For most seasoned business owners and aspiring entrepreneurs, the product development process often carries a mystical aura.
And when you hear the origin stories of other great ecommerce businesses, it's often clear the journey to a finished product rarely resembles a straight line. For example, when Tina Roth-Eisenberg’s daughter brought home some semi-permanent tattoos she felt were lacking, she mobilized her community of fellow designers to create Tattly.
David Barnett, on the other hand, had to teach himself how to use 3D design software so he could prototype PopSockets, the now-popular phone accessory.
On their own, these inspiring stories don’t provide an end-to-end blueprint for product development, but the similarities they share reveal some of the steps founders consistently take on the road to starting a business and shipping a finished product.
Effective product development requires many things: market research, product management, and testing your idea to name a few.
In this guide we'll cover everything you need to know about the product development process as well as some tactics to improve the development process to help you bring your vision to life!
Table of Contents
What is product development?
Product development refers to the complete process of taking a product to market. It also covers renewing an existing product and introducing an old product to a new market. This includes identifying market needs, conceptualizing the product, building the product roadmap, launching the product, and collecting feedback.
New product development (NPD) is a core part of product design. The process doesn’t end until the product life cycle is over. You can continue to collect user feedback and iterate on new versions by enhancing or adding new features.
There’s no one role that does product development. In 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 plays an essential part in the process to define, design, build, test, and deliver the product. As you'll see in this guide, the complexities of the product development process makes product management all that more important.
The new-product-development process in 7 steps
New product development (NPD) is the process of bringing an original product idea to market. NPD can benefit greatly from agile software development principles as well.
Although the product development process differs by industry, it can essentially be broken down into seven stages: ideation, research, planning, prototyping, sourcing, costing, and commercialization.
Use the following development framework to bring your own product idea to market.
1. Idea generation
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 upon a product already in the wild.
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.
If you’re still looking for your aha moment, we also put together a list of sources for coming up with your own product ideas, from analyzing online marketplaces and product descriptions for inspiration to reinventing historical trends.
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.
Get How To Find A Product To Sell Online: The Definitive Guide PDF delivered right to your inbox.
Almost there: please enter your email below to gain instant access.
2. Market Research
With your product idea in mind, you may feel inclined to leapfrog ahead to production, but that can become a misstep if you fail to validate your idea first.
Product validation ensures you’re creating a product people will pay for and that 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:
- Sharing your idea with your target market on online forums etc.
- 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 to get initial feedback.
- Researching market demand using Google Trends
- Launching a product launch roadmap to gauge interest via email opt-ins or pre-orders
- Asking for initial feedback on forums like Reddit
However you decide to go about validating your idea, it is important to get feedback from a substantial and unbiased audience as to whether they would buy your product. Be wary of overvaluing feedback from people who “definitely would buy” if you were to create your theoretical product—until money changes hands, you can’t count someone as a customer. Asking advice from your family and friends (unless they have prior experience) is also something to avoid.
You may want to run a feasibility study or an assessment of whether your proposed idea is worth investing in—or not.
Product validation ensures you’re creating a product people will pay for.
Validation research will also inevitably 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.
Visiting your competitors’ website and signing up for their email list will allow you to understand how they attract customers and make sales. Asking your own potential customers what they like or dislike about your competitors will also be important in defining your own competitive advantage.
The information compiled from doing product validation and market research will allow you to gauge the demand for your product and also the level of competition that exists before you start planning. Research is a critical part of product development so definitely don't neglect it!
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.
When you eventually approach manufacturers or start looking for materials, if you don’t have a concrete idea of your product’s design and how it will function, it’s easy to get lost in the subsequent steps.
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.
You don’t need a professional quality drawing since you won’t be submitting it to a manufacturer at this stage. However, if you are not confident that you can produce a legible diagram that will make sense of your product, it is easy to find illustrators for hire on Dribbble, UpWork, or Minty.
Try to use your diagram to create a list of the different components or materials you will need in order to bring the product to life. The list does not need to be inclusive of all potential components, but it should allow you to begin planning what you will need in order to create the product.
For example, a drawing of a purse design could be accompanied by this list:
- Zippers (large and small);
- Silver clasps;
- Leather straps;
- Protection pouch;
- Embossed label;
- Interior wallet.
Along with the components, you should also begin to consider the retail price or category your product will fall into. Will the product be an everyday item or for special occasions? Will it use premium materials or be environmentally friendly? These are all questions to consider in the planning phase since they will help guide you through not only your product development process but also your brand positioning and marketing strategy.
The packaging, labels, and overall quality of your materials should be considered as well before you continue to the sourcing and costing stages. These will have an effect on how you market your product to your target customer, so it’s important to take these aspects of your product into consideration during the planning phase too. Again, having a clear product roadmap can help ensure you're moving forward towards your goal os releasing your product into the world.
The goal of the prototyping phase during product development is to create a finished product to use as a sample for mass production.
It’s unlikely you will get to your finished product in a single attempt—prototyping usually involves experimenting with several versions of your product, slowly eliminating options and making improvements until you feel satisfied with a final sample. Minimum viable product is a great standard to hold yourself too.
Prototyping also differs significantly depending on the type of product you are developing. The least expensive and simplest cases are products you can prototype yourself, such as food recipes and some cosmetic products. This do-it-yourself prototyping can also extend to fashion, pottery, design, and other verticals, if you are lucky enough to be trained in these disciplines.
However, more often than not, entrepreneurs will work with a third party to prototype their product. In the fashion and apparel industry, this usually involves working with a local seamstress (for clothing and accessories), cobbler (for shoes), or pattern maker (for clothing). These services usually can be found online by Googling local services in the industry.
Most large cities also have art, design, or fashion schools where students are trained in these techniques. Administrators from these university or college programs can usually grant you access to their internal job board, where you can create a request 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. Artists or engineers who are trained in computer-aided design and drafting (CAD) software can be contracted to do this using UpWork or Freelancer. There are also user-friendly online tools such as SketchUp, Tinkercad, and Vectary for founders who want to learn how to create 3D models for themselves.
To get a 3D design turned into a physical model, makers used to have to get molds made for each part. Molds are typically expensive and involve setup fees for things like tools and dies that are used to cut and shape pieces of plastic and other hard materials.
Luckily, with the innovation of 3D printing, designs can be turned into physical samples at a much lower cost with a quicker turnaround time.
Chris Little, the founder of Wintersmiths, prototyped his line of barware using 3D Systems On Demand Manufacturing. Little explains that he was able to do so on a budget and within a few days’ time. Alex Commons of Bulat Kitchen recommends Hubs, which he used to prototype a knife, paying around $30 per 3D-printed model.
You’ll also want to start testing a minimum viable product (MVP) at this stage. The 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.
Startups release the MVP to early customers then run experiments to gauge interest, test price sensitivity and messaging, and more. It begins the feedback process to bring ideas and suggestions based on customer needs. This allows you to create iterations of the product and build something more valuable for your target market.
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. During this stage of product development, project management is crucial.
While this phase will mainly involve finding manufacturers or suppliers, you may also factor storage, shipping, and warehousing into your choice.
In Shoe Dog, a memoir by Nike founder Phil Knight, the importance of diversifying your supply chain is a theme emphasized throughout the story. Finding multiple suppliers for the different materials you will need, as well as different potential manufacturers, will allow you to compare costs. It also has an added benefit of creating a backup option if one of your suppliers or manufacturers doesn’t work out. Sourcing several options is an important part of safeguarding your business for the long term.
During product development, each journey to a finished product is different.
When looking for suppliers, there are plenty of resources both online and in person. While it may seem old fashioned, many business owners choose to attend trade shows dedicated to sourcing. Trade shows like Magic in Las Vegas provide the opportunity to meet hundreds of vendors at once—to see, touch, and discuss materials and build a personal relationship with suppliers, which can be valuable when it comes time to negotiate prices.
During the sourcing phase, you will inevitably come across the decision of whether to produce your product locally or overseas. It is a good idea to compare the two options, as they each have their own advantages and disadvantages.
Buying from Alibaba is one way to do so, as it's the most commonly used sourcing platform for overseas production. Alibaba is a marketplace for Chinese suppliers and factories, where you can browse listings for finished goods or raw materials. A popular way of using Alibaba to find a manufacturer is to look for listings with similar products to your own and then contact the factory to see if they can produce your specific design.
After research, planning, prototyping, and sourcing is done, you should 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 thus far and add up what your cost of goods sold (COGS) will be so you can determine a retail price and gross margin.
Begin by creating a spreadsheet with each additional cost broken out as a separate line item. This should include all of your raw materials, factory setup costs, manufacturing costs, and shipping costs. It is important to factor in shipping, import fees, and any duties you will need to pay in order to get your final product into the customer’s hands, as these fees can have a significant impact on your COGS, depending on where you are producing the product.
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 and subtract the COGS from that price to get your potential gross margin, or profit, on each unit sold.
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
- Enable Instagram Shopping
- Run Chat Marketing campaigns
- Get reviews from early customers
Product development examples
The product development cycle will naturally vary by industry, so let’s take a brief look at what you might have to consider across three of the largest and most well-established industries: fashion and apparel; beauty and cosmetics; and food and beverage.
These three industries have relatively straightforward paths to product development, thanks to the many well-documented case studies that can be used for inspiration.
Fashion and apparel
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. Once the size set is finalized, it is put into production.
Rather than make the product, some fashion and apparel businesses choose print on demand to produce their clothing in the beginning. Print-on-demand allows you to upload designs to a third-party app that connects your store with a warehouse and screen-printing facility. When an order is placed online, your design is printed on an existing stock of t-shirts, sweaters, or various other items on offer, creating a finished product without the need to design the entire garment.
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.
Beauty and cosmetics
The beauty and cosmetics industry includes a wide range of products that is constantly expanding, due to wellness and self-care trends. From makeup to bath products to skincare, many beauty brands are focusing on all-natural ingredients and sustainability, which makes it easier to prototype a product on your own using everyday ingredients.
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.
Food and beverage
Food and beverage products are among the easiest to start developing at a low cost and from the comfort of your own 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 kitchens are usually set up with ovens and cooking equipment to accommodate large batches, but if you are considering mass production and packaging, a co-packer or co-manufacturer might be a better option. 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.
Free Video Series: Ecommerce Inspiration
Feeling uninspired? Watch some of the world's most successful entrepreneurs share their best advice for new business owners.
Get our Ecommerce Inspiration video series delivered right to your inbox.
Almost there: please enter your email below to gain instant access.
Winning your at your own product development process
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. From product management, to prototyping, and marketing your product to the world, there's a lot of moving parts!
By following these steps as you undergo your own product development process, you can break down the overwhelming task of bringing a new product to market into more digestible phases.
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.
Illustration by Pete Ryan
Design by Brenda Wisniowski
Ready to create your business? Start your free 14-day trial of Shopify—no credit card required.
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?
- 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. These two departments work together to plan and build the product roadmap that’ll bring the product to market.
What are the 7 stages in the product development process?
- Idea generation