Successful product development can be a struggle for many startups and established companies.
Pricing dictates a lot about your product. If priced too low, you risk customers not trusting the quality of your product or losing out on revenue. if priced too high, you risk customers not willing to look past the price tag. Your pricing strategy plays a crucial role in achieving product/market fit.
For products that are entering existing markets pricing is largely predetermined. Early on in product development you should have a clear understanding of who your target customer is, who your primary competitors are, and what stores your product best fits into. You can find the market price max and min by looking at
Note: While researching competitor retail prices there is typically a keystone markup of 2x the wholesale price applied. Using this markup you can estimate the wholesale price should expect to be paid when launching. Understanding your competitive wholesale price helps determine manufacturing cost limitiations.
Another common business strategy is to segment an existing market. One example of this is Starbucks®. Not only did Starbucks® want to sell premium coffee, but they also wanted to create a new type of environment where people could meet or work that was in between feeling like a home and feeling like an office. While the coffee market already existed along with coffee shops, Starbucks® added a new market segment by creating a coffee shop that not only sold coffee but provided an alternative work environment.
In order to price a product outside an existing market it is typically necessary to segment the market by providing a new experience that allows customers to view your product as separate from the competition.
How Pricing Affects Product Development
When developing a new product, price plays a major role while making design and development decisions. By understanding your pricing limitations it can simplify a lot of product design decisions that would add too much cost. Understanding
One solution to product pricing is to offer multiple tiers of a similar product. Each tier delivers varying performance, quality, and functionality for different price points. This allows customers to select the price that best fits their needs, which can significantly expand your potential market. However, while developing an entirely new product it is best to start out with only one tier in order to control risk through minimizing upfront costs of an unproven product.
Product performance greatly affects a customers experience and therefore product/market fit. If a product performs below customer expectations then it will be deemed as an inadequate solution. If a product far exceeds a customers demand then it likely has excess cost built in that exceeds what customers are willing to pay. There is a sweet spot for performance for most products and customer segments where it provides a strong solution while keeping the cost in line with what customers are willing to pay.
Finding the Performance Sweet Spot
Finding the performance sweet spot is a difficult task and requires significant research into your market. You can start researching product performance with potential customer interviews to gain a solid grasp on the problem you are trying to tackle. One option to find the sweet spot is to generate multiple different design options that offer varying price points and performance levels. Once these designs have been generated ask potential customers which solution they would choose if they were available for purchase today. Using the information obtained you can either move forward with one of the designs or further iterate on the design based on customer feedback.
Designing multiple levels of performance and cost options will also allow you to rapidly expand upon your product family should the initial product achieve product/market fit.
The quality that you need to attain can change a lot about your product and processes. Product quality is derived from a combination of materials, manufacturing processes, and design. Improving quality is not always a great idea, as it can quickly ramp up costs. Instead, your goal should be to minimize manufacturing costs while delivering the quality customers desire.
Determining the Quality You Should Strive for
Customer demand for quality varies significantly from product to product and customer to customer. To start researching the quality the market has come to expect look at products that are currently on the market. Product features such as finishing and materials can reveal a lot about what customers expect. Product finishes and materials vary significantly in cost and durability. While you should not directly copy a competitor’s finish and material choice, it can reveal how much cost they are allocating to the products quality.
For example, if the standard market trend is to use carbon fiber in the construction then you can assume that the demand for performance and quality far exceed the customer reluctance to pay for increases in performance and quality. Therefore, to meet product/market fit you can loosen the cost restriction and instead go full in on performance and quality. This along with customer interviews will give you an initial hypothesis to base your products quality on.
Move Forward or Iterate
Once you have initial designs, product specifications, and cost estimates ready you will need to get back out the door and interview customers to determine whether your initial hypothesis was correct and if it is wrong where to go next. Determining the optimal product quality is an iterative process and is heavily dependent upon who your end customer is.
Customer Background Effects Quality Expectations
While determining the optimal quality for your product you will have to keep in mind who your target customer is. A customers
Perceived Quality vs Engineered Quality
Quality can be a largely perceived product feature. While there are ways to directly determine
Today products are adding more and more functionality allowing for one product to replace multiple. However, instead of trying to squeeze as much functionality as possible into your product, it is better to first learn how much functionality your product really needs at launch. Once you meet initial product/market fit you can always add more functionality with future product iterations. However, for your initial
Discover Your Minimum Viable Product (MVP)
A minimum viable product (MVP) is the simplest form of a product that can meet product/market fit. Your initial goal should be to discover what your MVP consists of. Start by getting out the door and interviewing those who you are looking to develop a product for. During these initial customer interviews, discover potential customers most frustrating problems, favorite products, and what makes them tick. While interviewing people in your target market be sure keep an open mind to discover as much as you can. It is entirely possible that the functions that you thought would be critical to a new product should actually be eliminated, or problems that you thought were major issues have actually already been solved. By learning as much as you can early on from those who are your future potential customers you can save yourself a lot of wasted time and money.
Keep a List
You should start with a list of product functions, features, specifications, and problems that your product is solving. As your discussions with potential customers continue,
5. Ergonomics / Ease of Use
While many times ergonomics and ease of use
Observe How Customers Use Your Product
To eliminate customer frustrations with your product you need to first understand how they interact with your product. The best way to do this is to observe how users interact with a product starting with when they first receive it in its packaging. Look for any points at which the user needs to pause, go back to look at the instructions, uses the product in a surprising way, or acts confused. Note down anything you observe as points for improving user experience. Through delivering a solution that is both easy to understand and use out of the box you will win customer praise. Every customer that you win over to your solution can turn into a brand ambassador that convinces others to convert driving affordable exponential growth through word of mouth. The fastest way to product/market fit is through delivering an exceptional customer experience while solving a problem.
Deliver Superior Comfort Through Ergonomics
One quick way to have your product shelved is to have it be painful to use. While designing your product you should follow ergonomic design guidelines as well as run user tests to check for user comfort and fatigue. In order to properly test your
While designing a new product you need to keep in mind what manufacturing processes will be used to produce the product at scale.
Design Your Product to Accommodate Manufacturing Processes
A lot of design limits including tolerances, volumes, geometries, and material will affect what machinery will be used. In order to reduce product costs, you will want to design components to be manufactured using the most affordable method possible for your desired volume.
Every machine has a tolerance limit. In order to manufacture components to tighter
Low Volume vs High Volume Manufacturing
The most affordable production method is also dependent upon your required volume due to upfront tooling costs. When manufacturing a few prototypes its very likely that the most economical manufacturing method will be different than when manufacturing a 10,000 unit production run. While 3D printing and CNC are common manufacturing methods for prototypes, stamping, and plastic injection molds are more common methods for high volume production. While high volume production delivers far higher throughput and more affordable components at high volumes, the upfront costs are far greater due to tooling expenses. This difference in upfront cost makes high volume production unappealing during the prototyping and design iteration stage.
How Geometry Affects Manufacturing
Product geometry also affects what manufacturing method can be used. The cost of machining a component on single-axis, three-axis, or five-axis machine vary significantly. Also, every time a component needs to be set on a new axis for a cut, the price increases dramatically. This makes designing components to be machined entirely on as few
Different materials require different manufacturing processes. While materials such as ultra high strength steel may deliver desirable performance properties, they also create manufacturing complications. For instance ultra high strength steel requires the use of a high-cost servo stamping press instead of a standard stamping press. Requiring the use of higher cost specialized machinery drives up component costs substantially. While machining components, the material selection also affects the cut-rate and tool life. When materials are chosen that deliver superior cut-rates and tool life the manufacturing cost is reduced.
When you’re starting to launch your new product to the market having an exciting feature or capability can do wonders to help your launch take off successfully. By designing marketable features into a product that can be shown off in exciting ways you greatly improve your ability to secure public relations (PR) opportunities. Every time your product is mentioned in the news, on a talk show, or elsewhere you save significant costs in marketing expenses.
Earning Word of Mouth
The most effective and sought after marketing effect today is word of mouth. When there is a unique, enticing, exciting, and relatable feature delivered in a product the probability that potential customers will share it with friends as a form of social capital increases. When a potential customer discovers your product from someone they trust instead of from a paid advertisement their conversion rate increases dramatically. With a successful word of mouth
Examples of Marketable Features
Features that have driven viral word of mouth campaigns have included anything from a high powered blendtec® blender pulverizing a variety of objects to providing shoes to those in developing countries with TOMS®. In order to turn heads, it requires more than a small improvement to an existing product. You need to take a new unique approach to a problem that shocks potential customers in a good way.
ASR Engineering is a mechanical and aerospace engineering firm that can take can make your product idea a reality no matter how simple or complex it is. If you are in need of engineering support then contact us today for a free quote!