A Product Roadmap is a plan to develop identified new products or services for introduction at a specific future date. It addresses a major risk in new product strategy — the company may waste time, effort, and money chasing technology upgrades while losing sight of why customers buy.
A product roadmap minimizes risk by providing a disciplined approach to new product development, based on market needs and competitive advantage. The roadmap also serves as a communications tool, aligning employee efforts toward a common goal, rather than competing for internal resources to develop everyone’s favorite idea.
Why New Products?
The most successful businesses earn almost half their revenue from new products: those introduced in the past five years. Businesses refresh their product lines at regular intervals for several reasons:
- To improve their differentiation from competitors, or narrow a competitor’s differentiation (see Competitive Analysis and Differentiation: Be Different or Be Gone!).
- To replace revenues as current products enter the later stages of their product life cycle (see Product Life Cycle)
- To take advantage of new technical developments
- To keep up with evolving market needs, or appeal to a new target market segment
The challenge is deciding which new products to introduce when, and gaining commitment to that plan throughout the company. The Product Roadmap technique enables a coherent market-based approach for the next several new products.
Creating the Framework for the Product Roadmap
Design your roadmap for customer needs, not engineers. Resist the temptation to select new products according to the availability of new technology.
The first step in developing a product roadmap is to select the target launch dates. For example, a consumer technology company may decide to launch a major new product around October 1 every year, because 40% of consumer electronics are bought in the Christmas season. Then it may decide to launch a minor product update six months earlier every year, around April 1. These intervals are similar to a software version release schedule.
The second step is to decide which market segment to address at each launch date. For example, the company may want to strengthen its competitive position with students, or business professionals, or students.
The third step is to decide which of the target market’s “buying criteria” to satisfy better. In this decision, the Competitive Analysis Matrix (see Competitive Analysis) is crucial. This tool reveals how well your company meets the needs of these customers today vs. how well they are met by competitors. Here is where you decide how to improve your competitive edge.
Selecting the New Product Concepts
Once this framework is in place, you decide what kind of improvement is needed for that time, that customer group, and that particular buying criteria you are choosing to address.
Anticipate the Price Impact on Your Product Line
Select a price point for the new product, and plan how the prices for your other (existing) products will be modified when the new product is launched.
For example, in early 2010, the Product Roadmap for Amazon’s Kindle e-reader might have looked like this:
|1. Target Launch:||
|2. Market Segment:||Avid readers||Children||Teens & Younger Adults|
|3. Buying Criteria:||Ease of Use||Lower price||Functionality beyond reading|
|4. Improvement Needed:||Size, battery, memory, display||Other revenue source; control cost||Multimedia; control cost|
|5. Solution:||Better technology||Ad-supported;Wi-Fi only||LCD screen; browser; no camera; touch-screen tablet|
|6. Price Strategy:||No higher than Kindle2; lower for Wi-Fi only version||Under $100||Higher than Kindle3, substantially < iPAD|
Once the roadmap is set, product developers can focus on the technology and packaging, while marketers focus on what content will be available, pricing details, communications, and distribution.
Companies using a product roadmap meet market needs with a string of successful launches, and develop a reputation for excellence in innovation and sustainable revenue growth. Above all, they are seen to be well-managed market leaders. These are enviable payoffs! The key is a disciplined approach to product development based on meeting customer needs, rather than chasing technology upgrades.
Tom Gray helps owners save and grow their companies. He is a management consultant focused on small business and telecom, a Certified Turnaround Professional (CTP), a Certified Business Development Advisor, and a Certified SCORE Mentor. He can be reached at 630-512-0406 or email@example.com. See www.tom-gray.com.
Tags: aligning employees, disciplined approach to new product development, product life cycle, product roadmap, Product Strategy: Product Roadmap, target market segment