The product strategy of a firm should be consistent with the overall strategy of the firm. A common framework for expressing the firm strategy is Porter's generic strategies (Porter 1980, Wikipedia).
Individual products follow a 'lifecycle' called the product-lifecycle. Product life-cycle management (PLC) is the succession of strategies used by business management as a product goes through its life-cycle (Wikipedia). The stages of the product lifecycle are:
Market Introduction - high cost and demand has to be created.
Growth - costs reduced, sales and profit increase. Competition also increases which leads to downward price pressure.
Maturity - sale peak as market is saturated, profits decline.
Saturation & Decline - sales and profit decline
Product By Value Analysis
A product by value analysis lists the products of a firm in descending order of their individual dollar contribution to the firm, which helps management determine produtc development priorities.
Product Design & Development Process
New product development is the term used to describe the complete process of bringing a new product to market (Wikipedia). The process usually follows these steps:
Idea Generation - Obtained through a SWOT analysis, Market and consumer trends, company's R&D department, competitors, focus groups, employees, salespeople, corporate spies, trade shows, or Ethnographic discovery methods (searching for user patterns and habits).
Idea Screening - Eliminate unsound concepts prior to devoting resources to them.
Concept Development & Testing - Develop the marketing and engineering details and asking a sample of prospective customers what they think of the idea.
Business Analysis - Estimate the likely selling price based on competition, the sales volume, profit and break-even point.
Beta and Market Testing - Develop a prototype and test it in typical situations and with test customers.
Quality function deployment (QFD) is a “method to transform user demands into design quality, to deploy the functions forming quality, and to deploy methods for achieving the design quality into subsystems and component parts, and ultimately to specific elements of the manufacturing process.” (Wikipedia). See this page for more detail.
Product Development Organization
Products can be development through a sequential process with handoffs between functional organizations. The problem with this approach is that it is slow and often the output of one function may require redesign as subsequent functions reveal issues with their input into the design. To solve this problem, concurrent engineering was created. Concurrent engineering is a work methodology based on the parallelization of tasks (i.e. performing tasks concurrently) in which functions of design engineering, manufacturing engineering and other functions are integrated to reduce the elapsed time required to bring a new product to the market (Wikipedia).
Value engineering (VE) is a systematic method to improve the "value" of goods or products and services by using an examination of function. Value, as defined, is the ratio of function to cost. Value can therefore be increased by either improving the function or reducing the cost (Wikipedia).
Other Design Considerations
Robust Design - products designed so that small variations in production do not adversely affect the product.
Modular design is an approach that subdivides a system into smaller parts (modules) that can be independently created and then used in different systems to drive multiple functionalities (Wikipedia).
Computer-aided design (CAD) - is the use of computer systems to assist in the creation, modification, analysis, or optimization of a design (Wikipedia).
Design for manufacturability (DFM) - is the general engineering of designing products in such a way that they are easy to manufacture (Wikipedia).
Design for assembly (DFA) is a process by which products are designed with ease of assembly in mind (Wikipedia).
Design for the Environment (DfE) is a United States Environmental Protection Agency (USEPA) program, created in 1992, that works to prevent pollution, and the risk pollution presents to humans and the environment (Wikipedia). It focuses on design for environmental manufacturing, packaging and disposal/reuse.
Service design is the activity of planning and organizing people, infrastructure, communication and material components of a service in order to improve its quality and the interaction between service provider and customers (Wikipedia). The interpretation of the service by customers is often shaped by moments of truth. A moment of truth is a critical interaction between the customer and the organization that determines customer satisfaction (Carlzon).