When developing a new product which is better to develop a quick prototype and fine tune it or spend longer time in the planning and designing phase ?

I think you will be better off launching an early product (prototype) than sleeping on it till it's fine tuned. Launch a prototype, get feedback, redesign then launch again .. This is a thumb's rule.

In case of competition, then I think this will also help. Competition is good and helps you have better orientation. You will be a step ahead of others by launching a protoype first because you will be able to build up a context the others lack! This is an advantage , right ?

First in the market gets better chances and if you don't do it then somebody else will do .

Good luck 

Developing a new product has many risks; the success relies in adapting the old ones and move on to fine tune. When developing a product one should assure either a knowledge base for future developments, or start thinking right away for the next move. This is somewhat like franchising your own ideas, but adapting the model to the specifics of the new client.

Each time you're commissioned a new product or project, think ahead, think about if you can use some of the blocks in future situations. Don´t forget to charge the client, which in the end will not only pay you what he wants to be delivered, but also a fee to provide you some slack for new products/projects you'll be commissioned to deliver.

Thinking ahead and creating a heritage allows you to move on delivering new products/projects.

The answer is both, spend a good amount of time in initial planning and designing, but don't dwell into detailed optimisations and refining in theory for long, try out the product, see what's missing, hire others to tell you what you need to change or fix, and what the market wants, and then adjust accordingly. You can also spend time in redisgining while you are working on the prototype.

Depend on the type of the product, but I prefer the agile method

I think also, it depends on the type of product.

It depends on which product you are developing. According to my poiunt of view, for smaller budgets it is better for a quick prototype. But for big budgets I think spending more time in designing and sensoring is preferabve option. It enhances the quality as well as reduces the manufacturing cost.