodate this.

☕ Case Study: A Beverage Brand’s Humble Roots

Hannah Mendoza spent a year in her own kitchen honing her recipe for Clevr Blends, a brand of superfood plant milk lattes. 👉 Read Hannah’s story

Wrapping up the product development cycle 

During product development, each journey to a finished product is different and every industry has its own unique set of quirks involved in creating something new.

If you find yourself struggling to figure it all out, remember that every product that came before yours had to overcome the same challenges. By following the steps in this guide, you can better manage the overwhelming task of bringing a new product to market.

No matter what you’re developing, by putting in all the necessary preparation—through researching, planning, prototyping, sourcing, and costing—you can set yourself up for a successful final product.

Feature illustration by Pete Ryan
Infographic design by Brenda Wisniowski

Product development FAQ

What is the product development process?

The product development process refers to the step a business takes to bring a product to market. It can be a completely new product, renewing an old product, or introducing an existing product to a new market. It involves concept development and testing, prototyping, costing, and commercializing the product by marketing it online.

How can I come up with new product ideas?

  • Brainstorming
  • Customer reviews
  • Test marketing
  • Examining your competitors
  • Audience surveys
  • Social media
  • B2B wholesale marketplaces
  • Concept testing
  • Online consumer trend publications

What is the difference between product development and product management?

Product development refers to the conceptualization and creation of a new product of the product life cycle. It involves a specific product strategy to bring an idea to life. Product management is responsible for guiding all product teams toward creating a usable product customers will buy, as well as the product roadmap. Both the product management and product development departments work together to plan and build the product roadmap that will bring the product to market.

What are the 7 stages in the product development process?

  1. Idea generation
  2. Research
  3. Planning
  4. Prototyping
  5. Sourcing
  6. Costing
  7. Commercialization

What is a minimum viable product?

The minimum viable product (MVP) is a version of your product with just enough functionality for early customers to use. It helps validate a product concept early in your product development process. It also helps product managers get user feedback as fast as possible to iterate and make small, incremental improvements to the product.

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