Product Development

 The next growth strategy we will be going over is product development. This strategy focuses on creating and positioning new products into a market that is already occupied by your business. New products are introduced into markets when you determine that the new product may offer advantages over existing products in the market. You must determine whether the new product will offer sufficient advantages over existing products in order to become successful in the market. This strategy offers benefits to the business in the form of familiarity: you and your business are already familiar with the market. This familiarity with the market enables you to properly position a new product in order to achieve maximum success. This strategy is considered to have medium risk, since your business is already familiar with the market, but is handling a new, unfamiliar product. You can take advantage of this strategy to increase revenue in markets in which they are already established.

We will look at how product development helped Netflix become one of the largest players in the movie distribution market. Product development was the strategy that Netflix employed when it began its popular movie streaming service. The company originally began as an online, mail-order DVD rental company. The company decided to create a new product, online movie streaming, and market it to its current DVD rental customers in 2007. Netflix's use of a new business model that focused on online streaming enabled it to quickly become one of the top companies on the movie distribution business.

Netflix released its new streaming product in 2007: a prime example of the product development strategy. The implementation of this new product played a major role in the company's success. It caused a sharp increase Netflix's annual revenue, from $997 million in 2006 to $1.2 billion in 2007 (Netflix Annual Report 2008). This was a growth of nearly 20% in the first year the product was implemented. There was an additional increase of 14% in revenue from $1.2 billion in 2007 to $1.36 billion in 2008. The implementation of the product development growth strategy proved quite valuable to Netflix, and contributed heavily to its success in a constantly evolving market.

You can implement in on a smaller scale, in order to attempt to achieve good growth within your business. In the next installment, we will go over how positioning an existing product into a new market can be used for success. Check back soon for this, and many more updates!