So, you’ve finished your project outline, and your initial market research reveals strong demand for what you’re planning. The next step is to launch the complete product development process, right? You could also cross a busy street blindfolded, and you may make it across unharmed. But the odds aren’t good. The same is true about jumping into new product development without a strong understanding of the risks and opportunities you face. We recommend improving your odds of success with a feasibility study.
A feasibility study is an analysis of the likelihood that a team can successfully complete a project and what the challenges and costs are. Any significant project should have a study done to understand the viability of the effort. There are many different types of feasibility studies, and the steps involved vary from industry to industry.
In new product development (NPD), a feasibility analysis will look at the entire product development process and identify challenges, costs, timing, and potential for success for each of those steps. So, it answers the question, “should we build it?” along with, “how long should it take and how much will it cost to build it?”
This article examines the why and how of a feasibility study for your new product development project. We cover what a typical study looks like, offer suggestions to make your study successful, and include hints on how to get started. By the end, you should know where to start, what to expect, and how critical this step is to maximizing your return on investment.
What A Typical NPD Project Feasibility Study Looks Like
A feasibility study will help you understand the viability of your product, gain information to inform your decision-making, and develop a cost-benefit analysis on the endeavor. Before you start your study, you first need a clear description of the product idea and the market you will be selling into. The second thing you will need is an expert or a team to assist in doing the study — people who know product development, project management, and how to gather information and present it in a useful way. A typical study for a new product is built around looking at every step in the product development process and how to go to market.
Evaluating Feasibility For The 6 Steps Of Product Development
Let’s start with the six standard phases for NPD and what a feasibility study looks at for each:
1. Ideation And Research
For the ideation portion of the process, the study will evaluate and make recommendations on the availability of the right industrial designers and the clarity of the product vision. Then for research, it will assess what type of research is needed, how much effort will be required, and the availability of key information. This is also where you take an initial look at the intellectual property (IP) landscape.
The most important takeaway is how much you should invest in ideation and research to be successful. Outputs include cost and schedule estimates and suggestions for further research.
2. Product Design
Product design is critical to your product’s success, so it needs a long, hard look. This portion of your feasibility study evaluates the effort required and the technical feasibility of your product idea. It should also explore what type of technical resources your design and engineering team will need.
Is your proposed project a “convert-a-napkin-sketch-into-drawings” or “bring-in-the-hardcore-nerds” effort? Because good design is an iterative effort, it should also estimate the best- and worst-case number of design cycles needed. The study will also delve into the schedule and the risks within the schedule, recommend verification and validation testing requirements, and identify when prototyping will be needed.
The most important takeaway is understanding what technical challenges — and potential failure points — you will face. Outputs include a cost estimate for the product design and a list of potential failure modes.
The goals of the sourcing step in the NPD process are to evaluate if there are people who can make your product, document the information they will need to produce good quotes and production plans, and where you should consider manufacturing.
The most important takeaway is an assessment of how hard or easy it will be to find a production partner. Outputs include location suggestions and recommendations on the type of manufacturing partner you should look for.
4. Production Management
A failure at any step in the product development process is painful. A failure in manufacturing can be catastrophic because you are so late in the process, and fixing problems is a massive drain on your financial resources. A feasibility study will dig deep into production. Since you don’t have a production partner yet, it looks at typical failure modes in production around supply chain, quality, and production speed. It should evaluate the balance between labor-intensive and automated production. The study will calculate estimates for cost and schedule, capture dependency, and identify potential problems with the probable manufacturing process.
The most important takeaways are the potential points of failure and recommended backup options. Outputs include estimated production costs with a basic production schedule and feedback from manufacturing engineers.
5. Logistics And Compliance
Once made, you have to get your product to warehouses, shelves, and ultimately to your customers. As the recent pandemic-induced supply chain disruptions have shown, no matter how good your product is, it won’t sell if there is nothing to ship. This part of your feasibility study needs to find shipping weak points and suggest alternatives.
You also need to make sure your product meets local and national regulations and complies with standards. This is where your feasibility study will identify requirements and point out any that will be hard to pass. This is also where your team should look at tariffs and other taxation issues.
The most important takeaway is identifying regulatory requirements. Outputs include a list of standards you need to meet and recommendations on preferred and backup shipping.
6. Supply Chain Management
Once your product gets into the hands of your customers, the product development process still chugs along, focused on maintaining and optimizing your supply chain. Your feasibility study will help you understand what type of effort this requires and the long-term problems you may face. And, because you did a feasibility study, your product’s sales will grow. So, it will also look at if and how your supply chain can evolve to meet growing demand.
The most important takeaway is an estimate of how viable it is to scale your production to meet your long-term sales goals. Outputs include challenges to scaling and where you need to establish multiple suppliers.
Don’t Forget The Sales And Marketing Strategy
Although a full marketplace assessment is part of the research step in the NPD process, a good feasibility study will take a high-level look at your market and how you plan to market and sell your product. There are a lot of unknowns at this point, but a good SWOT analysis of the market is a good place to start. The study should also gather some competitive information and map out comparable pricing. And, without a doubt, one of the most valuable pieces of information you will get from a feasibility study is a preliminary market analysis showing how big your potential market is and the effort required to capture a part of it.
Another area to focus on is the sales environment: assessing the type of sales used in your industry, what the challenges are, how large a sales team needs to be (if any), and how long the sales cycle is. This is also where your team should evaluate the different places your product can be sold — an e-commerce site, retail, and/or through Amazon.
The most important takeaways from this part of the study are estimates of how big your potential market is and how much of it you can practically capture. Outputs include a selling price estimate and a SWOT analysis of your product relative to the market.
6 Suggestions To Make Your Feasibility Study Successful
There is a whole science to feasibility studies, and each attempt needs to fit your product and industry. After doing a few, you start to see some basic lessons you learn over time — sometimes the hard way. Here is our take on six suggestions to help you obtain a helpful feasibility study.
1. Capture And Prioritize Which Parts Of The Project You Need To Study
A feasibility study is only useful if done on time and gives you the information needed to make a go/no-go decision. So start the process by looking at your project plan and identifying what information you need to decide and which are the most important. This will help your assessment team know what to focus on and how much effort to put into each phase of their study. Decide how important aspects like legal requirements, technology requirements, staffing requirements, operational feasibility, economic feasibility, and financial feasibility are to the project.
2. Dig Deep To Get Answers
For those high-priority items, the team needs to dig deep and keep asking “why?” to understand what generates threats and challenges and also how to deal with them. They should leverage whatever data is available to get quantitative information. A great example is talking to the manufacturing engineers at any company supplying you with a production estimate. Don’t just take their quote. Ask questions about the project scope and challenges and potential areas of improvement. Also, never use just one source. Get quotes and feedback from multiple people.
3. Be Creative In Looking For Potential Problems
A successful feasibility study involves thinking outside the box and using your team’s brainstorming skills to uncover potential problems and find solutions. The team should always be asking themselves, “what about this?” while looking at every step in your product development process and go-to-market strategy.
4. Learn From The Mistakes And Success Of Others
Don’t reinvent the wheel. Take the time to explore what other businesses have done with similar products and uncover what went right and what went wrong. History is a great teacher if you look at it without bias and learn from the past. A great source for this type of information is the people you are getting estimates from. Ask them about similar projects and how they went.
5. Include Growth And Scaling
If you are starting a project for a new product, it is tempting to just focus on the validity of getting the product to market. Yes, you need a successful launch, but you make your money over time by growing and scaling your business. Make sure your feasibility report includes looking at the challenges you will face over time, and especially how hard or easy scaling up production, logistics, sales, and marketing will be.
6. Identify And Listen To Multiple Stakeholders
Normally, it’s a good thing that people have specialties. However, specialists tend to be a little short-sighted, and if they are experts at using a hammer, every problem looks like a nail. Make sure you identify all of the stakeholders for your project — from the person that came up with the idea to the end customer. Include people who can look at technology considerations and organizational structure. Ask them what they think and listen to what they have to say.
Let’s Get Started On Your Feasibility Study
Hopefully, this review has helped you understand what a feasibility study is and why it’s so important. Not only will it help you decide if you should move forward with your product, but it will also provide critical information for your business plan. And the more information you have, the better you can manage your balance sheet and your bottom line.
Whether you’re a startup or an established brand with products already on the market, when you start a new project, you should conduct a preliminary analysis of your product’s potential with a feasibility study. And as suggested in the recommendations for success, you need a team with broad, interdisciplinary knowledge with proven competency to conduct your feasibility study efficiently.
At Gembah, we think this process is so important that we offer a feasibility study as a standard package through our Marketplace. Besides the items listed above, our study will also provide you with a full product development quote and recommendations for global manufacturing options. Our diverse team of experts can address every aspect of your potential project and deliver actionable recommendations to help you make the right decisions. You can start now by visiting our Marketplace or by contacting us and sharing your product vision.