Digital Product Development: Step-By-Step Guide for Startups

Digital Product Development: Step-By-Step Guide for Startups

Startups working to introduce an original new product in the market face a lot of challenges. The new digital product development process is not a straight line. But if you do it in the right way, the process can lead to digital disruption when the new product reaches the market and solves the needs of the customers in a unique way. Thus, the business gets the product-market fit by meeting the end user’s needs.

Many companies have successfully launched new products in the market. For instance, task management by Trello, cloud storage by Dropbox, video communication by Zoom, etc. New product development needs a lot of market research and planning. The aim is to bring into the market a product that has the capability to meet customers’ needs. Below is the complete guide for startups to get started on the product development process.

What Is the Product Development Process?

The product development process involves converting an idea into a new product. It is the process startups, entrepreneurs, or businesses follow before launching a new product in the market, introducing an old product to a brand-new market, or renewing an already existing product.

There are no standard steps involved in the product development process; they vary from one product to another according to the nature of the business and management of the company. Below are the basic product development steps:

  1. Idea Generation

Solving customers’ problems should be the core priority of startups so that they can generate some worthy ideas. There need to be different brainstorming sessions to bring up some unproven and raw ideas and discussions regarding how to convert them to solutions for the existing problem.

Businesses foolproof their ideas in the following ways:

Focus On Problems of Target Audience

When you can describe a problem, it is only then possible to solve it. So, a business can’t come up with a solution to a problem that the business is not familiar with. You can identify the challenges your target audience is experiencing by following ways:

  • Evaluate The Shortlisted Problems

Most lucrative products and ideas arise from issues creators experience in their own personal lives. Make a list of problems and their possible solutions from your personal life. After creating the list, check the likelihood of the problems and the solutions you listed. Check whether the proposed solution will solve the existing customers’ problems and achieve product-market fit. Whether the problem is urgent and the target audience demands a solution.

The proposed solution must be able to fill the existing customer experience gap and achieve the product-market fit. Also, evaluate whether solving the present issue is a compulsion or a choice. You need to check the availability of present products in the market that are addressing the problem and to what extent.

  • Craft Possible Solutions

There can be a problem that is unidentified, and there is no possible solution for it. So, it will be a potential new product development opportunity for a unique product. A company can create an entirely new product for this problem or use an existing product to solve the present problem in a different way.

  • Qualify Problems & Their Possible Solutions

At this stage, make a comparison chart showing the comparison between the problems and their potential product development solutions. Share the findings after the comparison with others and get their feedback. If the stakeholders are not convinced with the shortlisted ideas, Re-Purpose, Upgrade, or Replicate.

  • Re-Purpose: It involves rewiring an existing product to expand the target audience and market share.
  • Upgrade: Upgrade means introducing a superior product to what is already available in the market. The product needs to have added functionalities, address the challenges of competitors, improved performance, and better speed.
  • Replicate: It means creating a product that is similar to what competitors have. However, the product must have unique features.
  1. Idea Screening

Idea screening is the stage where stakeholders choose an idea having the highest potential for success. So, they put all the ideas on the table and review each of them one by one with individuals having industrial knowledge and experience in that field.

At this stage, you also need to check whether the idea is feasible to build or not. SWOT analysis can help you provide a detailed analysis of whether the strengths and opportunities of the idea can surpass its weaknesses and threats or not.

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  1. Concept Development

There will be a detailed version of the solution and the user stories at this stage. It allows you to arrest problems at the earliest and correct them accordingly. This stage includes the following steps:

  • Enlist the innovative features of your product. You need to highlight the main features that will solve the problem.
  • At this step, you need to see the solution from the perspective of the user. You need to calculate the Gain/Pain ratio. The gain is the benefits the customers get from your product, and the pain is the required effort to understand and use the product.
  • Draft a value proposition chart. Describe your idea to the users so that they can tell what your new product is able to do for them.
  • It is crucial to carry out competitor analysis and understand the existing market players. It will help you know what competitors lack, the present white space of the market, and the scope for improvement.
  • The final step is to test the concept. Choose a few customers and present the value proposition to them. If the customers don’t find the product promising at all, you must be ready to go back to the idea screening step.
  1. Market Strategy

It is essential to create a strategy that helps you reach your target audience. One of the suitable methods to consider is 4Ps. It involves:

  • Product – The product design, service levels, and branding strategy you are offering.
  • Price – It includes payments modes, pricing strategy, and discount policies.
  • Promotion – The mediums you want to use for reaching the target audience.
  • Placement – You need to define the scope of your product, i.e., global or local.

Business analysis at this stage helps you evaluate if the product development is worth the financial investment and will be capable of generating a continuous stream of value. You need a good strategy for the selling price considering the base price of the product.

  1. Product Development

After the idea screen, documenting a market strategy, and completing a business analysis, the next phase is the product development cycle. New product development starts with a prototype, and then there is a Minimum Viable Product (MVP).

  • Prototype

The prototype includes creating the UI/UX of the product and sharing it with stakeholders. A prototype helps people visualize what the final product will look like and whether it will be able to meet the ergonomics best practices.

Prototyping also helps you experiment with different versions of the products, eliminating options until you’re fully satisfied with the final sample, and making improvements. It makes prototyping different from different product types.

  • Minimum Viable Product (MVP)

After the design, development, and testing phase MVP is launched. MVP has minimal features, and you can make the changes according to initial responses. MVP for different products offers enough functionality, and the early users can use them in that state. It helps in validating the concept of the product at the early stages of product development.

Further, the product managers can get user feedback at the early stages to make timely incremental improvements during the product development process. MVP also helps businesses gauge the interest of customers and test price sensitivity, helping you build something more valuable for the target audience.

  1. Market Testing

Market testing helps to minimize any uncertainties around the success of software products. It is essential to check the marketing campaign and viability of the new product. For these, the following market strategies can be helpful.

  • Beta Testing

The target groups and customers use the product and offer unbiased feedback.

  • Alpha Testing

The test engineers judge the product based on the performance.

  • In-Home Usage Test (IHUT)

The developed product is given to intended customers for use, and their feedback is recorded that acts as the foundation for further improvements.

  1. Commercialization

Commercialization is the phase that includes strategies ensuring that the new product is successful. These strategies comprise marketing, customer support, production, sales, and distribution. These strategies aim to attract the target audience’s attention and make a product-market fit. You can do the following to gain traction for your product:

  • A Unique Brand Voice

Your marketing team should efficiently represent your brand and product, whether using the website, email marketing, or content marketing. All the content needs to be consistent and clear.

  • Market The Concept Over Product Features

Instead of boosting the features of your product, discuss its intent. Explain to your customers how they will get benefit from your product.

Marketing your product and brand through expensive ads can be very effective if you have the budget to do so. However, you need a successful go-to-market strategy such as affiliate marketing campaigns, customers’ reviews, email marketing, promotional gifts, or enable Instagram shopping.


The product development journey of products is different from each other. The above process is particularly for software products, and it can be slightly different for other products such as food, fashion, beverage, and beauty.

As a startup, if you need help regarding the product development process, you can consult a reputable vendor such as Xavor Corporation. Xavor has the experience and expertise to help understand the digital product development process and how you can make it more effective to launch a new successful product in the market.

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