Developing a New Product/Service (Junior Cert Business Studies): Revision Notes
Developing a New Product/Service
Creating successful products and services requires following a systematic development process. This structured approach helps businesses turn initial ideas into profitable offerings that meet customer needs.
The seven-step development process
Step 1: Generating an idea
Every product and service begins with an idea. These ideas can come from various sources both inside and outside the business. The key is to remain open to inspiration from multiple channels and encourage creative thinking throughout the organisation.
Sources of ideas include:
- Employee suggestions and observations
- Customer feedback and requests
- Market research findings
- Competitor analysis
- Technology developments
Real-World Example: Innovation at Kerrygold
Imagine Sarah Murphy works in the research department at Kerrygold. She notices that plant-based alternatives are becoming popular and suggests developing a new dairy-free spread that still delivers the rich taste customers expect from the brand. This observation-based idea demonstrates how employees can identify market opportunities through daily awareness of consumer trends.
Step 2: Selecting the most promising idea
During this stage, businesses evaluate all potential ideas and choose the one most likely to succeed financially. This process is known as idea screening, which acts as a crucial philtre to ensure resources are invested wisely.
Teams typically gather for brainstorming sessions where different concepts are discussed and assessed. Sarah's team at Kerrygold might consider various plant-based options before deciding that an oat-based spread offers the best commercial potential.
Effective idea screening considers multiple factors including market demand, production feasibility, brand alignment, and competitive advantage. Teams often use scoring matrices to objectively evaluate different concepts.
Step 3: Developing the idea
Once selected, the chosen idea undergoes detailed development. The team considers practical questions such as appearance, features, and packaging. This stage transforms abstract concepts into concrete specifications.
A Unique Selling Point (USP) is a feature that makes the product or service stand out from competitors in the market. Without a clear USP, products risk becoming commoditized and competing solely on price.
Sarah and her colleagues work with Kerrygold's food technologists to determine ingredients and collaborate with the design team on packaging that clearly communicates the product's plant-based nature whilst maintaining the trusted Kerrygold brand identity. This collaborative approach ensures all aspects align with the overall vision.
Step 4: Conducting a feasibility study
At this crucial stage, the idea undergoes testing to determine whether it can be produced within reasonable time frames and generate profit. If costs are too high or production takes too long, development stops here. This stage acts as a critical checkpoint that prevents costly mistakes later in the process.
The team calculates production costs, determines pricing, and works out how many units need to be sold to make the venture worthwhile.
The break-even point is the number of units that must be sold to cover all development and production costs. Below this point, the business makes a loss. Understanding this figure is essential for making informed investment decisions.
Sarah's team consults with Kerrygold's finance department to analyse the total cost of creating the plant-based spread. They calculate exactly how much each unit will cost to produce and determine the minimum sales volume needed for profitability.
Step 5: Making a prototype
A prototype (test model) or sample of the product is created during this phase. This physical version helps identify any production problems before full-scale manufacturing begins, potentially saving thousands of euros in avoided mistakes.
Prototype Development in Action
Sarah works with Kerrygold's production team to create small batches of the new spread. They discover that the initial recipe makes the product too soft, so they adjust the formulation to achieve the right consistency. This iterative process allows for refinement without the expense of full production runs.
Step 6: Test marketing
The product or service undergoes testing with a small group of potential customers. Their feedback helps ensure the offering meets consumer needs and expectations. This stage provides invaluable insights that can make the difference between success and failure in the broader market.
Sarah organises focus groups with local shoppers who try the plant-based spread. Participants share their thoughts on taste, texture, and packaging. The overall response is positive, with suggestions for minor improvements to the flavour profile.
Test marketing can take various forms, from focus groups and surveys to limited regional launches. The key is gathering honest feedback from representative customers before committing to a full launch.
Step 7: Launching the product or service
The final step involves making the product available for purchase. This includes advertising and promotional activities to raise consumer awareness. A well-executed launch can establish strong market presence from day one.
Kerrygold's new plant-based spread appears in selected SuperValu stores. During the launch week, free samples are distributed in shopping centres, whilst advertisements appear on social media and in food magazines targeting health-conscious consumers.
Key considerations throughout development
Throughout the development process, businesses must keep several critical factors in mind to ensure success.
Financial viability: Every step requires careful cost analysis to ensure profitability. Regular budget reviews prevent cost overruns that could jeopardise the entire project.
Consumer needs: Regular feedback collection helps align the product with customer expectations. Understanding the target market deeply is essential for success.
Competition: Understanding what competitors offer helps identify opportunities for differentiation. This knowledge shapes both product features and marketing strategy.
Production capabilities: The business must have the resources and expertise to manufacture the product effectively. Capacity planning ensures smooth scaling from prototype to full production.
Key Points to Remember:
- Product development follows seven distinct steps from idea generation to launch
- Idea screening helps select the most promising concepts for further development
- A USP makes products stand out from competitors in the marketplace
- Feasibility studies test whether ideas can be produced profitably within reasonable timeframes
- Prototypes help identify production problems before full-scale manufacturing
- Test marketing provides valuable customer feedback before launch
- Each step builds on the previous one, creating a structured path from concept to market