Research and develop ideas, new products and services
How to develop your idea into a viable business and create new products or services to meet customer needs
Research and development (R&D) is a key activity for growing and improving your business. Successful R&D relies on extensive market research and detailed assessment of your customer needs and behaviours, before developing new and improved products and services to fit those needs.
R&D is crucial to growth, both when starting up and as a means of keeping your existing business profitable. But new product development process can sometimes be risky and it needs considerable planning and organisation.
This guide highlights best practices in researching new product and service ideas. It explains how to generate ideas and assess their viability, carry out concept development and testing and ultimately test the market.
It also tells you how to protect new product ideas and find suitable finance and funding options for a new product or service development.
Generating ideas for new products and services
How to generate ideas for new products and services, and evaluate those that are worth investing in
A new idea is often the basis for starting up a business. Many entrepreneurs spot a gap in the market and start businesses that provide a product or service that fills it. Others come up with ways to improve an existing product.
The development of a new product or service usually starts with an initial idea. There are many ways to come up with an idea. To begin with, you can ask yourself the following questions:
- Is there a gap in the market in the industry that you currently work in?
- Are there gaps in your existing product range?
- Are there weaknesses in existing products which you may be able to address?
- Can you adapt, modify or improve your existing products?
- Can you use customer's feedback to enhance your existing products or services?
- Can you identify a need for a particular service or product that nobody else provides?
Generating a good product or service idea is your starting point in any new product or service development.
New product development
New product development is a process of bringing a new product to the market. You may want to develop new products due to:
- changing customer needs or preferences
- increased competition
- advances in technology
- new opportunities
A quality idea lays the foundation for all other stages of product development. Once you've come up with a list of product or service ideas, you should carefully screen or assess each one to determine whether you should pursue or discard them.
Read more about screening new product or service ideas.
Screening new product or service ideas
How to evaluate if your business idea is viable, and what criteria to use to screen new product or service ideas
Successful new product development starts with identifying good product or service ideas. You will have to carefully evaluate each idea to determine which are worth pursuing and which you should discard.
When screening or evaluating your ideas, it might help to assess them against an objective set of criteria. For example, the criteria may include:
- the needs of your market and your customers
- details of your customer behaviours and expectations
- the affordability of your idea, including resources needed for research and development
- the technical feasibility of your idea
- the market potential of your idea
- the profitability of your idea and the return on investment
- relevancy and desirability of your new products or product improvements
- your competition and their existing products
You may also want to consider doing a SWOT analysis for each of your ideas to identify their strengths and weaknesses.
Once you determine which ideas are viable, take time to refine them further to maximise their chances of success. Read more about researching new product and service ideas.
Researching new product and service ideas
How to research your new product or service ideas to make sure they can succeed in the market and meet customer needs
The key to successful research and development (R&D) is conducting extensive market research. This is essential as it helps you to identify and understand the needs of your customers and, ultimately, develop better products or services.
How to identify market need?
To determine if there is a market or demand for your product or service, ask yourself the following questions:
- Does it satisfy or create a market need?
- Will it outlive passing trends or capitalise on the trend before it dies away?
- Is it unique, distinct or superior to those offered by competitors?
- What competition will it face - direct or indirect, local, national or global?
- Will the market want your product or service at a realistic price?
- Can you identify potential customers?
- Will your product be safe for public use and comply with relevant laws and regulations?
Market research plays an important role in answering many of these questions and increasing your chances of success. See more on market research and market reports.
How to carry out market research?
Be as thorough in your research as possible, as mistakes made at this stage of development could prove costly later on. The more information you have, the better you will be able to understand your potential customers, the marketplace and how your product fits in.
When conducting market research, remember to consider not only the needs of your customers, but also the needs of other parties such as retailers or distributors.
Find out how to understand your customers' needs.
Develop your USP
As well as meeting your customers' needs, your new product or service should have a unique selling proposition (USP) - a feature or property that makes it stand out in the marketplace.
Before entering the market, you should assess your competition and determine:
- how they meet their customer needs
- what will differentiate your product or service from your competitors - this will be your USP
- why would the customers choose your product or service over your competitors', both now and in the future
- what risks you are prepared to take to launch your product or service into this market
Find other best practices to help you understand your competitors.
Concept development and testing
How to define new product concept and test it with your market segment to determine if the product will be a success
Concept development and testing is a crucial stage in the new product or service development. It takes place early on in the process and helps to identify key perceptions, user needs and wants associated with the product or service.
What is concept development?
Concept development involves coming up with a detailed description of an idea, explained from the perspective of your customer. A concept typically highlights the best features of the proposed solutions in terms of:
When developing a new product or service, it is common to work with a large number of concepts and only develop the select few that show the most promise.
What is a new product concept?
A new product concept is basically a blueprint for your idea. When developing a new product concept, you should:
- describe it from your customers' point of view
- list features and benefits of your product that may appeal to customers
- research and determine your target audience
- conduct focus groups and thorough market research
- consider resources required for designing, manufacturing and delivering the product
Once you develop your product concept, you should test it rigorously with your intended customers to determine its viability.
What is concept testing?
Concept testing is a process that helps you assess the customer reaction to your proposed product or service prior to introducing it to the market. It typically involves surveying potential users for their opinions on the concept. For example, you may want to ask them:
- Are they interested in the product?
- How much do they like the product?
- How desirable do they find the product's features?
- What features do they like most/least?
- How well would the product compare to other brands or similar product?
- What price point would they find appealing?
- What would they like to change about the product?
You may want to present several different concepts to determine which ones the customers find most desirable.
Benefits of concept development and testing
Developing a product concept may take time, but it is extremely important for the success of your project to define your concept clearly, test it rigorously and avoid making assumptions about the product's feasibility.
Concept testing will help you evaluate objectively which product ideas are likely to yield the best results. It may also help you to:
- estimate the concept market potential
- prove the viability of the concept
- eliminate poor concepts
- identify features that customers find most desirable
- develop and further test your prototypes
- segment your potential customer base
- identify the appropriate price point and position for your product
- estimate sales and potential return on investment
Remember that concept development and testing is only one of the steps involved in the new product or service development. For an overview of all the stages, see new product development process.
Financing new product or service development
How to finance new product or service development, assess various funding options and analyse the costs involved in bringing your product to market
Securing adequate funding is one of the biggest obstacles many entrepreneurs face. If you're launching your business on the back of a new product or service, it's important to build into your financial forecasts a generous margin for contingencies and the unexpected.
It's not worth investing money in a new product or service and then running out before your business has got off the ground. See how to choose the right finance when starting up.
Analysing the costs of new product and service development
Once you've developed and tested your new product or service concept, it will require a detailed business analysis. This step of the process helps to:
- determine the costs involved in the development
- forecast the profits you may make from your product or service
When doing a business analysis, you will want to:
- estimate your product price, including the discounted or minimum sale price
- identify your product's full market potential
- forecast the sales volume and likely profits
- identify your break-even point
- consider the full the lifecycle of your product in the market
A thorough business analysis will help you determine how much money you might need to secure or borrow for your product or service development, and what return on investment is likely to be.
Controling costs in product or service development
It's essential to keep a close eye on costs when you develop new products and services to avoid them spiralling out of control. You should:
- estimate development costs in advance
- monitor spending throughout the development process
- introduce phased investment - eg release funds for each new development stage once the previous one has been successfully completed
There are two main ways to estimate costs:
- a top-down approach where you consider previous comparable projects and use them as a benchmark
- a bottom-up approach where all team members agree the costs they expect to incur with one project manager, who will then estimate the total cost
Remember that your costs could include staffing, materials, technology, product design, market research, prototyping and overhead costs.
It is important to plan any investment and control your costs carefully. Before making investment decisions, consider how much your business stands to gain from the new product or service. Weigh this against any risks you face.
Find funding for your R&D project
Use our R&D tool to find out about the support available for R&D projects in Northern Ireland or watch the animation below to see how Invest Northern Ireland can help.
Test the market
How to develop ideas through the process of prototyping, market testing, brand building and pricing
Prototyping and product testing are important throughout the design and development process. While you are developing your new product or service, it's a good idea to keep testing the market to make sure you are still on the right track.
New product prototypes
Developing a prototype of your product allows you to bring it to life and test it in the market with your target customers.
A product prototype can be as simple as a mock-up or an early commissioned sample. A prototype can help you determine:
- how to package, brand and market your product
- how your product's 'look and feel' appeal to your customers
- if the product meets the market expectations
How to test your prototype
You should test your prototype in the type of situations you expect it to be used by your customers. To test it thoroughly, you should:
- show an early version of your product to customers and refine it based on the feedback
- run focus groups - ask your targeted customer segment what they want from your product or service
- conduct questionnaires - try to get as wide a sample as possible
You may need to respond to suggestions from users by modifying the design. Don't be discouraged, as most successful entrepreneurs do not view this as a failure, but as a learning curve.
It's a good idea to send your product to a large or very reputable potential customer or user. A positive testimonial will prove invaluable as you approach other customers.
Before you test your prototype with customers or users, make sure that you you've taken steps to protect your intellectual property - find out how to protect new product ideas.
You may want to consider testing even after your product goes on sale. Ongoing contact with customers can uncover both the shortcomings of your product and possible opportunities that you may have missed.
Once you have a final product, you can then set about building a brand. A brand includes everything that is visible to the customer, such as the product name, its packaging and its delivery. Read about designing a successful brand.
Pricing your proposed service or product
Establishing a pricing strategy for a development project to determine how much to invest in it
Establishing a pricing strategy for a new product or service is an important part of the development process. You should consider pricing the moment you decide to take an idea forward as it will determine how much you can afford to invest in the project.
How to price your new product or service
To set the right price for your product or service, you will need to take the following into account:
- the impact of your new product or service on your entire portfolio
- the analysis of its value - eg the benefits to the customer and the likelihood of them paying the price you want to charge
- the competition and their pricing - is your product or service innovative or are you following a market trend
- the selling channels you want to use - this will affect your promotional spend and distribution costs
- how quickly you want to establish your product or service
- the expected life cycle of your product or service
- how much you will need to charge to cover your costs
Make sure to cost all the materials, other inputs, machinery, processes and administrative time realistically. You will need to research different suppliers and the cost of marketing and distribution.
Strategic pricing can be used to drive sales and regulate demand. See how to price your product or service.
How to protect new product ideas
Different ways in which you can protect your new product or service ideas and concepts
If you create something unique or come up with a great idea for a viable, commercially successful product or service, you will likely have intellectual property (IP) that you can protect and exploit.
IP in new ideas
All businesses have IP. Your business' IP is what sets it apart from its competitors. For example, it could be your business name, logos, inventions, product designs or other creative work.
Some IP rights are automatically safeguarded by IP law, but there are also other types of legal protection you can apply for. Depending on the type of IP you have in your product or service, you may want to:
- register a design
- apply for a trade mark
- file a patent
Read an overview of the different types of legal protection for intellectual property rights or find out about protecting intellectual property.
Confidentiality and non-disclosure
At some stage, you will probably wish to discuss your new product or service idea with a third party or test it with customers and clients. It's important to understand that, once you put an idea into the public domain, it can no longer be considered confidential or a trade secret, so you need to take steps to protect it.
Before talking to any third parties, it is a good idea to ask them to sign a non-disclosure or confidentiality agreement. This prevents them from sharing details of your idea with others. See more on non-disclosure agreements.
The Intellectual Property Office (IPO) offers a number of online tools which can help you better understand your IP rights. Access the IP for business tools.
New product development process
Understand the key stages of new product development process (NPD process), from generating ideas and concepts, to product launch
New product development (NPD) is a process of taking a product or service from conception to market. The process sets out a series of stages that new products typically go through, beginning with ideation and concept generation, and ending with the product's introduction to the market. Occasionally, some of the stages overlap or vary depending on the nature of the business.
Key stages in the process of new product or service development
The NPD process involves eight key stages:
1. Idea generation - brainstorming and coming up with innovative new ideas. See generating ideas for new products and services.
2. Idea evaluation - filtering out any ideas not worth taking forward. See screening new product or service idea.
3. Concept definition - considering specifications such as technical feasibility, product design and market potential. See researching new product and service ideas.
4. Strategic analysis - ensuring your ideas fit into your business' strategic plans and determining the demand, the costs and the profit margin.
5. Product development and testing - creating a prototype product or pilot service. See concept development and testing.
6. Market testing - modifying the product or service according to customer, manufacturer and support organisations' feedback. This involves deciding the best timing and process for piloting your new product or service. See how to test the market.
7. Commercialisation - determining the pricing for your product or service and finalising marketing plans. See pricing your proposed service or product.
8. Product launch - a detailed launch plan can help ensure a smooth introduction to market.
In most cases, a phased approach to the product development process will help you keep schedule, resources and costs under control.
Use our checklist to help you develop a product or service or, for more information on managing projects, see how to manage your research, design and development.
Checklist: developing a product or service
Step-by-step list on how to develop new products or services, with a checklist of key things to consider before and during development
There are many things to take into account when developing a new product or service. The checklist below should keep you on track and help ensure that your development process runs smoothly.
Developing new products or services checklist
1. Start by generating good quality ideas. Think about potential new products or services, or enhancements to existing ones. Get insights and suggestions from staff, suppliers, customers and business associates. Find out more about generating ideas for new products and services.
2. Assess your ideas for viability and feasibility. While they may be good ideas, they might not necessarily make a sustainable or commercially successful product. Use customer needs and expectations to drive your product development. Learn more about screening new product or service ideas.
3. Research the market and how your proposed product or service might fit in. Start testing at the ideas stage and adapt your idea to meet the needs of the market. Think about your customers, their desires and requirements, and don't forget to take a look at your competition and their offering. Read more about researching new product and service ideas.
4. Define your product concept clearly and outline specifications and features which you believe will appeal to your customers. Then test the concept with your target audience and refine based on their feedback. See more on concept development and testing.
5. Think about how you're going to price your product or service and cover your costs. Read more about pricing your proposed service or product.
6. Consider how to phase in your new product development and control how much you are spending. Make sure you stop work on ideas that don't meet your criteria before committing a lot of time and resources. For more information, see financing new product or service development.
7. Build a good project team to lead your development and involve them from the outset. Think about who needs to be on it and how they will work together, and who's going to manage the team. See more on creating a new product development team.
8. Develop an early prototype and market test it to address any technical or user acceptance issues. Design, test and refine packaging, brand and the look and feel of the product. Continue making modifications until your product meets customers' expectations and needs. Find out how to test the market.
9. Consider if any regulations (including environmental regulations) are likely to affect your new product or service. Take steps to protect your intellectual property from the outset - find out how to protect new product ideas.
10. Plan for launch and develop a marketing strategy to maximise the impact and the commercialisation of your product or service. Look beyond its immediate potential and consider the longer term.
Continue to monitor the product success after launch and remember to look for further improvement opportunities or opportunities to extend the product's lifespan.
You may also want to make new product or service development an essential part of your business strategy and plan for new products on a scheduled basis to make sure your business remains competitive in the market.
Find out how to prepare a business plan for growth.
Creating a new product development team
Every potential new product or service needs a dedicated development team.
In creating your team, you need to include people with a variety of skills. For example, you may need:
- a creative ideas person
- a technical expert
- a marketing specialist
- someone in charge of market research who understands customer needs
- someone who can source components
- someone who understands the supply chain difficulties you could encounter
All team members should understand your business' objectives and be committed to them. You may also want to appoint a project manager to coordinate the rest of the product development team.
Managing product development process
Project managers are essential to ensure the successful development of new products or services. The project manager is responsible for:
- controlling costs and allocating resources
- drawing up the product or service's specification
- co-ordinating the product development team
- timetabling the development process
Timetabling the development process
Your project manager should draw up a critical path for the completion of key tasks and stages in the new product development process. SMART (specific, measurable, agreed, realistic and time-bound) objectives should be introduced to help measure and monitor progress.
However, your plans should be flexible as well so that you can deal with any unknown event that occurs. For example, you may have to deal with a change in the project's specifications or expected completion date. For more information on managing your development project, see how to manage your research, design and development.