Creating a product can help your company meet an unmet customer need, deepen sales to existing customers, diversify revenue, or renew its market position—but none of those outcomes is guaranteed. Start by validating a real problem, testing a small prototype and willingness to pay, and checking whether your company can deliver the solution at a viable cost. Also compare building something new with improving an existing product or taking it to a new market.
Why should a company create a product?
A product is worth considering when it solves a sufficiently important customer problem and the business has a plausible way to make, deliver, and support it economically. Innovation by itself is not a business case. NIST’s Manufacturing Extension Partnership emphasizes tying innovation to unmet customer needs: NIST Manufacturing Extension Partnership.
Depending on the market and the company’s capabilities, product development may help address needs that current offerings leave unmet, sell more to existing customers, spread fixed costs across more offerings, diversify revenue exposure, or refresh the company’s competitive position. Government guidance also identifies growth, expansion, competitiveness, and business renewal as possible reasons to develop products. These are potential benefits, not promises; GOV.UK advises assessing whether likely revenue can justify the investment before development proceeds: GOV.UK guidance on developing a business idea and Queensland government guidance on product development.
What digital-product figures can—and cannot—tell you
A 2025 PwC Germany study of 200 decision-makers at industrial companies across sectors provides context for digital product development, not a forecast for every business. Respondents expected an average efficiency increase of 19% over the next five years from investment in digital product development; this is an expectation, not a measured or guaranteed gain. In that survey, 41% of companies said they used data analytics and AI for product development. PwC also reported that digital products and services account for up to 30% of total revenue for digital frontrunners—a subgroup ceiling, not a typical result for all firms. PwC Germany’s 2025 study on digital product development.
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As study leader Reinhard Geissbauer, a Partner at PwC Germany, puts it: “Increased investment in research and development does not automatically lead to greater success. It is more about strategically smart use of resources.”
Should you build a new product or improve what you already sell?
Compare at least three paths rather than treating the decision as “invent something or do nothing”: improve an existing product, take an existing offering into a new market, or develop an entirely new product. Assess each option against the same questions so that enthusiasm for one idea does not set a different standard for it.
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| Decision question | Improve an existing product | Enter a new market | Develop a new product |
|---|---|---|---|
| Customer need | What unresolved need or frustration does the improvement address among current or prospective users? | Does the offering solve a relevant problem for buyers in the new market? | What evidence shows the intended users have a problem important enough to address? |
| Differentiation | What meaningful improvement distinguishes the updated offer from its current version and alternatives? | How does the offering compare with alternatives in that market? | What is meaningfully different from the company’s current products and competing options? |
| Cost, time, and return | What will the change cost and how likely is the additional return to justify it? | What investment is needed to adapt and sell the offer in the new market, and what return is plausible? | Can likely demand and revenue justify the full development investment? |
| Delivery capability | Can the company make the change and support users reliably? | Can the company meet the new market’s delivery and support needs? | Can the company produce, deliver, and support the product at a viable cost? |
| Revenue exposure | Does the change deepen reliance on the same customers or create broader appeal? | Could the new market diversify exposure, and what new risks come with it? | Would the product diversify revenue or add another offering dependent on the same market? |
Customer testing, competition analysis, return-on-investment checks, and diversification are all relevant to the comparison. The best path is the one supported by evidence and feasible for your company—not necessarily the one that sounds most novel.
How to create and validate a product
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Define the customer problem
Speak with existing and potential customers about their needs. Describe who has the problem, the situation in which it occurs, and what makes it difficult before deciding what to build. Customer conversations are a way to investigate the need; do not treat interest in an idea as proof that buyers will pay for it. See GOV.UK’s guidance on developing a business idea and NIST’s Manufacturing Extension Partnership.
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Choose a small, inexpensive test
Build a prototype as quickly and inexpensively as practical. It should be sufficient to test the central idea, not a polished final product. The purpose is to learn whether the concept addresses a real need before committing the full development budget.
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Test usefulness and willingness to pay
Show the concept to prospective customers, gather feedback, and test prices consistently and realistically. Ask whether buyers would pay enough, in sufficient numbers, to make the expected return plausible relative to the investment. A positive reaction to a prototype is useful evidence about the problem and solution, but it is not by itself evidence of viable demand.
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Compare alternatives and clarify the difference
Assess competing offers as well as your company’s current products. Identify what is meaningfully better or different for the intended market. If customers cannot see a relevant distinction, revisit the customer problem or the proposed solution.
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Check whether the company can deliver
At each iteration, ask whether the problem matters, the prototype works, the company can produce and deliver the solution, and buyers will pay enough to support the business case. Consider the resources needed for production, delivery, and ongoing support—not just design.
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Plan implementation and launch
Build a product-development plan around customer and market needs, testing, barriers, timing, resources, and implementation. Prepare launch activity before the product reaches the market. Queensland’s guidance discusses product development planning and implementation: Queensland government product-development guidance.
When should you pause or change direction?
Use what testing reveals to refine the concept, choose another path, or stop before additional investment. Reconsider the idea if the customer problem is weak, the product does not work well enough, buyers will not pay a viable price, the difference from alternatives is unclear, or your company cannot produce and support it within realistic constraints. A prototype is valuable partly because it can expose these gaps before a full development commitment.
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