The Possibilities of Internet Based Product Development

ABSTRACT

A great deal is currently being said about product sales through the Internet. Different from other media because of the two-way flow of information that it allows, the Internet can be used not only to promote products and respond to customer questions, but also to actually develop the products themselves. By using the Internet to survey the needs of their consumers, for example, an increasing number of companies are successfully developing popular new products.

The idea of "information stickiness" - i.e. how difficult certain information is to be transferred from one individual to another- is used to determine for each product whether the important product development information lies with the manufacturer, the consumer, or the retailer. "Information stickiness" will be the basis for our discussion on the impact of the Internet upon product development.

Internet based product development involves four key players: 1) the manufacturer, 2) the retailer, 3) the consumer, and 4) the third party companies (e.g. a product evaluation website). While introducing current examples of each, this report examines the differences in the roles of each player, the nature of the collaboration that can occur between them, and, finally, how both of these relationships shift depending on the type of product being developed.

According to our survey, savings in time and cost is regarded as the greatest benefit to utilizing the Internet for product development. But the Internet will also enable a closeness of communication with consumers that is not allowed by the conventional means of marketing research. By perceiving more accurately the increasingly diverse needs of their customers and giving them a sense of involvement in the product development process, producers will also be able to develop stronger product loyalty. In strengthening product loyalty, however, producers should also be wary of over privileging a single contingent and closing out the general market. This report will use survey results conducted on the current state of Internet based product development in Japan to discuss in further detail the merits and demerits of utilizing the Internet.

There is no doubt that if the Internet is used effectively, businesses can enhance their product development activities, a vital source of competitiveness. Thus, by applying an understanding of the merits, limitations, and points of caution discussed here, companies can achieve large leaps in their own competitive position.