Product Concept: Meaning and How To Develop One (2024)

Our view at Stack - Shopify has just about everything you need if you're looking to sell online. It excels with unlimited products, user-friendly setup, and 24/7 support. It offers 6,000+ app integrations, abandoned cart recovery, and shipping discounts up to 88%. Plus, it allows selling both online and in-person, scaling as your business grows.

For entrepreneurs, the idea of creating a product from scratch and selling it to customers is thrilling. However, the realities of budgets, product testing, and manufacturing mean this process takes time and careful planning. 

You can kickstart the product life cycle by drafting a product concept statement. This document will guide you throughout the product development process, helping you determine which ideas are worth pursuing and which aren’t.

What is a product concept?

A product concept is a detailed description of a product a business owner aims to develop. 

It’s part of the initial stage of the product development life cycle, where business owners explore new offerings for their target markets. Company leaders typically create product concept statements to outline their vision for new products, including details like features, price, and intended customers. 

They use these documents to conduct product concept testing, where members of a target audience provide feedback on the product features, aesthetics, and proposed price. If the concept test goes well, the business may proceed with the product development.

Why is product concept important? 

A product concept acts as the blueprint for developing your products. It ensures you’re working toward a specific goal and that your entire team is aligned. 

Foundational strategy for product development 

Just as you need a map for any journey, your foundational strategy is your GPS, guiding you and your team through the various stages of product development—from design and prototyping to marketing concept and production. 

Taking the time to align your product vision with overall company goals helps create a clear roadmap that keeps your team focused and working toward the same outcome. 

Understanding market needs

Developing a product concept involves thorough market research. By carefully crafting and validating your initial product idea, you gain deep insights into problems and desires in the market. This understanding is invaluable for creating products that provide value and making informed decisions about features, design, positioning, and messaging that resonate with your target audience. 

Critical elements of a strong product concept

A successful product concept typically features eight key elements:

• Summary: Outline innovative features, iterative changes to a previous model, or an aesthetic product description.
• Technical aspects: Provide a list of expected technical aspects—like product measurements—to help the design team plan for prototyping and production.
• Use cases: Explain the product’s functional value. Use market research to detail how the product will address customer needs and lead to long-term satisfaction.
• Target market: Describe the customers you believe will get the most value from your new product. Consider creating a buyer persona to help visualize your ideal customer.
• Unique value proposition: Articulate why the product will stand out among similar competitors.
• Manufacturing strategy:Outline an initial plan for manufacturing the product at scale, whether handcrafting, mass production, or something in between.
• Pricing strategy: Propose a price based on expected production costs and customer price sensitivity.
• Connection to the brand: Explain how the new product aligns with your company values to project a strong brand image.

2 types of product concepts

These categories may impact the scope and nature of a product concept statement:

1. Original product concept

An original product concept statement describes a product that will be notably different from anything else on the market. Examples include the first smartphones or electric cars, which had unique features not found in any product before their existence.

2. Augmented product concept

An augmented product concept describes a product built off an existing product but offers new features or design improvements. For example, newer models of smartphones and electric cars are augmented product concepts. 

Focusing on continuous improvement, a business can regularly roll out augmented product concepts. This might involve using more cost-effective materials or framing a new product offering in the context of a customer’s experience. For instance, an augmented product concept might explain how a more affordable version of an existing product will appeal to price-conscious consumers or how a high-end apparel item could signify social status to a customer.

How to develop a product concept

1. Identify your target market
2. Conduct product research on existing items
3. Identify your product’s unique selling proposition
4. Craft a manufacturing plan
5. Estimate pricing
6. Plan a marketing strategy

Start your product development process with a well-articulated product concept statement. This will anchor your process as you pitch your idea, test your concept, work toward a finished prototype, settle on a final product, and build it at scale. 

Follow this six-step plan to effectively tackle the product concept process:

1. Identify your target market

New product concepts succeed only when there’s a product-market fit. Begin by visualizing the ideal customer for your new product. They might be part of your existing customer base or a new audience you want to reach. Creating a buyer persona can help you home in on which product features to highlight in your marketing materials.

2. Conduct product research on existing items

Be aware of current market offerings from which your target audience can choose. Do competitors offer similar products? What are their strengths and weaknesses? This product research will help you strategically select features, pricing, and a marketing approach to help you stand out.

3. Identify your product’s unique selling points

Your unique selling proposition (USP) is the distinguishing feature that makes customers choose your product over others. Maybe you make an incredibly long-lasting leather belt or the world’s strongest coffee blend. Perhaps you offer the lowest price or the most attractive product. Define your USP and lean into it.

4. Craft a manufacturing plan

Include details about how the product can be manufactured at scale and profitably. This section might cover information about supply chains, equipment, shipping, and labor needs.

5. Estimate pricing

Your price point will significantly influence whether your new product can find a target audience and be profitable. Set a price that balances these competing needs. Estimating a price point may be easier if you’ve manufactured similar products in the past. For brand-new product spaces, research what similar products sell for.

6. Plan a marketing strategy

Consider how you’ll pitch your new product to prospective customers. Your marketing campaign should highlight your product’s features and resonate with the people you identified in your market research. 

What marketing channels does your target audience use most frequently? Social media? Search engines? Email newsletters? Focus on these channels to showcase your product and connect with potential customers.

Example of a product concept

To see how a product concept functions in the real world, consider Taylor Stitch, an ecommerce clothing retailer. While Taylor Stitch has many competitors, the brand uses a unique “workshop” model, rolling out every new item as a concept that customers can crowdfund. 

Here’s how it works: 

1. Taylor Stitch posts a product prototype on its website.
2. Customers can preorder the product if they’re interested.
3. If enough preorders are received, the product is manufactured.
4. Once in production, the product becomes available for the general public on Taylor Stitch’s website.
5. If the crowdfunding campaign doesn’t meet its goal, the product will not be manufactured, and contributors will receive their money back.

While Taylor Stitch is an example of a product concept in action, it’s not a “pure” product concept because the team creates a prototype, allowing buyers to see the finished product before ordering. Nevertheless, it demonstrates bringing a product concept directly to customers and letting them decide whether the product should advance.

Advantages of product concepts 

1. Clarifies product vision. Helps product managers and development teams understand what they’re building and why, which is crucial for maintaining strategic direction. 
2. Facilitates effective communication. Creates a common reference point for clear and consistent communication across teams. It’s far easier to stay focused and deliver constructive feedback when everyone operates from the same blueprint. 
3. Promotes brand consistency. Ensures your core value proposition, messaging, and overall experience stay consistent across channels. 
4. Facilitates focused execution. Helps prioritize initiatives and allocate resources more effectively to avoid chasing shiny objects or getting derailed by scope creep. 
5. Future-proofs your business. Understanding customers’ core needs helps build a durable foundation for long-term growth. As markets and trends inevitably shift, you can nimbly adapt your offerings while staying faithful to your value prop. 

Disadvantages of product concepts

1. Potential for market misalignment. If not continuously validated, a product concept can lead to products out of sync with evolving customer needs. 
2. Resource intensiveness. Creating, developing, and testing product concepts requires significant time, labor, and financial investment. 
3. Overemphasis on product features. It’s tempting to focus too much on features rather than solving customer problems. This can hamper user experience and product usability. 
4. Possibility of stifling innovation. Becoming too attached to the initial concept may cause you to miss new opportunities or pivots that could better serve your customers.

Potential blind spots. Hyper-focusing on a specific customer pain point might lead to overlooking other problems your product could solve.

If Shopify is of interest and you'd like more information, please do make contact or take a look in more detail here.

Credit: Original article published here.