Building Digital Products: How to Wow the Market

However, product development is a more dynamic and interdisciplinary process requiring more than just technical execution.

For those looking how to create a product from scratch, this guide presents steps that organizations and startups should take to boost their chances of building successful digital products and services. Digital products come in many forms, allowing creators to leverage their unique skills and knowledge to reach a global audience without the limitations of physical delivery. Unlike physical products or physical ones, digital products do not require manufacturing, inventory, or shipping, which significantly reduces costs and complexity. You can sell digital products online instantly, and selling digital products offers advantages over selling physical ones, such as scalability, passive income potential, and accessibility for buyers worldwide.

To help contextualize this, we’ll also identify the most common challenges in product development and the benefits of adopting product-oriented processes in developing a product from scratch. Building digital products is also a proven way of making money in the digital economy.

Introduction to Creating Digital Products

Creating digital products opens up a world of opportunity for businesses and individuals looking to share their expertise, solve problems, and generate passive income. In today’s digital-first landscape, the process of creating digital products—whether it’s online courses, software, or mobile apps—has become more accessible than ever. Digital products come in many forms, allowing creators to leverage their unique skills and knowledge to reach a global audience without the limitations of physical delivery. By building a digital product business, you can scale your offerings, diversify your revenue streams, and tap into the growing demand for quality content and innovative solutions. Whether you’re a seasoned entrepreneur or just starting out, understanding the fundamentals of creating digital products is the first step toward building a sustainable and profitable business in the digital economy.

Most common challenges in creating a new digital product

No company, inventor, or startup founder intends for their product to fail and yet 95% of new products do. Before going into the strategic steps that organizations must take in building a novel digital product, it’s vital to recognize the recurring barriers in the product development process.

One key challenge is the misconception that you need a massive audience to validate your product concept. In reality, you can test ideas and gather valuable feedback from a small group of users before investing heavily in development.

Here are the most common challenges that startups and enterprises face in developing a product from scratch.

Achieving product-market fit

In a survey among startups that closed down, 34% attributed their failure to lack of product-market fit and another 22% to marketing-related problems. This means that a majority of startups that fail admit to not investing sufficient effort understanding their customers.

Often times, this is rooted in a promising idea but the product’s market viability is not studied enough. Organizations can be tempted into jumping into product design and development without the proper discoveries, user research, market research, and other analytical processes.

Founders and managers can sometimes be biased with their assumptions and reasoning, which deters them from asking the right questions. Not validating your ideas increases the likelihood of product failure.

This challenge manifests in many different forms but typically reveals itself later than product teams would like. It could be about mismatch with target customers, mistakes in product pricing—such as not experimenting with different price points to find the optimal market fit—poor messaging and branding, or market size smaller than initially estimated.

There are products that don’t solve any problem at all, or the problem doesn’t actually exist, or the number of customers affected by the problem is not sufficient enough to make a business from it.

In the guide below, we’ll talk more about how performing a discovery and validating a product idea, while not a guarantee of success, can lead to an effective product launch, acquisition of early users, product-market fit, and a scalable business.

Building the right team

The first challenge in building a product team is defining the key roles based on the scope of the product development process. It goes without saying that picking the right product manager or lead is of paramount importance. It's been reported that a fully optimized product manager can increase profits by 34.2% (280 Group).

New digital products typically require personnel for business analysis, design, technology, marketing, and project management. The ideal team composition during product research, discovery, and validation include a product manager, UX researcher, technology-specific engineer, growth hacker, and other relevant subject matter experts.

Startups and smaller organizations find this challenge even more difficult as some personnel may have to double-up on responsibilities and learn new product development skill sets.

Businesses will also have to consider if certain team members may have to be sourced externally such as engaging individual contractors or agencies. Companies don't have to individually hire team members on their own as agencies such as Netguru can provide the experts in building products from scratch.

In our projects, during the ideation and discovery phase, we assign innovation or discovery consultants and product managers to help you to build the right product.

Managing execution issues

Assuming that a product team has done their analytical work and has come up with a validated product idea, they should expect plenty of bumps in the road when it comes to managing workflows, engineering the product, engaging internal and external stakeholders, executing the business strategy, and complying with regulations, among many others.

A key benefit of being product-oriented in your approach is that it allows for incremental and rapid reviews of the product. Problems will always come up in product development, but what matters is that there are mechanisms that surface and address these issues at the soonest possible time before problems snowball.

For instance, we at Netguru, when possible, suggest developing products in a dual-track agile framework, where product teams conduct discovery and development simultaneously and iteratively.

Meeting time-to-market

A product team's ability to meet launch timelines and respond to market movements can determine the product's market positioning. In fact, 50.8% of product managers say that lack of time is a continuing challenge for them and 39% of product management and marketing professionals are worried about missing launch dates.

Product development, especially creating them from scratch, is far from a straightforward process. There can be a certain level of tolerance for missing deadlines, particularly on obstacles related to unforeseeable circumstances, hiring delays, legacy systems, and compliance issues.

While product or project managers may have little control over some delays, they are ultimately expected to fine-tune operations so that critical milestones are delivered according to their team's established timeline.

Instead of looking and recruiting for internal talent, tapping the services of a digital agency can help shorten time-to-market — not to mention that this route can also be cheaper for organizations. With readily available experts skilled in conducting discovery, user research, prototyping, and many other product management tools, engaging agencies can speed up project delivery

Disclaimer: This is an exemplary timeline for Market Research, Product Design and Validation with a Data-science workshop for a machine learning product built from scratch. 'N' is a variable that is estimated per particular project.

6 steps in building an exceptional product from scratch

A product-oriented approach requires analytical rigor before diving into product ideation, design, and development. Further, we believe that product teams must embrace cycling through learning, building, measuring again and again in order to deliver a digital product that can carve out a place in the market.

It’s important to recognize that the product development process is elastic. If the discovery process or insights generated during user testing strongly suggest that you should pivot your product, then you should follow the evidence and pivot.

It’s better to change course or modify your product idea or design before heavy coding begins. At this stage, ensure that your actual product aligns with user needs and market demand to maximize its chances of success. Ideally, you should be able to gather sufficient evidence or insights during discovery, product validation, or proof of concept before serious work on product engineering commences.

Here’s our guide on the six (6) steps that you must take to create a successful digital product from scratch.

1. Market research and product design

While the organic or common approach in product development is that businesses begin with a specific problem, we suggest that you should start instead with a broad problem area and then explore what the opportunities might be. This process is called a discovery.

A discovery entails researching a problem space, framing the problems to be solved, and gathering evidence that will guide what to do next. As you plan for user acquisition and sales funnels, it's also essential to consider different sales strategies, such as adaptable pricing models and aligning marketing efforts with specific sales tactics, to optimize how your digital product reaches the market.

Discoveries should initially be broad and veer away from looking at solutions, products, or technologies. When companies perform a discovery around a product idea, it’s no longer a discovery but rather a validation exercise wherein teams seek to confirm that their ideated solution is the best way forward.

It’s important to distinguish between the process of understanding the broad problem area versus exploring product ideas that solve specific problems. While this can be a continuous process, generating product ideas and validating them should be recognized as a separate discipline from pure discovery.

After exploring the problem area, product teams can then define the specific problems they want to solve, conduct further research and analysis, and go into product discovery.

Problem definition

• Refine the problem area into specific problem statements.

• Articulate the specific market gaps where there are opportunities.

• Identify areas where the company can achieve quick wins.

Research and analysis

• Market research: Gather market insights and conduct market research. Understand the market size. Study the market trends.

• Ecosystem mapping: Identify the most important players in the product ecosystem and how they affect each other. Consider the role of search engines in product discoverability and how they influence competitive positioning and digital sales strategies.

• Competitive analysis: Research direct and indirect competitors, including substitute and complementary products. Study business models and pricing strategies.

• Expert interviews: Talk with experts to gain insights and contexts that may not be available from available research. Get experts to assess your plans and ideas.

Product discovery

• Persona research: Empathize with users and co-create user personas with them. Gain clarity on user pain points, “jobs to be done,” and gains that the product can bring them. Segment users and customers.

• User journeys: Design how users will move through and experience the product to achieve their objectives.

• Product scope: Refresh and refine the scope of the product's features and functionalities based on new information. Distil the essence of the product.

• Feasibility check: Understand how future features and functionalities, particularly those that will be introduced beyond the initial releases, can impact the product and the business.

• User acquisition: Clarify how you intend for target audiences to discover your product and convert them into users.

• Sales funnel: Lay out and optimize the process that leads to customer purchases or spending on the product. User acquisition

2. Product Validation

Product validation is the process of testing a product idea with potential users and assessing its viability in the market. Validating a product idea primarily helps in testing and tailoring for product-market fit.

There’s a wide range of techniques in validating product ideas. They can be grouped into two main categories: Lo-fi experiments and Hi-fi experiments. One effective method is offering a free sample—such as an excerpt from a digital product like an ebook—to potential users, allowing you to gather feedback and validate demand before full-scale development.

Lo-fi experiments

Product teams use low fidelity interfaces or tools in conducting tests or experiments. During these early stages, offering lead magnets—such as free resources or downloads—can help attract potential users and gather valuable feedback. Here are several examples of techniques, tools, and activities typically deployed in lo-fi experiments.

Wireframes

Wireframes are black and white sketches intended to convey features and functionalities. These are low-fidelity representations of user interfaces (UI), which depict the structures of visual elements and how content are grouped together.

User interviews

Start with gathering information about problems and needs of users, and defining and validating a potential solution. When you have a solution wire framed, bring it in front of potential customers to have them try it out as if they were using a real product. The team should then observe their behavior and listen to feedback.

Product teams can explore posting their product ideas on a blog or on social media to gather feedback from their target audience.

Landing page

Teams can create a landing page to present features and benefits of the app. Such a landing page should include for instance a call to action such as sign-up form to collect emails of interested users. Additionally, landing pages can be used to automatically deliver a download link to users after they sign up or make a purchase, ensuring instant access to the digital product.

Video

Instead of low fidelity images, you can produce video content such as walkthroughs of key user journeys, promotional videos, or educational material to engage users. Video content guarantees higher conversion and engagement than text or images.

Product managers can create a campaign promoting the app, for instance via Google Ads or Facebook Ads. They allow to segment users based on several criteria, which then makes possible to test their reactions. Often ad campaign is linked with a landing page.

Fake door tests

They offer potential users with an invitation to use a product that doesn't exist yet. This is typically done through a CTA button, an in-app notification, a pop-up, a product video, or an ad.

When the user clicks on the invitation or signs up for the service, they receive an email or land on a page that could say that the product is coming soon. Data collected from a fake door campaign, such as clickthrough rate (CTR) or page interactions, help product teams decide what may or may not work.

Survey

When putting low fidelity artifacts in front of potential users, whether online or face-to-face, teams can accompany this with a survey, which will gather insight on how to better improve the product.

Email marketing

You can share your product ideas through an email campaign. Professionals typically combine this with other methods (e.g. survey, fake door) to gather feedback and generate ideas. Offering free downloads as an incentive in your email campaign can encourage signups and help you collect valuable feedback from potential users.

Lean UX Canvas

Lean UX Canvas is an analytical tool that helps product teams frame their work as a problem to solve rather than a solution to implement. Use this framework before and during your user experiments, whether lo-fi or hi-fi, to help you clarify your product idea.

Customer journey

Use your low fidelity artifacts to map the process that a user goes through in order to accomplish a goal.

A/B testing or split testing

is a method to compare two versions of a product — in this case, a lo-fi version — to determine which one is more successful. The version that prompts more users to take the target objective, such as a conversion, is deemed the better design.

Smoke testing

Similar to a fake door test, is a method to determine whether there is sufficient for a product idea. This is typically done through a one-page website describing the product and asking visitors to sign up to the product or their email list.

Hi-fi experiments

Product teams use high fidelity interfaces or tools in conducting tests or experiments. It is crucial that hi-fi prototypes and mockups are mobile friendly to ensure a seamless experience across devices. Here are several examples of techniques, tools, and activities typically deployed in hi-fi experiments.

Crowdfunding or pre-order

Companies or aspiring startups can use crowdfunding or pre-orders to draw in potential customers to look at their products and generate feedback. While still unfinished, the products will appear to be polished as they're already presented through high fidelity mockups or images. Increasingly, startups are gathering funds by ICO (Initial Coin Offers) and crypto-token funding.

Wizard of Oz

It is a method that allows users to interact with an interface without knowing that the product's responses are being created not autonomously by the product but manually by a human operator.

Concierge MVP

It is a similar method where the team behind the product actually performs the service. Unlike the Wizard of Oz, the users or customers know this and they directly interact with the product team facilitated by the digital product. By directly executing customer requirements, you can collect direct feedback to determine the next steps for your service.

Clickable mockups

Clickable mockups are where certain features or functions of the mockup are able to respond to user engagements, particularly clicks. This helps simulate user journeys to help inform product teams how users will likely interact with their eventual product.

One feature apps

These are working apps but having available only one limited functionality. With the rise of low and no-code generators, now it's possible to build a PoC even without coding.

3. Proof of Concept

In product or software development, a proof of concept (PoC) is an exercise to test that the application or product can work in real life before beginning development.

A proof of concept comes for instance in the form of documentation, a presentation, a wireframe demonstration, a clickable mock-up or preferably a combination of these. At this stage, coding is not yet required.

In addition, the documentation should contain some degree of depth with regard to requirements and technical specifications. It's also usually done internally or within a narrow stakeholder group when outsourcing to an agency.

Design teams can swing back and forth in their wireframes, mockups, and prototypes. These terms are oftentimes used interchangeably but knowing their distinctions help guide the design work during the early stages of product development.

• Mockups incorporate design choices into the wireframes, particularly color, font, and icons. Designers also typically introduce placeholder content, such as text and photos, to approximate the intended look of the digital product.

• Prototypes are intended to partially simulate the intended user experience (UX) of the product. A prototype's UI is typically not yet linked with backend mechanisms. POCs can take the form of no or low-code prototypes.

At the heart of the proof of concept process is measuring and evaluating results. Product teams should gather qualitative and quantitative data as they observe sample users navigate through their mockup or prototype.

This enables product teams to further test the product idea before allowing the programmers or engineers to begin their work. From all the findings during the proof-of-concept phase, product teams can then proceed to developing an MVP.

4. Minimum Viable Product (MVP)

A minimum viable product (MVP) is an early product version that has just enough features for early customers to be able to use it. The journey towards an MVP is when software developers and engineers take on a greater role.

An MVP is intended to be simpler than the envisioned fully-developed version of the application. The full set of features and functionalities need not be available yet as long as it’s a working product.

By building and releasing an MVP, organizations can quickly observe how users actually interact with the product in the real world. This is also the first opportunity to see how customers purchase and engage with your digital product, providing valuable insights into the buying process and user behavior. This enables teams to quickly respond by further iterating and optimizing the product, including removing features that may not be necessary.

This way, companies can avoid substantial and costly changes down the line if the full product would have been shipped to market at a later point without the benefit of early use.

While developing an MVP, companies can also benefit by preparing a product roadmap that presents how to build on the MVP. While teams have to be flexible and adaptable to user feedback, it’s best practice to already have a product roadmap that can anchor the next iterations.

5. Go-to-Market (GTM) Strategy

Launching an MVP is typically done as a soft launch. While there may be little fanfare, the product will already be exposed to its market albeit only to a small number of targeted early users.

Product teams need to prepare a go-to-market (GTM) strategy in anticipation of product releases no matter how small or scaled down the first version of the MVP may still be.

A go-to-market strategy is a step-by-step plan detailing how to successfully launch a product to market. It identifies the target audiences and outlines a corresponding marketing and sales plan for each customer segment. When planning distribution, you can choose to focus on one platform or diversify across multiple platforms, depending on your strategy and the nature of your digital product. While each GTM strategy is different, an effective one presents how to communicate the product as a solution to a key market pain point.

An effective GTM strategy must contain the following:

• Product-market fit: Articulate the problem/s or pain points your product solves or alleviates. Develop the messaging that communicates this. Establish the business model.

• Target audience: Identify customer segments who experience these problem/s. Come up with a pricing strategy.

• Competition: Identify your competitors and articulate how your product is better.

• Demand: Estimate the volume of users and paying customers.

• Distribution: Identify the mediums or channels where you'll be marketing the product and acquiring users.

While this is an elementary description of a GTM strategy, product teams can actually already surface significant parts of their go-to-market approaches during their research and investigation as part of product discovery. You'll also be able to draw lessons learnt from product validation.

6. Scale the product and the business

From the time a product is launched to market, even as an MVP, enterprises and startups will find themselves between pursuing their initial product and business roadmaps and responding to user feedback and behavior. What’s important is that organizations continue to iterate their products that can both meet customer expectations and achieve business results.

At a certain point, when the product has demonstrated that it has a place in the market, organizations should recognize when they need to transition to a growth phase. As part of scaling, consider expanding to other platforms—such as SaaS tools, apps, plug-ins, or self-hosted solutions—to reach new audiences and diversify your sales channels.

Now that the very core of the product idea seems to have already been validated, product teams need to grow the product and the business depending on metrics that matter to them at this stage. Organizations need to set and work on their objectives and key results (OKRs) and set a roadmap to achieve them.

This could be the overall number of users, the number of paying customers, revenue, profit, valuation, or market share, among many others. Keep in mind that choosing which growth metrics to prioritize impacts product development.

At this stage, the journey for product teams has crossed over from creating a product from scratch, typically known as the introduction phase, into the growth phase.

The journey from the growth phase into the maturity phase will present its own unique challenges.

Digital Product Variations

Digital products are incredibly versatile, catering to a wide range of interests, industries, and customer needs. Some of the most popular types of digital products include online courses, which empower users to learn new skills at their own pace, and ebooks, which deliver valuable insights on specialized topics. Digital templates—such as Canva templates or Google Docs layouts—help customers save time and streamline their workflows, making them a favorite among content creators and small businesses. Licensed digital content, like stock photos, sound effects, and video editing assets, enables creators to enhance their projects with professional-quality resources. Digital services, including software solutions and mobile apps, address everyday challenges and provide ongoing value to users. By exploring different types of digital products, businesses can identify the formats that best align with their expertise and the needs of their target audience, ensuring they deliver immediate value and stand out in a crowded market.

Protecting Your Digital Product

Safeguarding your digital products is essential to maintaining your competitive edge and ensuring a positive customer experience. To protect your intellectual property, consider implementing copyright notices and clear license agreements that outline how your digital items can be used. Digital rights management (DRM) tools, watermarking, and file encryption can help prevent unauthorized sharing and piracy, giving you greater control over your content. Additionally, using secure payment gateways and trusted delivery platforms ensures that customers receive their digital downloads safely and efficiently, reducing the risk of fraud and enhancing trust in your brand. By prioritizing the security of your digital products, you not only protect your business but also provide customers with a seamless and reliable buying process.

Staying Up-to-Date with Industry Trends

In the fast-evolving world of digital products, staying current with industry trends is key to maintaining relevance and attracting new customers. Regular market research and active engagement with your target audience through social media platforms can reveal emerging needs and preferences. Gathering customer feedback—whether through surveys, reviews, or direct interactions—helps you refine your offerings and stay ahead of competitors. Participating in webinars, online courses, and industry conferences allows you to expand your knowledge and adapt your digital products to the latest technologies and best practices. By continuously monitoring trends and listening to your customers, you can ensure your digital products and marketing strategies remain fresh, effective, and aligned with market demands.

Measuring Success and Tracking Performance

To build a thriving digital product business, it’s crucial to measure success and track performance across all aspects of your offerings. Utilize website analytics, social media insights, and customer feedback to assess how well your digital products are resonating with your target audience. Key performance indicators (KPIs) such as sales figures, conversion rates, and customer engagement levels provide valuable data for optimizing your marketing and product development strategies. Tools like Google Analytics and social media management platforms can help you monitor trends, identify growth opportunities, and streamline your marketing efforts. By making data-driven decisions and regularly evaluating your results, you can continuously improve your digital products, enhance the customer experience, and achieve your business goals.

Benefits of product-oriented development

Creating a product from scratch is not a straightforward process and it’s not as linear as taking these steps from one through six.

However, applying these product-oriented approaches in developing new products from scratch have been proven to be successful. Implementing these steps in your next project can bring the following benefits:

• Achieve product-market fit: By taking the time and effort to perform a discovery and validate your product, you can increase your chances of achieving product-market fit. It’s not simply about creating a “cool”, smart, or well-designed product, but delivering solutions that solve actual problems for a considerable volume of customers.

• Save on costs: Understanding the market, learning about your users, and adapting from feedback as early as possible will allow you to save on design and development costs. Additionally, building digital products often involves a low cost of creation and distribution compared to traditional methods, thanks to affordable tools and platforms available today. This will also help you avoid making costly mistakes by coding features or products that no one wants or uses.

• Faster time-to-market: Incremental deliveries allow product teams to ship product features in sprints. This can help speed up the pace towards releasing the MVP. Further, corrections or newer versions can be delivered in days allowing teams to react quickly to user feedback.

• Increase chances of funding: For those part of enterprises or more established organizations, strategic product development can help convince executives to allocate funding because discoveries and product validations are grounded on analytical work.

This approach also fits with the innovative nature of startups where there’s emphasis in solving new problems with speed and scale. Angel investors, venture capital firms, and other institutional investors are typically drawn to startups with carefully considered problems and adaptive solutions.

Meeting user expectations and business objectives

While product teams can obsess about delivering quality user experience and good product design at the earliest releases, freshly shipped products should always be an opportunity to meet objectives or metrics that matter to the business.

Delivering a new product goes beyond making a good first impression among early users. It’s also about carving out a place for your company within your market for years to come.

Achieving this requires experts in the earliest stages of product development who know how to frame problems, deploy analytical tools, create proofs of concept, and perform product experiments. This will not only help you create meaningful experiences for your users, but also support your company to make better business decisions. Having your own digital product gives you more control over your brand, revenue streams, and customer relationships, allowing you to independently manage, promote, and protect your digital assets.

If you’re looking for a partner with deep experience in product development, we at Netguru have built countless of digital products and services from scratch.

We’ve helped enterprises and startups throughout their product development journeys — from performing discoveries and validating product ideas all the way to designing and engineering applications, and scaling them up to wide user adoption. You can create and sell digital products to achieve your business goals, leveraging our expertise to bring your vision to market. Get in touch with us, and let’s start a conversation.