The Big Picture

When you go into a store or shop online, do you ever wonder how the products got there in the first place?This week, we’ll take a close look at how businesses create new products and services through the Product Development Process. We’ll consider how products move through a natural Product Life Cycle. We’ll see that, by listening closely to the people who buy their products, businesses can continue to create new products and features that meet the changing needs and desires of their customers. Next week, we will study different aspects of Production: common methods of manufacturing products and ensuring the products are of the highest quality.Rochelle and her team at Alikay Naturals do an incredible job of creating products that meet their customers’ needs. It’s a key part of the story of their success. Rochelle started her business by listening to one of the most important customers—herself. She had a need for a beauty product that didn’t exist. So what did she do? She went out and made it for herself! What happened next is a common story in the world of business. People around her—her friends and family—started telling Rochelle about their own beauty needs and desires and asked her to make similar products for them. Through hard work and a simple process for creating great products, she’s been able to meet the needs of her friends and family members—and many more customers.

Rochelle’s story is inspiring. She built a new business from scratch, and now her products sit on the shelves of leading traditional and online retailers, such as Target and Amazon. She’s a great example of how a disciplined approach to creating new products and a commitment to quality can turn a great idea into a well-loved and successful business.

Let’s take a look at the Most Important Things that we’ll be focusing on this week.

  • Businesses use a simple, repeatable process for creating new products or services. It’s called the Product Development Process. The four simple steps of the process are: (1) generating ideas, (2) testing and analyzing, (3) developing the product or service, and (4) launching the product or service.
  • Products have a natural progression—called the Product Life Cycle—that starts with Introduction and moves through Growth, Maturity, and Decline. Business leaders must be able to recognize a product’s position in its life cycle in order to decide when to improve existing products, discontinue outdated products, and introduce new products.
  • Innovation—the act of creating something new—is essential for businesses to continue to compete and thrive. There are four main types of innovation: sustainable (eco-friendly), frugal, sustaining, and disruptive.

At the end of this week, you will know how to apply these insights to any business.

Why is this important?

Product development is the engine for making innovations—new ideas—come to life. This is at the heart of what businesses do. In fact, without an understanding of how to develop new ideas and turn them into products, businesses wouldn’t exist. The companies that have been around for decades, such as GE or Apple, continue to thrive because they know how to listen to customers, generate new ideas, and turn those ideas into products their customers love and—most importantly for the business—purchase. Companies who aren’t able to go through this process won’t have anything to sell that customers want. Those companies will lose their customers to competing businesses. Without customers, a company won’t be around for long. That’s a big risk for a business.

Companies also need to know how well a product is doing in the market. Is it still new and exciting, and are sales growing? Are customers continuing to buy it, and have sales been steady over the last few months? Or do people seem to not want the product anymore, and are sales starting to fall? These phases are all natural parts of the product life cycle. It’s important for businesses to be able to recognize each of these phases. For example, if customers no longer want a particular product, a company can begin the process of creating a new, better product to replace the current one. Businesses need to know when and how to introduce these new products.

Quick Question:

Do you work for a company that consistently creates new and interesting products? Or have most of the products been around for a while?
What companies come to mind that do a good job of introducing new products?

How does this connect to the other parts of business?

Products and services are the backbone of a business. Companies exist because they have something valuable to offer their customers. Without that, a company has nothing to sell—and customers have nothing to buy. That, of course, means there is no money for the accountants and finance team to track and measure. Sure, a business can have a leadership team and strong management, but it will just be people in an office with nothing to sell. How will it compete with other businesses with a product?

This is why we’re starting with product development. Throughout the rest of this course, you’ll learn how products are sold to customers, how those sales lead to profits and growth, and how strong teams can lead companies to do even more. But remember, all good businesses are built around a product or service that meets a need or addresses an opportunity.

Now, let’s jump right into this week’s materials with an Explore Activity.

The importance of change

You may have heard it before: “The only constant is change.” This is especially true in business, where companies must constantly reinvent themselves in order to grow. If a business refuses to change, its competitors will, and its customers will move on to the latest, greatest thing.

Gillette, the popular shaving products company, has been reinventing the razor for more than 100 years. Gillette’s tweet says it all.

The product development process, revisited

Let’s pause here to remind ourselves what we’ve learned so far.

  • First, we learned that in order to stay competitive, companies must always look for ways to improve.
  • Then we learned that in order to improve, companies must focus on understanding their customers.
  • In the previous section, we learned that innovation can help companies come up with new ideas that meet the needs of their customers.

You’ll recall that Rochelle and the folks at Alikay Naturals use a simple process for taking their innovative ideas and turning it into something they can sell—the Product Development Process. Here’s a snapshot of that process:

Phase 1: identifying needs & generating product ideas

As we learned in this week’s Strayer Talk, businesses create new and better products in response to the changing needs and desires of their customers. There are limitless ways to explore product improvements and new product opportunities. Rochelle and her team at Alikay Naturals, for example, find ideas and inspiration from their customers. Take a look at the table below, which explains a few of the ways that companies look for opportunities to improve existing products or create new ones.

Approach Example

Look at Trends

Businesses look at trends to make predictions about what will be popular next. This is especially true in the fashion industry. By observing important events such as fashion shows, businesses can find ways to change their products to improve customer appeal. For example, new colors or fabrics may be “in style,” or the desired fit for a pair of pants may slim down.

Conduct a Focus Group

A focus group is a group of people who agree to talk to a business about their ideas, opinions and attitudes about a product. Businesses hire researchers to ask the group about various aspects of the product, such how easy it is to use, whether the packaging is eye-catching, and whether it delivers the expected results. The group’s answers give the company ideas about changes that can make the products better.

Survey Customers

Companies send questions to customers to ask about their experiences with a product. Surveys often ask customers about what kinds of products they would like to see or what needs they have that are not currently being addressed. Surveys often ask about customers’ buying habits so companies can understand what customers are likely to purchase.

These research methods and other ways of better understanding customers help businesses find opportunities and create new ideas. This allows a company to stay competitive with other companies by creating new and better products. It’s a starting point for innovation.

What is innovation anyway?

You have certainly heard this word a lot in recent years. Innovation seems to be everywhere. Everyday, someone has an idea for an innovative product. You can even go to school to learn how to innovate. But what is innovation, really?

This is how the dictionary defines innovation:



  • A new idea, device, or method
  • The act or process of introducing new ideas, devices, or methods

Innovation is an essential part of coming up with new products. Innovation is how an idea becomes a product that you can actually sell to a customer. Anyone can come up with a good idea, but the process of innovation ensures that the idea can be made at a reasonable cost. Innovation might take advantage of a new technology or respond in a unique way to a new problem. Innovation might make a product more environmentally friendly or meet a long-felt customer need in a new way.

Innovation is using creative problem solving to create something that doesn’t exist yet — or making significant improvements to existing products.

In addition to customer needs, which we have talked a lot about, there are other Innovation Triggers that create opportunities for businesses to innovate, including:

  • An unforeseen problem or unexpected crisis;
  • The need to save money or find a faster way of doing things;
  • New technologies that allow you to do things differently; and
  • Environmental issues that put pressure on companies to be more eco-friendly.

In response to these Innovation Triggers, businesses must find ways to address these new needs. We can categorize these solutions into different types of innovation.

  1. Sustainable innovations (or eco-innovations) are ways to create or deliver a product that reduces harm to the environment, such as using recyclable materials or product packaging.
  2. When a low-cost version of a product is created in order to sell to a new market that does not have the money to buy more expensive versions, we call this a frugal innovation. Many laptop providers create very cost-efficient versions of their computers to reach customers who don’t need premium features.
  3. There is also sustaining innovation, which is a significant improvement to an existing product. This happens often, such as when Apple gave each of its iPod products touchscreens to make them more user-friendly.
  4. disruptive innovation is something that creates a new category or product altogether—something that customers have never seen before. Good examples of this innovation are the new ridesharing apps like Uber and Lyft that allow users to find and pay for a taxi ride.
  5. breakthrough innovation changes both a market and the way customers look at the world. For example, when Zipcar offered car rental by the hour, it not only offered a new product to a market—it actually changed the way people look at car ownership.

Phase 2: testing & analyzing product ideas

Once a company has identified a customer need and created innovative solutions to fill that need by generating product ideas, it’s time to test the product with potential customers. This is an essential phase in the process. It helps a company discover unseen challenges and iron out any kinks with the idea. There are two essential parts of this phase. In the first part, a business tests the product to make sure it works well for customers. Rochelle and her team use a number of different approaches to test their products.

Product testing at Alikay Naturals

When it’s time to test new products, Rochelle creates a test batch of the products and looks for people to use those products and give her feedback. The feedback often comes in the form of a questionnaire: “How does your hair feel after a week? Two weeks?” or “If you could make this product better, what would you do?”

Option #1 – give the products to friends, family & employees

Rochelle asks friends and family—people she knows she can trust—to try out the products. These people might shy away from being very honest, so it’s important that she also ask other people.

Option #2 – ask loyal or potential customers to try the product

Rochelle can also ask her existing customers—people who have already purchased her products— what they think about the new ideas. She might also ask people who are looking for a similar product but who have not yet made a purchasing decision.

Option #3 – try the product yourself

Rochelle says, “I also use the products, all of them, myself. Even if they’re not made specifically for my hair type, because what I think is important is having the versatility of our products.”

Once a business has tested the product with customers, the business also analyzes how the product will perform in the market. A business considers several factors before investing the money necessary to create the final version of a product.

Let’s look at a few key considerations that businesses review when they analyze the market.

  1. How much will it cost to make this product?
  2. Can I sell this product for more than what it cost to make? Will the product generate a profit?
  3. How big is the market for this product? Are there a lot of people out there who would want to buy it?
  4. How many similar products are out there? Does my product stand out?

If the answers to these questions show that the new product is a good fit for the company, then the business is ready to move into the next phase of product development: creating the final product.

Phase 3: creating the final product

By this phase of the process, the business has received a lot of feedback on how to make the idea better. The research and analysis have even provided a clear sense of the product’s limitations, which help guide how much the business invests making the new product so that it pays off for the business. The next step is to design and develop the final product—the one that customers will purchase.

When creating a final product, a business takes great care to design every detail. Designers obsess over the shape, colors, and functional elements of the product. There are a number of considerations when designing the final product, including:

  • Functionality: Does the product have a specific use or function, and is that clear to the customer?
  • Ease of Use: Is the way to use the product clear to the customer?
  • Durability: Is the product built well and will it last for a reasonable amount of time?
  • Visual Appeal: Is the product beautiful?
  • Simplicity: Has the product been designed without unnecessary features?
  • Eco-friendliness: Will this product have a minimal impact on the environment?
  • Innovative: Is this product new or different in a big way from other similar products?

Designers use a repeatable process to make sure a product is easy to use and aesthetically pleasing.

For designers, focusing on these core questions and design principles will ensure that the end result is something the customer will want and enjoy.

Phase 4: launching the product

With the final product in place, it’s time to share it with the world. We’ll talk about this in more detail when we get to marketing in Weeks 6 & 7. For now, the key takeaway is that a business launches an initial campaign to get attention for the new product and pairs that with a long-term marketing plan to generate sales of the product. When launching a product, the initial campaign is a business’s opportunity to build excitement. Companies use various approaches: word of mouth, advertising, social media, and more.

The technology giant Apple is one of the best companies when it comes to launching products. Each year, they host an event where they introduce new products and improvements to existing products. This event is closely followed by people all around the world, especially when a new version of Apple’s popular iPhone is released. In September 2016, Apple launched the most recent version of the iPhone–iPhone 7. To promote the product, they made a video highlighting the features of the new phone. Click on the Tweet below from the technology news website TechCrunch to view the video.

When thinking about launching a product, it’s important to know your audience. Apple is great at this. You’ve not doubt seen their ads before. They know how to build anticipation and create a great launch campaign that uses events and advertising–you’ve no doubt seen their ads before–to build excitement for it’s new products.

How to use the product life cycle

We’ve talked about the process of creating new products. Another key element of product development is knowing when it’s time to update an existing product or create a new one. In this week’s Strayer Talk, we learned the basics of the Product Life Cycle — the natural progression of a product from introduction to decline.

“The products we have…have gone through an amazing transformation…We’re constantly evolving.”

Let’s take a closer look at what happens at each phase in this life cycle.

  • In the introduction phase, the business sells very few products. The product will have slow turnover, meaning it spends a long time on shelves. The business is still working on efficiently producing the product, so the cost of making each one is relatively high. Typically, the business is not making money at this stage.
  • In the growth phase, the business will see the number of products sold start to increase. Turnover is starting to pick up and products are spending less time on the shelf, and the business is getting better at making the product. More sales combined with more efficient production lowers cost.
  • During maturity, sales start to flatten. The business is doing a good job turning over products and is able to predict accurately how long products will be in stores before they are purchased. The company is really good at making the products and can understand precisely how much it costs to make each product.
  • Finally, during decline, sales start to decrease. Even though costs to deliver the products remain the same, the amount of money generated from sales is lower, and the company is making less money.

When a business understands these details about the Product Life Cycle, just looking at the right numbers can reveal where the product stands in its life cycle—and more importantly, what might come next. In order to determine where a product is at, businesses need to simply look at recent sales numbers and the number of days it takes to sell a product. When looking at sales, businesses are looking to see if they are growing, staying flat, or starting to decline. This will give them a clue about where the product is at in its lifecycle. The second thing to look at is the number of days it takes to sell a product. If products are popular, they won’t spend many days on the shelf. As products start to decline, they will sit on the shelf for a longer period of time. By looking at each of these numbers, a business can determine where a product is at in its lifecycle.

Planning for the next product

Once a product has matured, a business can predict that it may soon decline. Before decline is the perfect time to begin the Product Development Process in order to ensure that there is something new to introduce. Great companies are able to time the release of new products really well and have something new ready to go before sales of the first product start to decline. This will ensure that the business continues to grow.

Businesses can also add new products so that they have multiple products at different stages of the life cycle. For example, Alikay may have multiple products—a shampoo, a conditioner, and a body lotion—that are all mature. These consistent sales give the business the ability to continue to develop new products to launch in the market.

The chart on the left shows how multiple products at different stages of the life cycle can be combined to keep sales consistently high for a business.


  • Businesses listen to customers and understand what they need.
  • Innovation is how businesses come up with new product ideas.
  • The Product Development Process enables businesses to turn those ideas into products.
  • The Product Life Cycle helps businesses decide when to start the process over.

These core principles help any business to bring new, innovative products to customers.