7 Steps of Product Development Process: A Comprehensive Guide

March 21, 2022

Have you ever wondered how a product takes shape? From the idea that sprouts in your head to the product you see on a store’s shelf, there is an entire process that brings it all together. Today, we will explore what goes into the Product development process, who is involved and why this matters.

What is a Product Development Process?

Product development is creating a new product and getting it ready for sale, which consists of designing, planning, creating, and marketing new products. It encompasses everything from research and concept development to consumer testing to marketing. 

The New product development (NPD) is the complete process of bringing a new product to market. The process doesn’t end until the product development cycle isn’t over. 

New product development is described as transforming an idea into a product available. The product can be tangible (something physical which one can touch) or intangible (like a service, experience, or belief).

The 7 Steps of The Product Development Process

The product development process is a series of steps that define how ideas enter the marketplace as products. There is no one fixed plan for product development.

It can vary according to industry, business size, goals, and product type. However, we have listed the 7 core steps of the product development process. 

You can break down the product development process into seven steps: ideation, research, planning, prototyping, sourcing, costing, and commercialization.

Here’s a complete breakdown of every single one of them.

Idea Generation

The first phase of the new product development process is the idea generation stage which involves businesses coming up with ideas for developing new products. 

This stage is used to create a broad base of ideas and then narrow them down to those that are viable. Companies use many methodologies to help generate ideas to improve existing products or create new ones.


Brainstorming is a popular technique used to gather a variety of solutions from several people in an organization. To start a brainstorming session, a group of people who know the subject matter should gather in an informal setting.

It’s essential for everyone to feel comfortable sharing their ideas, no matter how absurd they may seem at first. The main goal is to keep all ideas on the table so you can find ways to work with them later.

It’s okay for them not to be perfect because this step aims to generate plenty of ideas and sort them out later. 

TIP: If you want prompts for brainstorming, you can use the SCAMPER model. SCAMPER Stands for Substitute, Combine, Adapt, Modify, Put to another use, Eliminate Reverse/ Rearrange. Try finding a product that substitutes an existing product or developing a product that combines two use-cases- a Phone case that charges your phone, etc.

Emphasize Customer Problems
Another way to find ideas is to look into customer problems. It is better if you can identify real-life customer problems. All you need to do is focus on that specific problem and build a solution around it.

Many successful entrepreneurs have asserted the importance of building a business around a problem-solution model.

Filter the list
Once you have made a list of ideas, it is time to filter it. There are many ways you can do it. But the 4U approach by Michael Skok of shortlisting your business ideas is probably the best way out there. 

4U Approach

The 4U stands for Unworkable, Unavoidable, Urgent, and Undeserved. 

  • Unworkable: You have to check whether the product will work in this aspect. Does it solve a real-life problem? Will it satisfy the customer's needs?
  • Unavoidable: You have to ask yourself whether the product concept is inevitable? The question is whether the problem which the product solves is imminent? Is the product unavoidable?
  • Urgent: This aspect also follows along the lines of unavoidable. Is the product in high demand in the target market? Are the audiences looking for a solution and not getting it? Are you filling an urgent market gap?
  • Undeserved: The next question you need to ask yourself is, Are there no products solving the problem of target customers?

Once you have chosen a glaring problem that you would like to address, it’s time to develop the solution. The ideation process involves both identifying the problem and finding the solution. 

Find The Solution

Finding a solution for a problem is the beginning of how you will build your business. Every issue has a cause and its effects. 

Your goal should identify the cause and minimize or eliminate the effects. But how do we find the solution?

You need to 

  • Research and find the cause
  • Strategize and plan your course of action
  • Use logic and reason to find the way
  • Try to find a unique way to the solution(something nobody has done before)

When you have found a viable solution to the problem, it is time to build a market strategy. But you can only do it by doing thorough research. 


In the previous step, you brainstormed and researched product ideas. Now it’s time to validate those ideas to find if there is a market for them. Product validation is a vital step because it ensures your product is market worthy.

The research you conduct in this stage is crucial. You are testing the market, and you are reading the target audience. You want to ensure that you do not spend thousands of bucks developing a product that doesn’t sell. How to validate your product?

  • Find an audience interested in your product niche and get feedback from them, not your family and friends who are likely to be biased. You need to ensure you are asking for input from the right people.
  • Run a pre-launch campaign to test demand. You can run a Coming Soon page, send out surveys or launch a crowdfunding campaign — all these strategies will help you validate your idea.
  • Use Google Trends to find out if there's search interest in your idea. If there's not, it may mean that there isn't any market demand for this specific product.
  • Product validation will also include a competitive analysis. Do you need to find out whether your idea has the potential to take up the market share? Do you have competitors in your market niche? What are your competitors doing?


Planning is a significant step in product development processes. A business plan can provide a general overview of all involved from an economic standpoint in launching your new product or service. 

It establishes how much money you'll need to invest in making your venture profitable.

Your business plan should include:

  • Executive summary — Includes your business and its goals.
  • Company description — Describes what your company is about. 
  • Market analysis — Shows your industry trends and how you'll compete within the market.
  • Organization and management — Describes who does what and how your structure allows for growth.
  • Service or product line — Describes what you're selling or promoting.
  • Product design  — Decide the packaging, labels, and overall quality of your materials. 
  • Marketing and Sales — Explains how you'll reach customers and tempt them to buy from you.
  • Funding request — If you're looking for funding, explain why you need it, how much you need, and how you'll use it.
  • Financial projections — Show expected profit and loss over the next five years and more.

The planning stage is more about decision-making than implementing as you choose your goal, product design, budget, and management. The next stage is all about implementation. 



In this stage, you create the mock-up or the beta version of your product, which you test out. A prototype is a test of an idea. To paraphrase a famous quote by Albert Einstein

Prototypes are not supposed to be beautiful; they are supposed to work.

The goal of prototyping is to try and create the finished product which is ready to be rolled out into the market. Now that you have your assumptions down on paper and have validated them, it's time to create a product prototype that can potentially address all these assumptions.

If you're building a digital product, this step could also be called "building a beta version." If you're making something tangible,  this step is your prototyping phase. Prototyping is all about validating your product. Here are some tips for prototyping your product:

  • Test the design and functionality of your product by using an online prototype tool such as InVision, HotGloo, or Proto.io to create clickable versions of your designs or mockups. You can share these with potential users and get feedback on which features work (and which don’t).
  • Create a beta version of your product that has limited functionality. This may be an early-stage app you can use to gain traction for your product without investing in a more polished version. Or, it might be a basic website that you can use to test out different landing pages or marketing copy.
  • Create a mockup or paper prototype (if you’re designing a physical product) that you can use to test out design changes and show investors what you’re creating.


Sourcing is one of the most critical steps for any business, getting you closer to getting your product to the market. Once you have created a product prototype, you need to find good supplies, materials, and a trustworthy supplier. 

If you don’t choose the right partner, you may deal with a nightmare of delays, defects, and even fraud. Your supply chain may be much simpler if you’re creating a digital product, like an app or a website.

You'll need to work with developers and designers to make your product.

However, if you're manufacturing physical goods, you'll need to build a more complex supply chain. Generally speaking, there are three types of sourcing options:

Types of Sourcing

  • Contract manufacturer: A contract manufacturer is an established manufacturer with the equipment and expertise needed to create your product. They may also assist in parts of the design process.
    While they're more expensive than other options, they offer the most control over how your product will be made and can manufacture more significant quantities.
  • Freelancer: Hiring freelancers is another option for parts of the design process. They're a cheaper alternative to contract manufacturers, but they generally offer less control over the design and manufacturing processes.
    For example, you may want to hire a freelance designer to create a logo for your brand or product packaging.
  • Micro-manufacturing: Micro-manufacturing is similar to working with freelancers in that it's less expensive than hiring contract manufacturers, but it offers less control over production results. 

How to choose a manufacturer

You can choose manufacturers or suppliers based on your needs and choice. But it's essential to evaluate potential vendors on several factors:

  • Quality: Do they have the expertise and capacity to create the highest-quality product possible?
  • Price: What is the cost per unit of each vendor?
  • Trustworthiness: Do they have a strong reputation in the industry?
  • Timelines: How soon can they deliver the minimum number of units you need?

How to find a manufacturer

The best way to find a manufacturer is through networking with other entrepreneurs in your industry. Visit industry trade shows to start building relationships and ask for introductions from people you meet. 

Word of mouth is still the most effective way to find a reputable manufacturer because you can get an honest assessment of their capabilities and quality of work.


Costing is the process of determining how much something will cost. When you make your first product, you may not know exactly how much it will cost to produce. But as you get along in the process and begin planning, prototyping, and sourcing, you will get a clearer picture of what it will cost to produce your product.

Your product may be a complex or straightforward item. The more complex, the more materials are needed to create it. For example, a T-shirt will require little material while a pair of shoes requires more material.

But you’re not just adding up the cost of materials, though; there are a lot of factors to consider when determining your COGS. You’ll want to be sure to include all of the following in your costing process:

  • Materials: This is the most significant portion of your manufacturing costs. If you use multiple materials in your products, calculate the cost for each material and divide it into different categories. 
  • Labor:  Labor costs are how much it will cost to pay someone to make your product. You can break this down into direct and indirect labor costs. Direct labor costs include cutting fabric or assembling parts of garments by hand.
    Meanwhile, indirect labor includes machine operators, supervisors, and quality control inspectors essential to production but do not create the product by hand.
  • Overhead Costs: These are expenses not directly related to creating or manufacturing the product. It is what money it takes to keep the business going. 

It's important to remember that there are MANY different ways to do the costing. You can take a few basic steps, but ultimately, you should do what works best for you.

  1. List out all the materials you'll need to purchase to make your product.
  2. Add up the prices of all materials needed to make 1 unit of your product (at the quantities/sizes you plan on purchasing.)
  3. Add up the costs of any additional parts/packaging you'll need.
  4. Add up the direct labor cost (the time it takes you to make 1 unit.) Typically this is done by figuring out how much time it takes for one person to make 1 unit and then multiplying that number by an hourly wage amount (this can be an average wage or whatever hourly rate you think is reasonable for yourself.)
  5. Add up any indirect labor costs (costs associated with managing a business but not directly attributed to making products.) Examples include accounting, taxes, marketing, and other overhead costs (you can learn more about overhead costs here.)
  6. Add up all costs associated with selling your product (shipping, website fees, etc.)
  7. Add up all costs above to get the total cost of goods sold.

You can make a spreadsheet, note down all the costs, and calculate the total COGS. Once you have determined the COGS, you can subtract it from the selling price to get your potential gross margin or profit. 


You’ve taken your product from idea to prototype, to manufacturing, and finally to a full-fledged product. It’s time for the world to see it! But how are you going to put your product out there?

There are many ways to get your product in front of consumers. 

  • Start a blog: A blog is a great way to promote your business, connect with customers, and provide valuable content.
  • Use social media: Social media can help you connect with consumers and build brand awareness. The best platforms for your business depend on your target audience. Facebook, Instagram, and Twitter are great places to start your social media journey. 
  • Run contests: Running a contest on social media can help you gain followers and engage with existing ones. Make sure to choose a prize that will attract your ideal customer.
  • Build an email list: Email is one of the most effective ways to market your products. You can use it to share special deals, build relationships with customers, and more.
  • Get press coverage: Reaching out to local publications is an easy way to get free publicity for your business.
  • Use SEO best practices: Search engine optimization (SEO) helps you improve your website’s ranking in search engines like Google so customers can find it easily. Start by researching what keywords people use and optimize your product pages accordingly. 

Get creative and make sure your product reaches the right target audience. If you know how to market your product right, you can almost sell anything!

What should I consider before starting the product development process?

When you have an idea for a new product, it is vital to consider the following aspects before starting the development process.

How can I reach my customers?

You need to know where your customers are because you will not find them if you do not know where to find them. And if you do not know where they are, you will not be able to sell your product to them.

If you want to reach your customers and sell your product, you must know who they are and their needs. Pay attention to

  • Audience demographics & Geography
  • Social media platforms that your target audience uses
  • What time are your customers most active?
  • What are their interests?

What competition will it have?

Suppose there is already a product in the market that fulfills the same function as yours.

In that case, you should consider whether it has enough potential to be successful or if it is better to abandon the project altogether. 

It is also essential that you know how your product's competitors operate since this could influence how you develop yours. 

Your product may be better than theirs or worse; either way, knowing what they offer can help you improve your own product. 

Study your competition, keep track of their moves, stay ahead of them, and try to offer something more than the competition. 

Do you have the necessary financial resources?

It is impossible to develop a product without money. Before starting the process, you should be sure that you have enough money to see it through until the product is sold successfully.

We recommend having at least three times more than it would cost to develop the product since costs can quickly spiral out of control.

Is there a demand for the product?

If there is no demand for your product, your entire idea will fail. It is crucial to determine whether or not you are in a market with many competitors and how much competition there is. 

If this is so, then what makes yours better than theirs? If there isn’t anyone else in the market, then ask yourself why that might be and if you can exploit this gap in the market.

Can it be produced?

A great idea can be ruined by poor production or lousy marketing. Simple things like getting the proper packaging or choosing a name that doesn’t match your product can make all the difference between success and failure. 

Try to think about these things before you start anything and find out whether or not they are possible to achieve.

Benefits of The New Product Development Process

The product development process has been proven to be one of the most valuable product development processes for small and large businesses alike. It is a systematic and strategic process to bring an idea to reality. 

The whole process is divided into stages, with each stage having a set of defined steps and activities.

Here are some of the benefits of sticking to the Product Development process:

Ensures Faster Time To Market

If you follow the proper process, it can reduce your time to market. If you do not know what you need to do, it could slow down the entire process. When you follow a proper step-wise procedure, you know what has to be done next and in what order.

Reduce Costs

This also helps reduce costs because if there is no delay in one phase, it won’t cause a delay in another step, leading to unnecessary costs.

Negates The Opportunity Cost 

The opportunity cost is what you lose by choosing one option over another; by avoiding mistakes early on, you can reduce or even negate this cost and make your project more efficient and effective.

Reduces Technical Debt

By creating a plan at the very beginning and sticking to it, you’re going to be able to avoid mistakes that could lead to technical debt, which is when developers have to correct their errors and pay off any interest continually.

Helps Check The Technical Feasibility Of The Idea

The first step of the product development process is research and testing. You need to do extensive market research and competitor analysis to see where you stand. 

This will also help you understand your customers better and how they will react to your product or service.

Once you have completed this step, it is easier to test the technical feasibility of your idea.

Effectively Addresses The Customer Needs

When you are conducting your research and testing phase, this is when you complete surveys with potential customers who fit into your target audience profile.

You ask them questions about their needs, their problems, what they are looking for.

Multiplies The Chances Of Success

By following a protocol, which helps you understand the requirements and risks involved in building a new product, you will have a better chance of creating something successful.

Product Development Examples

By Industry

Rare Beauty (Beauty and Cosmetics)

Rare Beauty Selena Gomez

Popstar Selena Gomez launched rare Beauty on September 3rd, 2020. It took Selena 2 years to plan and launch her makeup brand. She intended to create a beauty brand beyond physical products, and she wanted customers to feel good in their skin. She created Rare Beauty to challenge the beauty myth of physical perfection. 

Pepsi (Food And Beverage)


Pepsi is one of the oldest food and beverage brands in the world. It was first developed in 1898 and was patented in 1902. Since then, Pepsi has become synonymous with cold beverages. But since the product reached its maturity, it has to follow a new product development process. 

There are many recommendations it can follow, for example:

  • Expanding to healthier options.
  • Including more flavors, etc. 

Pepsi has begun using SftS ( Sustainable from the Start) tools to calculate environmental footprints for approximately 25 percent of the company’s top-selling products made and sold in markets today. 

Nasty Gal (Fashion And Apparel)

Nasty Gal

Sophia Amoruso started her journey in 2006 from just a laptop and eBay account by selling vintage finds.

But soon, she became unpopular because of reselling stuff at high prices, and she also lost the trust of eBay. 

But she bounced back and developed her own website, Nasty Girl, and became a huge success.

However, it wasn’t smooth sailing for Nasty Girl because it went bankrupt in 2016. Thanks to the partnership with Boohoo, however, the brand is still alive. T

here are many lessons you can learn from Nasty Gal on how to plan your business better. 

Real-Life Examples

Go Pro


Go Pro was developed by techie Nick Woodman who identified the gap in the market. He realized that there was no equipment in the market to record high-quality motion videos. 

So, he first tried to develop the product. He planned the process then raised funds in 2002. After that, he released the first product in 2004 - a 35mm waterproof camera you could strap to your wrist. Nick followed a well-defined product development process to ensure GoPro became a success. 



Uber might have branched out to Uber eats today, but the company started with one primary goal -a more straightforward ride-hailing process with simplified payment processing.

But soon, Uber read the market needs and developed ride tiers like budget, luxury, etc. With the proper market study, you can also create an innovative product. 

FAQs: Product Development Process

What are the 7 steps of product development?

The seven stages of Product development are idea generation, research, planning, prototyping, sourcing, costing, and commercialization. 

How can I come up with new product ideas?

You can develop new product ideas by doing market research, brainstorming, social media polls, following Google trends, etc. The easiest way to come up with a product idea is to address a real-life problem and find a solution for it. 

What is the difference between product development and product management?

The product development process starts with product ideation and ends at delivering a product for the customer.

In comparison, Product management is a job that takes care of the entire lifecycle of the product - from ideation to improvement and maintenance of the product. It's not a one-time activity, but it's more like a continuous process that goes throughout the product's life cycle. 

Conclusion: Product Development Process

Remember, not all products are created equal, and it’s essential to make sure you’re aware of which process works best for you and your product. 

Once you have an idea, have a plan in place so that once you release it into the wild, you can start making money as soon as possible. There’s no point in having a great idea if you don’t know how to develop it into a successful product!

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