SME Resources > Products & Services > New product development

New product development

New products/services are a vital part of your competitive growth strategy

What is new product development?

It is not about sitting in a dark room waiting for that ‘eureka’ moment on discovering something completely new or different that everyone wants. It is about introducing a new menu item, theme, combination, additional service, or adding a fresh twist to an existing product or service.

A new product could be

  • The Bed & Breakfast premises offering an afternoon tea package on arrival for guests
  • The unique triple decker sandwich combination to extend your lunch offer
  • The seasonal cocktail menu
  • A taxi offering a city tour guide package

Why do it?

Well planned and executed ongoing product development can help you to:

Sell more to existing customers

This makes the most of your existing customer relationships. Remember it is easier and less costly to sell more to your existing customers than it is to find new customers.

Retain the loyalty of your customer base by keeping your offer fresh

Every day customers drift away from our businesses because of product offer fatigue. A fresh idea, a slightly different approach or a new combination keeps the relationship interesting for them – so they keep coming back!

Spread fixed costs like premises or equipment across a range of products/services adding extra margin to your business

For example starting up an outside catering provision to operate from your café/restaurant.

Diversify the products you offer so you’re less reliant on a certain customer segment

For example adding milkshakes to attract school kids during your quieter afternoon periods, in a business known locally for coffee and light lunches for the local office population.

Tip

  • Remember - statistics tell us that you might need 70 ideas to generate one really good one

How to go about it

1. Set up a project team

It is valuable to put together a ‘new product development team'. Keep it small but if possible get a good mix of people across the business (maybe one each from the production, customer facing, administration and sales teams).

If you are the business then you are the team! That is no excuse to avoid new product development. It will be all about you having the discipline to do it.

2. Generate your new product ideas

What might your customers like? You might want to run a short customer forum session or carry out a short customer survey.

What might be new or different out there? Use the internet, subscribe to and read journals, watch the news and documentaries, understand what is new elsewhere (get to a city, explore different businesses and record anything new or fresh that you find).

Get a ‘blue sky’ session facilitated for your project team – these can generate lots of brilliant yet simple to introduce ideas. Run a brainstorming session - learn how here.

3. Draw up a simple project plan and timeline

The plan will cover the who, what, when and how that needs to be carried to develop and test your new product, and to get it commercially ready for market, including the costing, pricing, packaging, presentation and messaging.

4. Develop the product

During this stage it is a great idea to involve potential suppliers who might assist in the development of a test product or prototype.

Consider how the product will look, feel, taste, sound and be perceived by the customer.

Pick a small control audience to test and feedback on the product/service. This could be next week's diners who are asked to taste and feedback on a new dish, or an invited group of local professionals who are asked to try out the new city guided tour.

5. Get the product ready for market

You need to agree how your product will look/feel/sound  - your project group will discuss and trial different ways, building in the tweaks noted as important during the development stage. From this you have a standard specification that you can train to.

The final costs of production, margin and selling price will be established and agreed, ensuring that the new product is a viable addition for your business. You now have a financial model for the product that is in line with your financial goals.

Any process around the production, storage, presentation, selling of the product/service will be defined and agreed. This is about building the new product into the operation of your business.

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Tools and assets

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Mind mapping software

Software from Mind Meister

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Online gantt chart software

Use the gantt chart on smartsheet.com to plan your project

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Gantt chart in excel

Create a gantt chart in excel for any project