Assess your options for business growth

Product development strategy relies on developing new products or modifying existing products so they appear new, and offering those products to current or new markets. When executed successfully, it can lead to growth in sales and market share.

Typically, businesses may look at product development if they've run out of opportunities for growth with their current product or within their current markets.

Growth through product development

With product development, a business usually has one of three choices. You can:

• create an entirely new product
• evolve your existing product for its existing market
• enhance your existing product to introduce it to new markets

Steps to create a new product or enhance an existing one are likely to include detailed research and development, a full assessment of customer needs, product design and analysis, design documentation, prototyping and production.

Each company approaches its product development strategy differently. Some businesses outsource product development and buy-in another product to sell it under their own brand. Others acquire the rights to sell someone else's product or work with another business to jointly develop new products. 

The key to a successful new product development process is continuous research, as well as the ongoing assessment of customer needs.

Brand extension strategies

Brand extension, or brand stretching, is a useful tactic in product development. It involves using your established brand name for a new product or new product category.

You can extend your brand in many ways, including:

• offering the original product in a new form
• combining two well-known products into one
• applying the existing brand to a different product category
• creating complementary products

Brand extension is a popular strategy within product development because it is usually easier to achieve than creating entirely new products.

It allows you to leverage your reputation and popularity of an existing product to launch a new one. The costs are also generally lower than they would be for introducing a new product without any brand identity.

However, to work, the brand extension must provide a logical link between the original product and the new item. If there is a mismatch, or the new product creates a negative association, this can lead to brand dilution. Find tips on using and managing your brand.

Keep in mind that product development is only one of four key business growth strategies. Others include market penetration, market development and diversification.