The product development cycle: part 1

Market research drives product development, which can also be thought of as a cycle or loop (as illustrated in Figure above). This is because even after a product has been successfully commercialized, the MFI should regularly assess customer satisfaction with the product to determine if possible improvements are needed. Remember, product development is not only about new products - product redesign can be a much more effective route.

The circles between each stage represent “Go” or “No Go” decision points. If any one of these stages tells you to stop, that’s the end of that product’s development. But lest you think it was all a waste of time, lessons learned from aborted processes should inform the MFI about future product ideas.

Idea development: The "first" stage in the process (remember, it's a cycle so there really is no first stage) is idea development. Ideas can come from anywhere, including your loan officers, but formal market research is also a good source. For example:

• SWOT Analysis: The MFI’s internal strengths and weaknesses and external opportunities and threats
• PEST Analysis: Trends analysis/research evaluating the Political, Economic, Social and Technological environment.
• Client feedback/drop out research can be a rich source of ideas.

Ideas are initially screened to determine if the MFI should take them to the next step, and some rudimentary profitability calculations may take place at this time based on estimates of market size. Idea screening asks the following questions:

• Who is the target market?
• What are the size and growth forecasts of the target market?
• Are we introducing this because of competitive pressures?
• What trends are the ideas based upon?