What is product development? WTF Marketing Jargon Busting 022
What is product development? WTF Marketing Jargon Busting 022
Hello there, my name is Martin Henley. This is the What the series and in Episode Number 22 we’re answering the question what is product development?
What are we going to cover in their product development definition?
In addressing the question, what is product development? There are seven things we’ll be sharing with you. We are, of course, going to answer the question, what is product development? We’ll answer the question, why is product development important? What product development has to do with marketing? Who should be thinking about product development? How you do product development? What are the different types of product? and when to do your product development, let’s get this started Sunny.
Did we manage to find a definition of product development?
As always, when we come to define this marketing jargon, or understand this marketing jargon, we are looking for a definition, we found this one right at the top of Google at productplan.com. What they tell us is that “product development typically refers to all of the stages involved in bringing a product from concept or idea through market release and beyond. In other words, product development incorporates a product’s entire journey.”
Now I’m really happy with this product development definition, which is why I’m sharing it with you. The only issue that I might have is where they’re talking about bringing a product from concept or idea through to market release and beyond. It absolutely makes perfect sense that you are concerned about your product development, beyond the time that it’s with your customers. What I’m going to demonstrate for you in this video, is that actually product development should concern your customers 100% and it should absolutely concern your sales and marketing people.
Why is product development important?
Which brings us to the question, why is product development important? Well, let me tell you that product development is critically important. In fact, I would go so far as to say that this is the only point of failure in your sales and marketing. You can get your pricing wrong, you can get your placement wrong, you can get your messaging wrong, all of those things can be fixed. If you have the wrong product or the wrong service, then it is effectively over for your marketing, there is nothing you can do to remedy this. So you can see that developing the right products is critical to your business success to your marketing success, and to your sales success. Now the second thing that you want to consider here is about profitability. In the early 2000s, there was a group called Business Link in the UK, who conducted a study that demonstrated that it is 17 times more cost effective to develop new products for your existing customers than it is to find and win new customers.
Let me show you how that works. What happens in your business is you acquire customers, and we established that there is a cost of customer acquisition, at length in video number 12. Once you have the customer, then you have access to the customer. So what should happen is you should go to the customer, and you should get feedback. They will tell you if they are happy or if they are sad. I would hope that they would be happy with what it is that you’re doing and what’s making them sad might be challenges others challenges. What you do then is you develop products to meet specifically, those new challenges of your customers. What happens then, is your customer lifetime value goes up because now you are selling more than one product to this customer. What happens then is the cost of customer acquisition goes away, you might remember that we said that could be as much as 30% of your turnover, and what you’re left with is a virtuous cycle. You have the customer, you speak to the customer, they give you feedback. You know, if they’re happy with you, you know what they’re unhappy about, you develop solutions to meet those challenges and your customer lifetime value continues to go up. Your customers continue to be happy because they talk to you about their challenges, and you meet those challenges. So you can see that if your cost of customer acquisition is going away, and that might be as much as 33% of your turnover and your lifetime customer value is going up. That is going to have a hugely positive effect on your profitability.
What does product development have to do with marketing?
Which brings us then Question number three, which is the question, What on earth does product development have to do with sales or marketing?
The reason I’m addressing this question is because, in my experience, the answer is nothing like enough. In the businesses that I’ve worked with, and the businesses that I’ve worked for, what typically happens is that the boffins sit in the corner, and they conceive and construct these products and services and then those products and are foisted on the marketing people, and the salespeople who then have to go and foist these products and services on your customers or the market.
Now, for me, that clearly isn’t a good situation. If we come back to our pictures, what we will see is that the customer was acquired, the customer was acquired most likely by a salesperson so it is the salesperson that has this relationship with the customer and the marketing person who should have an insight into the actual market. So you can see that this virtuous cycle does away with 33% of your costs and increases your lifetime value, by involving your customer in the product development process. Now, the way that should work is through those customer relationships and the people that you employ to have those customer relationships should be your marketing people and your sales people. If this goes on for a long period of time, then customer services could also be contributing to this virtuous cycle.
But the point is here is that it should be your customers; the people who already know you, have already bought from you, already have good experience of you delivering solutions to them, it should be those people that are driving your product development. And they will do that through your sales people, through your marketing people and through your customer services people.
Who should be thinking about product development?
Who should be thinking about product development, and the question you’re asking is do I need to be thinking about product development?
Well, given what I’ve told you about how important this is, I would say that anyone who is looking to run a successful and profitable business should be investing in product development. This should be something that goes on in your business continuously, you should be continuously speaking to your customers, finding out what makes them happy, finding out where their challenges are, and developing solutions to meet those challenges. So the answer, who should be concerned about product development is anyone who is interested in running a profitable and successful business.
How do you do product development?
Question number five, how do you do product development? Well, let me tell you there is a whole industry out there concerned with consulting and directing people on product development. I’ve looked at this for the purpose of research on this video and the reason I’m making this video is because for me, there isn’t enough customer input, there isn’t enough marketing input and there isn’t enough sales input in those processes. I am going to borrow the steps of their processes to demonstrate how sales or marketing people could be adding value at every step of the way.
Typically, what happens in a product development cycle is that it starts with problem identification. So here is an example of a problem. This clearly, is a resource heavy way of moving a poor pig on a tray. What I’m saying here is that your marketing people if they are plugged into the market, if they’re doing their keyword research, if they’re following your competitors, they are much better placed to identify these problems than the boffins who are sitting in the corner, dreaming up issues that they are creating solutions for. So step one is problem identification.
Step two, is market research. So what you’re looking for here is your qualitative, you should be speaking to people, and your quantitative trying to work out how many people have this problem. Now, absolutely this is a job for your marketing people. They should be doing their competitor analysis, they should be doing their market analysis, they should be doing their keyword research. What you’re interested to know is not that we are developing this solution for one customer, but that if we develop this solution for this customer, then there is a strong likelihood that we are going to find other people who are facing this challenge, who will be prepared to spend money to get this challenge resolved.
Step three is about feasibility. Is this solution actually going to work? And this is something absolutely that keeps the boffins busy and they are only interested in if it is going to work, or how it might fail, so what I’m interested in is the feasibility of actually selling this product or service. So not only is it going to work for the customer, is it going to deliver value for the customer? But are we actually going to be able to sell it. So we can look, for example, at some search engine optimisation, and see how many searches there are every month, how many people are competing for those searches, and the likelihood of us being able to rank for that service. Or we might look for example, at Pay Per Click and see how much it’s going to cost us for somebody to click through onto our page and give us an indication of what the cost of customer acquisition might be. So you can see that there are two levels to this feasibility, the first absolutely is it going to work. Before I even did that, I would want to know, can we feasibly sell this thing profitably? So feasibility for me is empowered hugely with some input from your marketing, and your sales people.
Step four is research and development. So okay, so the boffins can have this one to themselves, they are perfectly happy to go away and research and develop the product. That’s not to say that there shouldn’t be some competitor analysis that goes on here, that you shouldn’t get hold of your competitors products, or you shouldn’t see what your competitors are developing. So that will help this enormously for research and development. We’ll leave that to the boffins, they can get on with that.
Step number five is prototyping. Now we’re going to talk very shortly about all the different types of products that now exist in 2021. So prototyping used to be about making a small one, and testing that it actually works. What I’d be interested to do is be a little bit more imaginative in my prototypes, maybe put some sense of the product out into the market, and see how people actually engage with that.
Step six, typically, in our product development, is launching the new product or service onto the market. Now, absolutely, this is where you need your sales and your marketing people to have some enthusiasm for this product. If you have involved them throughout the product development process, starting with problem identification, including the market research, including the market feasibility, then what will happen is that they will go into the market with enthusiasm for this product, because there is something of them in this product.
What I hope to have demonstrated no matter how many steps you might think to the product development cycle, your sales and marketing people could add value at every step. And it’s not the case, where I’ve been environments, in environments where you go to the customer, and they say if the product did this thing, or it did that thing, and I’ve gone back with that feedback to the business and I’ve been told – sell the product you’ve been given. What I’m telling you is that if your customers, through your sales people through your marketing people through your customer services people have an input into the products that you develop, those products will be more successful.
What are the different types of product?
So here we are in 2021 and what’s happened is that computers and the internet have revolutionised the way we think about products and services. In the old days before computers, there were literally physical products, and there were services. So if you wanted to develop a physical product, you would have to go through those six steps of product development, without the market insight, without the customer insight and you would typically have to hope that the products or services that you were developing, were actually going to find a market.
Since computers now obviously, we also have software type products. The internet, of course, has revolutionised this entirely. So now it doesn’t matter what you sell, you don’t have to go through a development process, you could be selling via drop shipping on Amazon, you could sell whatever it is that you want to sell. If you want to sell the most technologically advanced cameras, then you can do that using affiliates and using services like Amazon. The other thing that’s happened, obviously, is content and this is where I’m talking about prototyping. So what I’m talking about is that you can develop content around this product or service, and you can actually test the market before you are involved.
So literally you can develop content around the solution, that might be blogs, it might be videos, it could be all manner of things. What will happen then, is that that content will get engagements, or likes, or comments and what will happen then is that that will indicate the likelihood of you securing and winning customers. Before you go to launch before you actually spend too much time on your boffins on developing the solution, you can check step number three, the feasibility of this, is the market actually interested? We’ve done with our qualitative research, we’ve spoken to people, we’ve done our quantitative research, we’ve counted the number of people who might be having this issue. Now, what I’m saying is, we can test this again, by putting content out into the market, and seeing if people react to that content, and how they react to that content. For example, content now is a product all on its own; maybe the goal of your marketing should be if your marketing can be funding itself, if you can produce content around these new products and services, that will actually cover your marketing costs, and go some way to covering your cost of customer acquisition. What that will definitely do is cover the costs of failure. So then you know, some customers have this issue, you know, the market is open to a solution to this issue, that will go some way to assuring the success of the products that you develop.
When should you be doing product development?
Which brings us to question number seven in this mammoth video on product development. The question is, when should you be doing product development and if you’ve got this far, you’ve heard the answer over and over and over again. Product development should be a continuous in your business, you should be finding and winning customers, you should be speaking to those customers about what their issues are, you should be developing solutions that meet those customers’ challenges, you should be selling them to those customers, and on, and on, and on, forever. This is how you guarantee the success of the products that you develop. This is how you guarantee the profitability and the success of your business. The key to developing products and services that will sell profitably is to engage your customers in that process.
What have we covered in this product development definition?
If you are still with us, well done, you know exactly what product development is; you know why product development is important; you know what this has to do with marketing, typically not enough, it should have more to do with marketing; you know, who needs to be thinking about product development, it’s always going to be you; you know how to do product development and how to include your sales and marketing people; you know what the different types of products are, and you know when to do your product development.
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We are done here, sonny.
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