3.1 Product strategy

Stage 1: product strategy, starts with the finalising of the product development strategy and product development programme. Then the aims of the individual product development projects can be set. The project starts with the generation of new product ideas and the outlining of the product design strategy, and ends with the product concept and product design specifications. There is real dichotomy in the decisions and activities; there is on the one hand, the need for freedom to be creative, and on the other, the need to set boundaries in the product design strategy. Before top management can make the critical decision to fund the further stages of the project, or to stop it, or to return it to the team for more knowledge, there are three critical decisions:

    1. Is the product concept a unique product satisfying the needs and wants
        of the target consumer/customer?

     2. Will the product concept and the project deliver the financial and other
        aims set in the business and product development strategies?

     3. Does the product concept harmonise with the company's
        business and environment?

Top management, to make these decisions, needs knowledge on the processing, production, distribution and marketing technologies for the product. Knowledge will be incomplete at this time. The financial predictions (sales revenue, gross profits or margins, the probabilities for success, the returns on investments or break-even times), and future costs and time for the project are very approximate. There will be other specific requirements for each project, such as enhancing health (Ericson, 1997), environmental effects, food regulations and trade barriers. But of course the most important knowledge is the description of the product idea in the product concept and the product design specifications. The project team has to build up this knowledge throughout the stage, and the type of knowledge identified will determine the critical activities that have to be completed in the product development project (Earle and Earle, 1999). The knowledge is built up in substages and decisions are made at the end of each stage usually by product development management, but sometimes by top management if the project is a major innovation and costly.

The substages in Stage 1: product strategy for the individual project are:

     defining the project;

     developing the product concept;

     identification of processes, distribution and marketing;

     development of product design specifications;

     planning of the project;

     predictions of project costs and financial outcomes.

This is total technology research incorporating product, processing and market research with consumer and society studies. At this early stage, the knowledge may be generalised, and the aim is to make it greater in breadth and depth through the later stages of the project. This stage sets the direction for the product development project, and has been identified in much research as most important to the final success of the project.