Alibaba, China’s e-commerce giant, is synonymous with delivering affordable products with little uniqueness, leading to a market saturated with products that offer little innovation and low margins.
Offering low product costs might be tempting, but it may not be the best choice when brands are operating in a fast-paced, dynamic consumer market and consumer behavior is steadily shifting towards personalization and customization.
Stay ahead of the pack with product evolution
To stay ahead of the fray, many consumer goods companies know they need to do things differently. One of the best ways is by creating new products. Here are a few reasons why:
- Allows you to differentiate yourself from the competition
- Only you can sell that product.
- Higher margins
- You can charge a premium because your product is unique to your brand.
- Keeps your company and brand alive
- Launching new products is the lifeblood of any consumer goods company.
- Avoid succumbing to your competitors by delivering upgraded or better performance products that can compete more effectively in the market.
- Market opportunity, value, and customer loyalty
- New products provide consumer goods companies the opportunity to offer more value to new or existing customers while opening new market opportunities.
- Developing new product lines help increase customer loyalty. Adding new products or iterations of existing products allows companies to sell more to existing customers.
Successful product development is a multi-step process that requires a product development plan and expertise ranging from market experts to engineers and manufacturing professionals.
6 major steps are required to bring your product idea to life
Step 1: Product design and engineering
Product engineering is the first and most critical step in the development process. A product will only be as good as it is functional. This step sets the course for the following phases. Contracting the work to a product design company, industrial engineer or contract manufacturer is suggested to stay lean. The critical elements of your search should include:
- Have they designed similar products before?
- Is their lead time acceptable?
- Can they make the prototype or does a different company do that?
- Are they reasonably priced?
Step 2: Proof of concept
Proof of Concept (PoC) checks the functional aspects of your product and ensures your product works as intended. Testing will be performed to emulate the product’s function in the real world.
Step 3: Product design and renderings
Renderings can be made before engineering to give a general idea of the product’s look. The design can be modified if it is not functional. Typically, product design begins after the functional elements of the product have been tested.
Step 4: Golden sample
The golden sample serves as the final sample to assess mass production and will be an exact copy in terms of material, finish, colour, and function to what will be produced during mass production.
A golden sample allows you to confirm the costs of your product, along with packaging and shipping. With costs in hand, you may refine your pricing strategy by marketing to distributors and retailers, crowdfunding your campaign, or creating marketing materials to start driving awareness and hype for your product. The feedback you gather should give you a ballpark on the number of units to produce.
You may use the samples for marketing purposes, however, don’t forget to provide your supplier with samples as well. These samples will be critical to develop and record product quality.
Step 5: Tooling
If you are developing a new product, you will likely need to invest in your tooling. You may speak with suppliers about tooling amortization and factoring tooling into your price. You may also ask if they offer an investment program.
Depending on the raw materials needed, tooling may be required to ensure product consistency. The main cost contributors to tooling are:
- Production line
- Plastic injection molding and die-cast are the two highest investments.
- Other processes may require tooling but are not as expensive.
- Type of steel used.
- Different types of steel may affect the number of slots a tool may have, which can affect the overall life-expectancy of a tool.
Plan your lead times, including those for tooling. In general, plastic injection molding and die-cast tools take roughly 30 days to complete.
Step 6: Production
The first round of production will likely be longer due to tooling and raw materials testing, known as the pilot run. A small percentage of the first Purchase Order (PO) is made to ensure the production runs smoothly. The first production run is shipped to the customer for final approval. Once approved, mass production may begin.
Consider the services of a professional contract manufacturer
Making the choice to go into developing a new product might seem complex, and for good reason. There are many aspects to quality product development. The good news is that there are professional contract manufacturers who can partner with you on product development and guide you through the processes of launching and scaling up production of your product.