Challenges Associated with New Product Development in A Startup Environment

A new product results from a unique and creative process through which business owners aspire to satisfy customers. According to the theory of product development, the process of new product development (NPD) is seldom straightforward (Gurbuz, 2018). There are many challenges associated with new product development in a startup environment that concern marketing, customer relations, management, and pricing.

Startups face a marketing challenge, despite it being a critical way to introduce a new product to potential customers (Santisteban & Mauricio, 2017). Startups often fail to acquire the necessary marketing expertise due to lack of funds or departments’ functional separation (Dimov et al., 2007). Oduola & Yakubu (2017) further explain that startups have limited marketing capacity and end up selling to niches with minimal opportunities.

Startups often find it challenging to leverage the benefits of early customer involvement. Oduola & Yakubu (2017) explains that customer tastes and preferences are highly unpredictable and might fail to favor the new product in its initial stages. Stone & Ozimek (2010) further explains that startups might face negative perception from customers, and thus crumbling the marketing efforts and better customer relations for the NPD. However, Florén et al. (2017) found that startups managements that does not include customer input in NPD seldom succeeds.

Management plays a critical role in an NPD’s success (Florén et al., 2017); but startup environments do not always have the necessary management functions (Dimov et al., 2007). Santisteban & Mauricio (2017) reports that management in a startup environment fails because the level of dependence often stresses business owners or fails to deploy excellent social skills and entrepreneurial expertise. Oduola & Yakubu (2017) contend that startups have funding problems, limiting them from establishing specialized functions such as project management for the NPD (Florén et al., 2017). Overall, there is inadequate human capital to undertake the NPD effectively.

The management might also set up a poor pricing strategy, predominantly critical for an NPD (Ingenbleek et al., 2013). New product pricing is a major determinant for product performance in the market and its price level (Ingenbleek et al., 2013). Oduola & Yakubu (2017) explains that startups face entrepreneurial competition, which Stone & Ozimek (2010) finds to be a setback in dynamic pricing. Besides, Ingenbleek et al. (2013) conclude that it is challenging for a startup to identify customer values, guiding the pricing strategy.


Dimov, D., Shepherd, D., & Sutcliffe, K. (2007). Requisite expertise, firm reputation, and status in venture capital investment allocation decisions. Journal Of Business Venturing, 22(4), 481-502.

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Florén, H., Frishammar, J., Parida, V., & Wincent, J. (2017). Critical success factors in early new product development: a review and a conceptual model. International Entrepreneurship And Management Journal, 14(2), 411-427.

Gurbuz, E. (2018). Theory of New Product Development and Its Applications. Marketing, 1(1).

Ingenbleek, P., Frambach, R., & Verhallen, T. (2013). Best Practices for New Product Pricing: Impact on Market Performance and Price Level under Different Conditions. Journal Of Product Innovation Management, 30(3), 560-573.

Oduola, M., & Yakubu, A. (2017). The Challenges of New Product Development in a Developing Economy. Advances In Research, 10(4), 1-7.

Santisteban, J., & Mauricio, D. (2017). Systematic Literature Review of Critical Success Factors of Information Technology Startups. Academy Of Entrepreneurship Journal, 23(2). Retrieved 18 November 2020, from

Stone, M., & Ozimek, J. (2010). The challenge of new marketing issues. Journal Of Database Marketing & Customer Strategy Management, 17(3-4), 188-200.