NEW MARKET DEVELOPMENT
TOPIC: PRODUCT MARKET STRUCTURE
OBJECTIVES:
1. Identify market structure
2. Differentiate the types of Market competition
3. Know the stages and strategies of the new product development
A. Market Structure
B. Types of Market Competition
C. New product and development stages and strategies
Market Structure
Market structure, in economics, refers to how different industries are classified and
differentiated based on their degree and nature of competition for goods and services. It is
based on the characteristics that influence the behavior and outcomes of companies working in
a specific market.
Understanding Market Structures
In economics, market structures can be understood well by closely examining an array of factors
or features exhibited by different players. It is common to differentiate these markets across the
following seven distinct features.
1. The industry’s buyer structure
2. The turnover of customers
3. The extent of product differentiation
4. The nature of costs of inputs
5. The number of players in the market
6. Vertical integration extent in the same industry
7. The largest player’s market share
By cross-examining the above features against each other, similar traits can be established.
Therefore, it becomes easier to categorize and differentiate companies across related industries.
Based on the above features, economists have used this information to describe four distinct
types of market structures. They include perfect competition, oligopoly market, monopoly
market, and monopolistic competition.
Types of Market Structures
1. Perfect Competition
Perfect competition occurs when there is a large number of small companies competing against
each other. They sell similar products (homogeneous), lack price influence over the
commodities, and are free to enter or exit the market.
Consumers in this type of market have full knowledge of the goods being sold. They are aware of
the prices charged on them and the product branding. In the real world, the pure form of this
type of market structure rarely exists. However, it is useful when comparing companies with
similar features. This market is unrealistic as it faces some significant criticisms described below.
No incentive for innovation: In the real world, if competition exists and a company holds a
dominant market share, there is a tendency to increase innovation to beat the competitors and
maintain the status quo. However, in a perfectly competitive market, the profit margin is fixed,
and sellers cannot increase prices, or they will lose their customers.
There are very few barriers to entry: Any company can enter the market and start selling the
product. Therefore, incumbents must stay proactive to maintain market share.
2. Monopolistic Competition
Monopolistic competition refers to an imperfectly competitive market with the traits of both the
monopoly and competitive market. Sellers compete among themselves and can differentiate
their goods in terms of quality and branding to look different. In this type of competition, sellers
consider the price charged by their competitors and ignore the impact of their own prices on
their competition.
When comparing monopolistic competition in the short term and long term, there are two
distinct aspects that are observed. In the short term, the monopolistic company maximizes its
profits and enjoys all the benefits as a monopoly.
The company initially produces many products as the demand is high. Therefore, its Marginal
Revenue (MR) corresponds to its Marginal Cost (MC). However, MR diminishes over time as new
companies enter the market with differentiated products affecting demand, leading to less
profit.
3. Oligopoly
An oligopoly market consists of a small number of large companies that sell differentiated or
identical products. Since there are few players in the market, their competitive strategies are
dependent on each other.
For example, if one of the actors decides to reduce the price of its products, the action will
trigger other actors to lower their prices, too. On the other hand, a price increase may influence
others not to take any action in the anticipation consumers will opt for their products. Therefore,
strategic planning by these types of players is a must.
In a situation where companies mutually compete, they may create agreements to share the
market by restricting production, leading to supernormal profits. This holds if either party
honors the Nash equilibrium state, and neither is tempted to engage in the prisoner’s dilemma.
In such an agreement, they work like monopolies. The collusion is referred to as cartels.
4. Monopoly
In a monopoly market, a single company represents the whole industry. It has no competitor,
and it is the sole seller of products in the entire market. This type of market is characterized by
factors such as the sole claim to ownership of resources, patent and copyright, licenses issued by
the government, or high initial setup costs.
What is new product development?
New product development is the end-to-end process of creating a product that has never been
brought to market—from idea to concept, prototyping, developing, testing, and launch. It
involves building a product strategy and roadmap to successfully guide cross-functional teams
and stakeholders through the entire process.
Unlike product enhancements and upgrades that modify and improve existing products, new
product development addresses the unique challenges of designing and delivering brand-new
products. This article discusses the seven stages of new product development, some challenges
Agile teams face along the way, and how you can succeed.
The 7 stages of new product development
Successful Agile software development takes careful planning and good project management
practices. The seven stages of new product development guide you through the process by
breaking the work into stages or steps.
1. Generating ideas
Every new product begins with a problem and ideas to solve it. Ideas may come from within the
company, such as the customer service team, or from outside via customer and market research.
In this phase, it's important to gather all ideas without discrimination. The more ideas you can
brainstorm, the better.
Products such as Jira Product Discovery help product teams structure the chaos of prolific ideas.
Ideas can be supported by data, customer feedback, sales input, support tickets, and more to
help shape what the product team should focus on, creating ongoing feedback loops. Idea
generation is most effective as a team activity with the outcome of developing the essential
elements for a new product.
To help you prioritize ideas, methods such as a SWOT or Competitive analysis take the guess-
work out of the process. When generating ideas, having a clear understanding of where
opportunities exist and knowing how the competition stacks up can lead to brainstorming
disruptive and game-changing ideas.
2. Screening ideas
Agile teams can use Jira Product Discovery matrixes to view a large number of ideas, using
criteria such as impact, effort, and confidence level before scoring and selecting which ideas to
move into the next phase. Gathering and organizing product ideas in a centralized tool makes it
easier for product teams to prioritize which ideas or features will drive the most impact.
Scoring ideas by product development effort versus the overall impact of the solution is an
excellent way to focus on those with the most impact. The SWOT and competitive analysis
templates from step 1 can provide the foundation for where to place priorities.
You can also identify good ideas that are simply not right for this new product but may be
suitable for future products and the goals of the team. Screening ideas can be difficult, but
aligning each good idea to your goals and comparing its impact to other ideas will help identify
the most impactful opportunities.
3. Creating a product strategy
After selecting ideas to develop into a new product, it's time to create your product strategy. This
is a concise definition of the need that the new product meets. A good product strategy includes
the vision, target market or user, position in the industry, features and benefits, and the value
the new product brings to the business. This phase involves creating a clear definition of the
requirements.
Confluence offers a strategic plan template that can help you refine your strategy messaging,
remove ambiguity, and clearly communicate the goal. From here, the Confluence requirements
template walks you through the process of outlining your objectives and success metrics, listing
assumptions and options to address them, and adding supporting documentation. These efforts
include prototyping and validating with customers, ensuring the product being built will be
something that customers want.
4. Building a product roadmap
A product roadmap is an action plan. It outlines product functionality, and release schedules and
helps you manage new product development. Think of the roadmap as the core communication
tool for short- and long-term efforts that align with your business goals. It's a shared source of
truth for a product’s vision, direction, priorities, and progress over time. Creating a great product
roadmap keeps your entire team working together and moving in the same direction (try
our product roadmap template). They also make it easy to check in on the work at any time
throughout the product development life cycle.
Product teams using Jira Product Discovery can then share their product strategy using always-
up-to-date, custom roadmaps to present which ideas will be built, when, and why.
5. Prototyping
Time to market is critical for new product development, and your ability to rapidly prototype and
develop products ensures viable solutions. Jira Product Discovery’s integration with software
development tools like Jira makes it easy to seamlessly connect your entire software delivery
lifecycle.
6. Testing
Defects and change requests are simply a fact of new product development, but concise tracking
and issue management keep everyone on your team informed, organized, and on schedule.
Testing can span both internal quality assurance (QA) teams as well as customers and end users
engaged in alpha, beta, or user acceptance testing. Jira is the leading tool that Agile teams use
for testing, in part because it optimizes the QA workflow by writing and managing test scripts,
tracking test cases, and managing defects.
The product roadmap template from the previous step, along with other Confluence project
planning templates, also inform testing and help ensure you miss nothing.
7. Product launch
You only get one chance to make a good first impression, and launching a new product requires
careful planning and delivery. Every step in the process is a building block to a successful launch.
Confluence’s product launch template helps ensure a smooth launch.
Additionally, sales and marketing, HR, and legal teams are already using your product strategy
and roadmap to align messaging, identify opportunities, and ensure regulatory compliance.
Using Jira, they can seamlessly connect their work with the product team’s. It provides a
streamlined UI and integrations with the tools they use daily, such as Gantt charts and
spreadsheets.