What is Digital Product Development? Everything You Need to Know

In today’s technology-focused world, everything seems to be digitalizing. And digital products are becoming a prime focus for several large and driven organizations.

According to a report by Gartner, IT spending worldwide is anticipated to increase by 4% and reach $3.8 trillion. Organizations are supercharging their digital efforts to thrive in the competitive marketplace, thus leading to an increase in digital product development spend.

The advancement in technology has created a whole new era of digital products and services. From creative design tools, video games, email services, video streaming apps to AI-powered voice assistants and messenger apps, there are innumerable digital products that are not just complementary to their physical counterparts but are native to digital.

Digital products are developed using digital product development principles. These principles follow a very different approach and can be a game-changer for businesses of all sizes.

What Is A Digital Product?

Essentially, a digital product is anything that you interact with via a digital medium. It is a product that can be sold online but does not have a physical form. For instance, web elements, software applications, templates, guides, e-books, data and research, music, etc. are all examples of digital products.

That said, people often find it hard to distinguish between digital products and digital services. A digital product is something that is sold to the other party. A product’s existence is independent of the buyer and seller. A digital service, on the other hand, involves a process and helps to develop a relationship with the customer. For instance, a digital service may include teaching the tricks of software development to someone or even selling a web page template.

Nowadays, most organizations offer digital products and services in combination with each other. This helps to develop a sustainable and lasting commercial relationship with the customer. And this is why it gets difficult to distinguish between digital products and services.

So, if an organization sells a website template along with frequent updates, support, design tweaks, and other additional elements, it becomes a digital product-service hybrid.

Purpose of Digital Product Development

Digital product development helps to create an efficient growth process that grabs consumer attention. It engages them with a seamless user experience and persuades them to make a purchase. In other words, digital products delight and engage consumers to a point where they feel organically inspired to become product advocators.

The process leverages actionable data, consumer analytics, marketing techniques, and design thinking principles to develop a product that satisfies the unmet needs of the consumers. It improves the consumer experience and keeps them coming back for more. That is the true purpose of digital product development.

Digital Product Development Process

The digital product development process is all about creating a product that engages the users and provides value. But how does a digital product come to life? How does it go from an idea on paper to virtual reality? Is there a set roadmap to digital product development or do companies reinvent the wheel every time they get a new idea?

Thankfully, several organizations that have plunged into the process have offered helpful insights. Although every digital product is different, certain predictable steps need to be followed. Here, we will look at a 7-step strategy for successful digital product development.


This is the first and foremost step of digital product development. Often, many organizations and product developers skip this part. As a result, they become attached to a solution that doesn’t fit the market needs.

Essentially, discovery is the process of identifying a problem to be solved. It seeks to uncover the pain points of customers and envision a solution to those pain points.

Sometimes, developers believe that they already understand the problem and overestimate the value of addressing that problem. But missing the mark here can make your digital product fail. So, it is imperative to take time to fully understand a problem or a need that is present to devise an optimum solution.

But what is the best way to discover a problem that needs a solution? Although there is no right answer to this, you can try to use the following techniques:

  • Research the ongoing trends: Consumer trends keep shifting. Staying on top of these trends can lead you in the direction of product brainstorming. These trends can be plant-based diets, fitness, Eco-friendliness, supplementation, etc.
  • Address your personal problems: If you are facing a problem, chances are that others might be facing it too. Stay alert in your daily life and look for problems that can be addressed by a digital product.
  • Find a way to improve an existing product: Many times, the problem you encounter may already have a digital solution. But if you find a better and more efficient way to solve that problem, you could be onto something. Additionally, you can create a variation of an already existing product with a unique selling proposition (USP) attached to it. For instance, you can develop an economical or a more luxurious version of an existing product and attract the consumer.

Also Read: 5 Best Tips to Find the Right Offshore Development Team for your Project

Idea Screening & Research

The primary objective of this stage is to brainstorm all possible solutions to the problem identified during the discovery stage. It involves creating a robust strategy to build a product with market demand.

Identifying solutions to develop into products can take several forms. For instance, you can try any one of the following:

  • Brainstorming: It is best to turn to people with industry knowledge and expertise for an internal review. This will help to ensure the viability of the solution.
  • Consulting an Agile Team: Talking to an Agile team can help you understand the technical side of things. They can also help to build a POC which is crucial to check the feasibility of the idea.
  • SWOT Analysis: SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. The product owner along with the Agile development team can conduct a thorough analysis of the idea to ensure that the strengths and opportunities override the threats and weaknesses.

At this stage, you must also conduct extensive research to ensure that your idea is worth a shot. At the research stage, the product owner needs to:

  • Research the market to understand the target audience
  • Conduct a strategic competitor analysis
  • Estimate product-market fit

This will help to align the digital product strategy with the precise market needs and expectations.

Architecture and Prototyping

After the ideation, it’s time to move forward to determine the look and feel of your digital product.

Prototyping helps to create a non-functional model of the solution that enables the stakeholders and investors to visualize the final product. It is the initial attempt to introduce UI/UX visually. Typically, prototypes are created with basic features and limited functionality. Their purpose is to attract investors and get feedback on the product.

Once you have the prototype, you can run tests with the target audience and your team. This will help to find out how the real users react to the product.

The stage will also involve customer journey mapping and feature set identification. The product features you integrate will make or break your business. So, while enlisting any product feature, pay attention to its originality and the problem that it will solve.

Product Development

Upon the completion of the prototyping stage, it is safe to proceed into full-scale development. If you work with proper procedures, this stage should be straightforward.

You begin with developing an MVP, i.e. Minimum Viable Product. As the name suggests, it is a product that integrates the bare minimum functionalities required to address the problem. The iterations will depend on the initial response.

The best way to approach digital product development is through Agile implementation. Agile development enhances the pace of product development and focuses on iterative development while boosting communication and collaboration.

The Agile approach is much better than the waterfall approach as the former enables quick-to-and-fro movement across the development cycle as new user requirements come up. That being said, many organizations are also adopting a hybrid approach that involves a mix of waterfall and agile technologies. This approach lets businesses customize the methodology to match the precise requirements of the project.

Testing and Quality Assurance

Rigorous testing and quality assurance seek to determine the viability of the new product. It helps to reduce ambiguity around its success after launch.

Typically, the stage involves two market testing strategies.

  • Alpha testing: The test engineers within the digital product development company use and judge the product based on its performance. In case of any issue, the product is suitably tweaked before the final launch.
  • Beta testing: A group of target users use the product and provide unbiased feedback on the same. The issues identified are addressed before a public version of the product is released.

The tests help to ensure the quality of the digital product and identify and eliminate any defects.


Once the MVP is ready, it’s time to hit the market. Essentially, a digital product launch implies putting your product on the market and offering customers their first crack at your solution. You can take several different approaches to launch, including a soft launch, a hard launch, or a dark launch.

You will also require a powerful pre-launch strategy to grab the attention of your target customers. For instance, you can build up some hype around your product by creating teasers, social media campaigns, landing pages, email marketing, and other promotional campaigns.

Remember, the market launch isn’t as simple as it may seem. The process will involve varied activities to entice your target users. In the initial stages, you have already figured out your user persona. So now, it’s time to roll out effective marketing strategies that may include leveraging social media networks, influencer campaigns, referrals, digital advertising, and more.


The post-launch support and maintenance phase is crucial. It is what separates successful products from the average ones. Typically, the phase should include the following:

  • Gathering and analyzing feedback: Your customer’s interaction with the digital product will provide valuable insights to improve your offerings.
  • Determine the optimal price: The customer feedback will also help you find out whether the product price is a little too high or low.
  • Scale-up marketing efforts: In order to reach more customers, you must work on marketing your product on different platforms.
  • Continuous testing: At every step of growth, you must validate your old hypotheses and your new ones to make the product as practical and viable as possible.

The following steps will help to adapt your digital product to a dynamic environment and shifting consumer needs.

Important Principles of Digital Product Development

As a responsible digital product development company, you must adhere to the following principles.

  • Design for the end-user: The user must be at the center of product development. You must focus on his needs and pain points while approaching development.
  • Understand the ecosystem: In today’s competitive era, it is important to stay abreast with the latest trends in technology and consumer patterns to develop products that hold up.
  • Create data-driven and scalable products: Make sure the product is based on actionable data and not gut feeling. Also, identify and eliminate any potential holdups that may arise due to a sudden surge in demand to ensure product scalability.
  • Address privacy and security challenges: Complete security and data privacy should be central to product development.
  • Build for sustainability: You must develop products for the future. Opt for a product that contributes to sustainability and gives back to the local communities.

Effective implementation of the digital product development strategy can help business organizations develop a product that people love. While approaching the development process, it is important to focus on innovation while delivering value.

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