You have new ideas, you are thinking about innovative products, and you want to produce them and bring them to market. But how do you know if your new product is attractive to consumers? After all, you have to take into account initial costs, production costs, distribution costs, sales opportunities, market size, and profit margin. This is a common dilemma for creative entrepreneurs.
The key is prioritization. This is a method of determining which aspects are attractive to consumers and, consequently, assessing how the product portfolio should be composed. There are many reasons why these priorities must be established. Some of these are:
1st step
Tuning
There is a significant difference between developing new simple product ideas and complex product ideas. It is essential to align your new product process with the types of new products being developed.
Limits
Realize that you have limited time, people, resources, and finances.
Technology level
Is your new product idea sufficiently adapted to the available functional technologies so that your new product is operational?
New on the market
Naturally, you want to be the first to market with your new product and stay ahead of the competition. That is a good starting point, because it is better to lead the market than to follow.
Portfolio
Ensure that the portfolio for the development of the new product is aligned with the business strategy and goals.
2e stap
The primary focus is on assessing the strategic and technical difficulties in developing your new product idea. There are four major groups of new product types:
Derivative products (derivatives)
Think of existing production lines where products undergo a modification. The advantage is that it is less risky and easy to execute. Consider, for example, adjustments to color, size, smell, taste, etc.
Expansion of production line
Expand the existing production line for the new product idea, without affecting the current production line.
New based on old product
The new product is a modification of an existing product. Although that new product has its own production line and sales channel, it complements the existing production of the same type of product. Consider, for example, a corded drill and a battery-powered drill.
New product, new production line
This is the riskiest approach. The appeal must be greatest here. Consumers can only spend their money once. Therefore, you must carefully assess its attractiveness to the company in advance. A consistent qualitative ranking assessment will work well at this stage. Please take into account five key attractiveness criteria:
3rd step
Design and production capabilities
- Can the design costs and production costs be fully factored into the sales price?
- Are the R&D and production departments familiar with the technologies involved?
- Do you have to manufacture the product or source it elsewhere?
Consumer interest
- Is the new product unique?
- Can consumers see easily demonstrable results?
Finances
- How high are the initial costs?
- What potential is there for the net margin?
- How high are the production costs?
- How big is the marketing budget?
- Can the selling price be kept attractive for the consumer?
Risk
- How long does the development phase last?
- What are the results of the qualitative and quantitative market research?
- Does a patent application apply?
Market size
- How big is the market?
- To what extent is the product sustainable?
- What is the growth perspective?
Competition
- Is there competition?
- How fierce is the competition?
4th step
These attractiveness criteria must be weighted, combined, and evaluated. You then apply product ranking. Evaluate each item and rank them from high to low based on these attractiveness scores. Do ensure, however, that your evaluation tool fits within your business model.
