Digital Product Development Process: A Complete Breakdown

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Every business owner sets out to achieve one thing with their business: success. If there’s one thing that distinguishes successful businesses from unsuccessful ones it’s innovation through New Product Development or NPD.

Nowadays, customers can order anything from the palm of their hand which is causing customer trends and business dynamics to change fast. That’s exactly why countless companies are investing millions to develop digital products in order to stay competitive.

Digital products are goods that are distributed through electronic means such as apps, software, algorithms, and dashboards. Developing digital products is similar to creating physical products, but, despite their similarities, only 10% of digital product ideas translate to successful products. This makes it essential to have a proper development process in place to ensure your chances of success.

In this article, we’ll discuss what digital product development is, the stages of the digital product development process, and frameworks to achieve product development success.

What is Digital Product Development?

Digital product development is the process of developing digital products or digitizing existing products. Some famous examples of digital products are MS Office and HubSpot. Companies conduct digital product development to create valuable mobile apps or web apps for end-users and to gain a wider customer base by reaching new markets through digital mediums.

5 Stages of the Digital Product Development Process

  1. Ideation

There are many ways to generate ideas for your digital products including:

  • Brainstorming
  • Market Research
  • Competitive Research


Brainstorming for ideas is the most common way to quickly gather ideas for your next digital product. With brainstorming, there are no “bad” ideas, and none of the ideas are evaluated or criticized during this stage.

This is a great exercise to promote team bonding and innovation as it removes any barriers from the creative process and leads you to a big pool of ideas to consider.

Market Research

Market research is the most promising way to research your digital product because you’re directly gathering feedback from your potential customers. Through customer surveys, interviews, and focus groups you can gather valuable feedback to identify customer needs and market gaps. This reduces the risk of your digital product failing since you will be creating a product that already has a market.

Competitive Research

Identify your competitors to see what they’re doing and, more importantly, what they aren’t doing. Take a good look at the products and services they offer and explore some potential opportunities for a competitive edge.

Maybe they have a great digital product, but they lack good customer service – identifying these weaknesses can help you discover ideas for your next digital product.

Once you have some ideas, try to narrow them down to a few good ones. These ideas should be enough to give you a good idea of how much budget to allocate for the development of your new digital product.

Also, remember that you should only decide upon a simplified version of your initial idea to lessen the risk of spending too much capital on something that might not bring you a lot of profit.

  1. Design

You have an idea, but now you need to visualize it. In the design phase, you’ll use different visualization techniques to give a preview of how your product would look and feel. You can do this by sketching, wireframing, and/or creating the UI/UX of the app or software.

This task is usually undertaken by the design team, so ask your designers to give you some concept designs of the finalized product. If it’s a website, ask them to create a wireframe of the homepage and how the user will navigate through the website.

At this stage, the product doesn’t need to be functional. Rather, the design should be kept plain and simple. This will help give a general idea of the finalized product without spending too much time or money on creating the concept. You can then evaluate the design to optimize it to provide a pleasurable user experience and accurately capture your brand.

  1. Development

After you’ve finalized a design it’s time to create the product. This stage is going to focus on the functionality and usability of the product. Here the product development team will create a minimal viable product (MVP) and test it for bugs, errors, and further optimizations.

This phase consists of two main steps:

  • Prototyping
  • Testing


A minimum viable product or prototype is a finalized version of the product made for testing and validation. It’s common for businesses to first make multiple low-fidelity (low-fi) prototypes, which is a basic version of the product. This prototype includes only the basic functionality of the end product with minimum visual design, content, and interactivity.

These low-fi prototypes are used to gather initial user feedback and are further developed into high-fidelity or hi-fi prototypes. Hi-fi prototypes are intended to be a replica of the final product and lead to meaningful feedback from end users. This prototype is usually created using design software or coded to enable proper functionality.


Once you have access to the actual product through prototyping, you can then use it for user testing and gathering feedback.

Testing is broken down into three sections:

  • Alpha Testing – This is a small-scale test where the product is passed around to internal stakeholders. Their feedback is used to make small tweaks and adjustments to the product.
  • Pilot Testing – This is a medium-scale test where the prototype is tested and validated by a selected group of users. These users then provide their feedback and thoughts about the product.
  • Beta Testing – This is a large-scale test where the product is released to the public for multiple users to test and provide feedback. At this point, the product should be close to being finalized due to the tweaks made in the alpha and pilot testing stages.

A beta test doesn’t mean that your product has officially launched. Beta versions of the product are still produced on a smaller scale with low-effort marketing. When you launch the product, you will commence full production, along with strict quality assurance checks, to ensure a successful launch.

  1. Launch

After developing, testing, and validating the product, you’re ready for launch Following beta testing your product, you can start marketing your finalized digital product to attract customers and retain customer attention building up to the actual product launch.

By conducting market research in the ideation phase, you should already have a good idea of your customer’s interests and pain points which can help you effectively market your products.

Some product owners may also work with Marketing to introduce the product with a soft launch, serving only a few people before hyping it up and risking over-promising to their customers. This can help make those final adjustments before a wider launch and scale more efficiently while keeping their customers’ trust.

  1. Maintenance & Support

After launching a product, there is still some risk of the product going downhill. An initial surge in sales can give you a lot of hope about your product’s success, but it doesn’t guarantee it. Once the market hype dies down, you can expect to see sales fall if you do not offer ongoing development of the product to improve quality and to keep customers engaged.

A great way to gather customer feedback post-launch is to use analysis tools that help track and analyze your visitors’ behavior with your new app, software, or site. Google Analytics is a popular tool that helps you track essential metrics and check your progress on your OKRs or KPIs.

You can also set funnels and marketing channels on Google Analytics to understand your target audience better. This valuable data can then help you to retain your customers and keep them engaged by offering timely updates on your newly developed digital product.

It’s also important to monitor the user response post-launch as it’s still possible despite all the strict quality checks that some bugs may have seeped through. Be quick to respond to negative feedback through exceptional customer support and timely updates as well as provide additional resources such as free trials, webinars, or product demos to prolong the life of the product.

Frameworks for Implementing the Digital Product Development Process

Although the above-mentioned digital development process is a great place to start, there are other specific frameworks companies use to create digital products such as:

  • Waterfall Development
  • Agile Development
  • Lean Development

Choosing the right framework for your digital product development depends on your team’s ability and business goals. It’s also possible to use a different framework for various projects, but sticking to one framework and tailoring it to your specific business can help you create high-quality digital products consistently in the long run.

Here’s a breakdown of each framework to help you decide which one may be best for you.

Waterfall Development

The waterfall is the traditional approach to product development. It follows a logical order with sequential steps or stages. In waterfall development, the production process does not move to the next stage until the previous stage is completed.

Waterfall development typically consists of the following stages:

  • Requirements
  • Design
  • Implement
  • Verify
  • Maintenance

This way of production has remained the status quo for the longest time, which has made many senior executives and managers accustomed to it.


  • A clear sense of direction with an established end goal
  • More control for senior managers to reduce mistakes
  • Transfers information clearly from top to bottom management


  • Changes are difficult to implement due to budget or time constraints
  • Doesn’t take into account customer feedback to make improvements
  • Conducts testing at the end when it may be too late to make significant changes

Agile Development

Agile development is a modern approach to product development and caters nicely to the fast-changing trends of the digital era. In Agile development, production is done in iterations or sprints, and each sprint is incremented on top of the previous one. It encourages agile teams to collaborate and take into account constant feedback from customers to continuously improve the product until it’s tailored to user needs.


  • Flexible and adapts to change
  • Ensures maximum product quality as digital products are made according to user’s needs
  • Faster product launches as prototypes are made quickly for testing and validation


  • Uncertain timelines or costs may occur
  • Limited documentation for production
  • Lesser control for senior staff which may cause issues at the production level

To learn more about agile development read our detailed guide.

Lean Development

Lean development seeks to minimize waste whilst maximizing output – leading to high efficiency. It is ultimately an Agile framework and consists of a product development cycle of the following steps:

  • Ideate
  • Explore
  • Validate
  • Grow
  • Sustain
  • Retire

Just like Agile development, lean product development is an iterative process where product developers learn as they go and use customer feedback to keep improving the product.


  • Maximizes efficiency by minimizing wasted resources
  • Adaptable to changing conditions due to a flexible strategy
  • Easier to scale compared to most frameworks


  • Poor inventory management due to a lower level of stock kept
  • The high initial cost of implementing lean production techniques and systems


All businesses are different, which is why they may use a different approach to digital product development stages in their industry. Having a smart and effective digital development process comes down to your team’s ability, budget, and business goals.