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Research and Development of a Product for a New Business

by / ⠀Blog / November 10, 2022
research and development product

This article will focus on explaining the ins and outs of research and development of a product. We will try our best to explain the two terms, explain why they are of the utmost importance and what budget should you set to go to product research and development.

These are two very broad terms that have very different meanings from each other, but still as important as they could get. Let’s take a direct approach to this and start with the definitions.

What is research and development of a product (R&D)?

Research and development of a product is the name of taking action in researching how your product differs from your competitors, what could be done to make the product better, and researching the market you are planning to sell your product in.

It involves a set of activities that will help you better understand the product’s benefits better, define its selling points and competitiveness on the market.

The difference between the two lies in the timing of the terms. Research is usually done prior to launching the product itself, while product development is done when the conceptual phase of the product is over. However, the difference has been somewhat blurry lately, and many researchers advocate for using research even after the concept phase.

Why Is Research and Development Important?

We could spend hours on this topic, but let’s boil it down to three important pillars, where your product could benefit from well-done research.

Market

With proper market research, you can establish what selling point you want the product to lean into. Different markets have different needs, and you wouldn’t take the same approach to a well-developed, commercial-heavy western market and a less-developed African market. But you get the gist, when proper research is done you will know what needs the product is supposed to satisfy, and then tailor your strategy accordingly.

Product

Will someone use the product? Is your product good enough to hit the market? Does it satisfy all the legal requirements? Without prior research, you cannot answer these questions. And if these questions are left unanswered, there may be difficulties along the way, prolonging the process of releasing the product or selling it. We all know time is money, and while you may need to invest in research a bit more, it can greatly advantage you in the long run.

Brand

With well-done research, you can focus on building good brand experiences. Good brand experiences mean very easy and, more importantly, free marketing via word-of-mouth. When your brand has a high reputation among your customers, they are more likely to buy again, and as an added bonus, tell their friends, colleagues, or close ones about your brand. Good brand experiences mean loyal customers.

If for example you were to buy something you needed, and the product is exactly what you are looking for, but there were issues along the process of buying said product, be it a long delivery time, bad experience with the website, or any other hindrances you are more likely to switch to a competitor and tell your friends to not buy the product from their website since you had a bad experience while shopping there.

How much of the price of a product should go into research and development?

There are many variables when it comes to setting the right amount of money to spend on research and development. The first variable is the industry you operate in.

Based on data published in 2015, the largest spenders on research are Consumer Non-Durables, 23% of the total, media and Entertainment, 15% of the total, and pharmaceuticals, 13% of the total. If you want more information consult the table below.

spending on research by industry

Companies spend billions of dollars on research and development. For example, Amazon spent 42.74 billion dollars in 2021 on just research. The revenue for the year 2021 is 469.82 billion U.S. dollars. This means that Amazon spent around 9 percent of its money on research only. This figure only indicates that Amazon deems it right to spend almost 10% of its earnings on something that might seem trivial in someone else’s eyes.

As stated previously, there are many variables in setting the budget for research and product development. Find the statistics for your industry, and try to adjust the budget accordingly. The spending for research and development should not be static. When you are designing a new product, the budget for research should also reflect it.

What is important to note is that you don’t stop your funding for research after you release the product to the market. Markets are fluid – they change, and you don’t want to sleep through any drastic changes, just because you didn’t pay enough attention to the research aspect.

The process of research and development

To make it easier, we will go through the research and development process step-by-step, with the individual steps being as broad as it gets, so you can tailor it to your product accordingly.

1. Sit down and talk

The first step of the process is sitting down and brainstorming. Let your team go wild on ideas and one of them may be destined to be the one actually translated into reality. Don’t forget to also do some research first, so employees have a general idea of what you would like to see added to your product line.

2. Conduct market research

After choosing the ideas, make sure to ask the public what they think of this potential product hitting the market. You might think that the product you are bringing to the market is groundbreaking, but the general public might have another point of view. When the data from your research is collected and sorted through, you might make changes to the product that will make it accessible to more people, so more people will think about eventually buying it.

If the first idea failed, try to improve it with the info gathered from the research and take it to the streets once again. If the public is still not approving of the product, rinse and repeat until they feel positive about your idea.

conduct market research

3. Bring ideas to life

After taking a look at the research and carefully compromising with the general public with the design and the product itself, you should become more confident in the product’s message and purpose.

After you are happy with the product, go ahead – sketch the look of it and build a prototype. (Don’t forget about the research you did beforehand, it might save you money and time when further developing the product. Make sure your design decisions are informed and backed up by data obtained earlier!)

4. Test & adjust the prototype

After your product is assembled and the first designs are created, test your prototype with the help of one of the online usability testing tools to see if everything works as intended.

This might make all the difference and save you money later, since you would have found most of the mistakes in concept, design, and such in the first prototype.

5. Rinse and repeat until you are confident the prototype is well received

This stage is very crucial in creating a new product. You have to take into account all the mistakes you have made and uncovered throughout the research. Get rid of the flaws and focus on your buyers and how they will benefit from the product. If you fail to do so, your product may be subjected to the harsh reality of an already oversaturated market.

6. Take all the things said about the product and release it

After you are confident with the product’s look, feel, features, and other factors, you can go ahead and release it on the market.

Using research and development (r&d) to avoid creating useless products

avoid creating useless products

Only the market itself decides what’s ripe to be released, and what’s too ahead of its time. Let’s take a quick look at some of the tips to keep in mind while creating a product. This way you can be sure it’s not released too far ahead.

Market research

Conducting market research will make the decisions a lot easier. You can hear for yourself what the general public thinks about your product.

If the people you questioned were adamant about the product not being useful at this time, don’t scrap it. Maybe just ask them what would have made them change their opinion. It is a very theoretical question. But even with vague answers, you sense the product’s best time for release.

Follow the trends

Look at the trends that are happening around you, and pay attention to them. If there is a trend within your industry, see what it is. Try to figure out how to implement it within your product. If the trend is using social media as a platform to market your product, think about introducing this type of marketing to your advantage. This will help you get ahead of the competitors.

Establish what is your product useful for

Try to sense out the advantages and disadvantages of your product and find a way to make it marketable. All along while also taking into consideration its usefulness at any given time. Maybe your product is not very usable right now, but two years later, it might be a hot trend.

This would mean you have two extra years to prepare for this exact moment and release one of the best products there is on the market, with well-done research and usability through the roof.

Research and development of a product: not to be underestimated

As we established earlier, product development and research are not something to be underestimated. With constant pressure on everything to be cheaper and done faster, it’s hard to keep a grip on the situation you are currently in. But good research is an investment into the future. If the research succeeds, and the changes requested are implemented well, it can save you thousands, if not millions of dollars when further developing the product.

It may be cheaper to skip the research and move straight to the prototyping stage. But, it will be a lot more expensive to fix the mistakes you could have found out about if the research was done properly.

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