Product Development Process: A Startup Guide

Entrepreneurs working on a tech product.

The process of creating a new product or service is something that every startup founder will go through in their journey to launch a startup. Simply put, product development is the process of bringing a new product to market from idea through commercialization.

However, how startups get there can vary as much as startups themselves. Startups approach product development in a number of different ways. Some startups stutter, step, and stagger, taking two steps forward and one step back. Others take a more structured approach, although the processes often look very different.

In this guide, we will discuss one of the structured approaches to the new product development (NPD) process.

What Is Product Development?

Product development is the process of bringing a new product to market from idea to commercialization. If you search for “product development process,” you will find it described in a multitude of ways. That’s because every company approaches new product development differently.

The product development process really begins with that first idea. And it comprises everything it takes to bring a product to market. This consists of identifying a need and coming up with a solution to solve it, researching and planning your new product, building a prototype and MVP, building your product, and promoting and selling your product. 

The product development process also never really stops — at least for startups that want to stay relevant in their industry. Successful companies use the new product development process over and over again both to create new products as well as to renew their existing products.

It is always a good idea to continue to collect feedback from your customers and users in order to improve and iterate on your product to better solve customer problems and meet their needs. 

New product development processes are usually divided into stages or steps where a company comes up with a new product idea and then researches, plans, prototypes, tests, produces it, and brings it to market.

Startup Product Development Steps

As you just learned, the new product development process is typically divided into stages or steps (although many of these may overlap). Although the new product development process can take many forms, here are the steps in the new product development process for startups:

  1. Ideation
  2. Research
  3. Planning
  4. Prototype
  5. Testing
  6. Building
  7. Commercialization

1. Ideation

The very first step of the new product development process is ideation, or the idea generation step. This is the stage of product development where you brainstorm ideas. While brainstorming, there are no bad ideas, but you will need to screen your ideas based on solving actual customer problems. 

There are several things you should consider when generating and screening ideas:

The Problem You Are Solving 

At this stage, you don’t need to know all of the details about what you are building just yet, but you should understand the problem your idea will solve and think about who experiences this problem, how frequently, and who your target audience may be.

Your Target Market 

You will need to pay particular attention to your target market. Your target market, or target audience, is the customer or users who experience this problem and you are building your new product for. Your target market is your most likely customers or users. You will need to pay attention to and listen to your target market if you ever hope to achieve product-market fit

Existing Solutions

You will also need to consider existing solutions:

  •  What are your target customers doing now to solve this problem or meet this need? 
  • What similar products exist? 
  • Who will your competitors be? 
  • What alternatives are there?

It’s okay if competitors exist. In fact, it’s probably a good thing as it validates that there is a market there in the first place. The important thing is understanding what your target market is doing now so you can develop your solution to provide them value that they aren’t finding in the market.

Competitive Advantage

What are your own or your startup’s strengths? In what areas do you have expertise? What are you good at? You need to evaluate your own, your startup’s, and your product’s strengths — as well as weaknesses, opportunities, and threats — early so you can identify where you might be able to build a competitive advantage. This is particularly important for startups that don’t have the resources for costly trial and error.

Startup Idea Resources

TRUiC provides a number of free resources and tools to help you come up with business ideas:

  • How to Come Up With Startup Ideas: TRUiC’s How to Come Up With Startup Ideas guide provides pointed tips on finding and evaluating startup ideas.
  • Startup Ideas Guides: TRUiC provides a number of additional guides on coming up with startup ideas as well as Popular Startup Ideas by Category.
  • Business Ideas Generator: TRUiC’s free business ideas generator allows you to explore a curated list of business ideas according to your interests and capabilities with just three easy steps.

2. Research

Once you have decided on a new product idea to pursue, the next step is to research and develop your idea into a product that people will want to buy. This is a key part of customer discovery and lean startup methodology and can be an effective way to develop and shape your idea in the early stages of new product development.

There are several avenues to explore in researching your idea, including your industry, market, customers, and competitor analysis.

The Industry

In order to develop a new product, you need to understand the industry. Ask yourself the following:

  • How new or old is the industry? 
  • How quickly is the industry growing?
  • What are the industry trends? 

When it comes down to it, you need to know if the industry has the potential to support your ambitions and aspirations.

Pay attention to recent innovations in the industry, the challenges startups in the industry are currently facing in developing new products, and how you could approach the problem from a different angle to set your products apart.

The Market

New products need a market. Your target market is the specific group of customers your product is intended for. No, it’s not everyone. Although every startup would love to sell their new product or service to everyone, your focus should be on your most likely and first customers. 

Performing a thorough analysis of your new product’s potential market makes it easier to determine the opportunities (or lack thereof) that exist, to design your products and services to meet those needs in the marketplace, and to plan more effective sales and marketing strategies in order to reach your most likely customers.

Customer Development

Once you know who your ideal customers are, you should go straight to the source for your next stage of research. Find your ideal customers and reach out to them. Ask them questions. Survey them. Gather feedback. Determine what they really need, what their biggest pain points are, and how you can develop your new product to solve real customer problems.

With this information, you can evolve your features, functions, and messaging to align with your target market’s most important wants and needs. 

Competitive Landscape

In addition, startups should be aware of their industry’s level of competition. When you have a clear picture of the competition, you can better determine your new product’s unique value proposition (UVP) and focus your efforts on developing a business strategy that will set your new product apart.

Identify your competition and learn as much as you can about them. Visit their website, sign up for their mailing list, pay attention to their marketing, and learn everything you can from them. Think about how they attract customers, their strengths and shortcomings, target markets, business strategies, and the potential threat they pose to your startup’s success.

You may also wish to conduct a SWOT analysis. This is an analysis of your new product’s (or startup’s) strengths, weaknesses, opportunities, and threats. To conduct a SWOT analysis, you will need to assess factors both inside and outside your venture. A SWOT analysis can help you understand your industry and market, your venture, and the strategies that you should pursue.

3. Planning

With research in hand, it is time to start planning your new product. This is the step where you design your new product or service (and your startup) around solving your customers’ problems and needs.

Planning involves not just designing a new product or service but also figuring out what you will need to do in order to bring it to life and sell it. 

Designing a New Product 

First, you will need to use what you learned about your industry, market, customers, and competitors to design your new product to solve customer problems and meet customer needs. When designing your new product, think about your customers. 

  • What problem are you really solving? 
  • What are their pain points?
  • How will you provide them value over other alternatives?

Planning for Building a New Product 

Next, you will need to plan on how you will build your product. For example, if you’re creating a physical product, you will need to source the appropriate materials or find manufacturing partners to help with production. If you are creating a digital product, planning might mean creating a product roadmap. When planning on building your new product, consider:

  • Who will build your product (and at what cost)?
  • How will your product be built?
  • How will you protect your intellectual property?

Planning for Selling a New Product 

Planning also involves planning to sell a new product. This includes coming up with a marketing strategy that will help you effectively market your new product when it is completed and setting pricing models that make sense for your product and that your customers are willing to pay.

  • Where will you find your customers?
  • Where will you market to them?
  • Where will you sell to them?

Once you have done some planning, it’s time to begin building a prototype and eventually a minimum viable product (MVP).

Intellectual Property Protection

Before moving on to prototyping, it is important to think about protecting your startup’s intellectual property (IP). Protecting your startup’s IP means that you need to obtain the proper patents, copyrights, and trademarks to ensure your intellectual property is protected. By registering ownership of your intellectual property, you reduce the risk of competitors copying your ideas, designs, or concepts that are protected.

One of the most common forms of IP protection in product development are patents. Patents are a type of intellectual property that grant your startup the exclusive rights to use, manufacture, license, or sell your idea or invention. They provide important protections and often add tangible value to a company.

Patent protection lasts for up to 20 years, depending on the type of patent that is issued. Utility patents, the most common, and plant patents come with the longest life — 20 years. 

Recommended: To learn more about intellectual property protection and whether your startup should file for a patent, read our Should Your Startup File for a Patent guide.

4. Prototype

After you have a plan, the next step of the product development process is to prototype your product. Prototyping is when you create a sample or mockup of your idea to learn more and gather additional feedback.

This step of the new product development process usually results in several iterations. Early-stage prototypes might be as simple as drawing a storyboard, a product roadmap, or a plastic model of a product. Later stage prototypes may be complex and even a near working model of an MVP.

During the prototyping step, you will need to evaluate your product’s feasibility:

  • Can the product you want to create be created at all? 
  • Is it technologically possible? 
  • Can you create and sell it at a price point that customers will pay? 
  • Do you have the resources, or do you have the ability to attain the resources you will need?

These are the questions you try to answer through the prototyping (and testing) steps as you work toward a minimum viable product.

A minimum viable product (MVP) is really the “final” prototype. An MVP is a product or service that has just enough features to attract some early adopters or customers for the purpose of validating a product idea as quickly and easily as possible. Minimum viable products are just that, minimal. They have minimal functionality, but they provide the opportunity to see if customers are actually interested in using or purchasing a product or service. Functionality and features can be added before launching full scale, but an MVP is a minimal usable (and maybe sellable) product.

Even once you “finalize” an MVP, your new product may still go through numerous iterations before moving on to testing, production, and commercialization.

5. Testing

Testing is an integral part of the product development process. Testing should begin while you are developing late-stage prototypes and carry on through the MVP and the rest of the product development process.

You should be testing at each stage of the process. At each stage, you will want to ensure two things: 

  1. Your product will work how you planned
  2. Your product will actually solve your customer’s problems and meet their needs 

To answer both questions, you will want to get your prototype/MVP/product in front of your target audience, test that it works as intended, and solicit feedback from your target customers. 

The feedback you receive from your testing and your target market may require you to go back to the drawing board and iterate on your solution.

Often new product testing, depending on whether you are creating a physical product or a digital, goes through numerous iterations from prototype to MVP to alpha testing, to beta testing, soliciting feeding from your users and target audience along the way. 

Once you believe that your new product is ready, it’s time to begin building your product.

6. Building

The next step of the product development process is actually building your product. If you are creating a physical product, this means beginning to produce your product. If you are building a digital product, it means building your beta release or first release and (eventually) offering your product for use or sale. 

In your planning process, you should have mapped out your build or production methods and plans. 

Prior to offering your product to your customers or users, you may want to ensure the quality or test it one more time. This may include testing its functionality, value proposition, marketing, pricing, etc.

Once your initial product is built, you’re ready to launch it on the market.

7. Commercialization

The “final” step of new product development is commercialization. This is the stage where you bring your product to market. You will begin “producing” or offering your new product while also focusing on marketing your product, selling your product, and improving your product.

You will need to engage in marketing to let your target audience know about your new product. The better you know your audience, the easier it will be to find and market to them.

You will also need to provide a place for them to buy it. If you have a physical product, you will need to determine whether you will sell it in retail stores or if you will only offer it for sale online. If you are making a digital product, you will also need to determine where and how you sell your new product in order to carry out these strategies effectively.

You should also be listening to your customers throughout this process. It’s important to remember that the journey doesn’t end when you launch your new product. 

You may need to return to the product development process repeatedly to make improvements to and iterate your product based on customer feedback, changes in the customer needs and preferences, and what the market demands.

Startup Product Development Best Practices

Although successful startups have developed startups in a myriad of ways, there are a number of strategies that successful products share.

  1. Follow a process or framework. Don’t approach product development in the dark. You don’t need to develop your own process when several already exist (although feel free to adapt them to best fit your startup’s needs).
  2. Start with your customer’s problems and needs as your primary focus. If you are not focusing on solving your customer’s problems and needs, then your product is not very likely to find product-market fit
  3. Listen to your customers. Through your market research, customer research, and testing, you should be looking for opportunities to collect feedback from your target market, users, and customers at every chance you get.
  4. Validate your product as early as possible. While you are collecting feedback, you should be looking to validate your product idea. Are you solving a real need? Will your target audience be willing to pay?
  5. Be willing to continually make adjustments based on what your users and customers are telling you.
  6. Product development is a cross-functional effort. In many cases, the entire startup team is involved in product development in one way or another. Since product development is a cross-functional effort, you should be sharing knowledge and communicating across your startup regularly.
  7. Product development is a continuous process. It does not end when you bring a product to market. Rather, this is the first real test of your product, and the iterative cycle of product development can be applied time and time again to listen to your customers and make iterations to better meet their needs.
  8. Seek out advice. When you are unsure, seek out advice, whether in your field or in the startup community.

Frequently Asked Questions

What is product development?

Product development is the process of bringing a new product to market from idea to commercialization. The product development process really begins with that first idea and comprises everything it takes to bring a product to market. This consists of identifying a need and coming up with a solution to solve it, researching and planning your new product, building a prototype and MVP, building your product, and promoting and selling your product. 

How do you develop a startup product?

Startup products are developed many different ways. Many startup products are developed following a process resembling one of the many new product development processes. This involves research, planning, prototyping, testing, production, and commercialization.

What are the stages of the product development process for startups?

The seven steps, or stages, of the startup product development process are:

  1. Ideation
  2. Research
  3. Planning
  4. Prototype
  5. Testing
  6. Building
  7. Commercialization

What is product development strategy?

Product development strategy refers to the entire strategy of bringing a product to market. Product development strategy may include introducing a new product into a market or by introducing an existing product into a new market through the process of research, planning, prototyping, testing, building, selling, and distributing.

Is new product development different from a lean startup?

There is no one new product development strategy. New product development strategy is any strategy for bringing a new product to market. The Lean Startup Method is just one form of new product development strategy.

What is a great product development strategy?

A great product development strategy is one that brings successful products to market. More often than not, this involves following a structured process such as new product development, the stage-gate process, lean startup, the IDEO process, among others. Great product development strategy also works to find product-market fit. Product-market fit refers to the fit between a product, its desire by the market, and its ability to satisfy customers’ needs.