Section 6 Stage of development

January 30th, 2013 Leave a comment Go to comments
WINNERS = Products which are packaged and ready to be put on the shelf.

New products are most often developed from two major inputs:

  1. Research which has accidentally, or as a by-product, provided a new technology or product which fills a need or creates a new desire, and;
  2. Research which was undertaken specifically to come up with a product to solve a problem, fill a need or address a desire which already exists.

For the purpose of product evaluation, “stage of development” refers to the point of progress that a new product has made toward its ultimate goal of reaching the marketplace.  Having a working prototype does not guarantee a product’s success, but it sure does reduce the risk of failure.

The risk of taking a new product to market is much greater if the product is in the early stages of development.  The chance of failure decreases as the product advances through the various stages of development.  To the product evaluator, the risk is inversely proportional to the present value of the product or technology.  If a lot of research and development must be done to get the product to a point where it is provably viable, the risk is high and the present value is low.

A product in the early stages of development is not worth nearly as much as a product which is in “beta” test stages.  The asking price for a new product which is only in prototype stage is so disproportionate to the asking price of a fully tooled product which is ready to be marketed, that many product developers would be better off borrowing the money to “tool” the product and then sell it.  It is also possible for a smart investor in some cases, to buy a product inexpensively at prototype stage, pay for the tooling, and then resell the product to a third party and make an excellent return on investment.

A product which has languished in early development stages for a long time without progressing is generally frowned on by evaluators, because the evaluator is left to wonder if the developer is serious about pursuing the product or technology and whether the idea itself is actually worth pursuing.  A common question is “if you think it is such a great idea, how come you have sat on it for so long without doing anything with it”?  A good suggestion for the product developer is, once you think of an idea, stay after it without interruption until you have either proven it to be valuable or find that it is not worth pursuing.

The longer a product or technology has been in early stages of development without progress, the less viable the project appears.

The more complex a product is, the less the product is worth in its early stage of development, because complex products require much more time and effort to perfect and bring to market than simple ones do.  Also, the chances are good that if the original product being evaluated is complex, any “follow through” products or line extensions are also likely to be of a complex nature and therefore will also be time consuming and costly to bring to market.

If a product will require an extensive testing period, this is generally considered to be a negative factor.  However, there can be one positive factor.  It is quite possible the product may generate “goodwill” in the eyes of the users or media people who have seen the product in its early stages etc.  The more goodwill which has been generated, the more the product is worth.  A good example would be a prescription drug or a piece of medical equipment which is not through with its mandated testing period, and is therefore unavailable to the general public, but has worked so well that everyone is becoming excited about its possibilities.



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