I have often come across great product ideas within companies that fail. The failure is not because the product is bad. The product fails because of poor management planning that applies the wrong new product strategy. The old saying of “Fail to plan – plan to fail” holds true with the launch of a new product or product strategy. ekn links has helped a number of our clients understand the process of launching a new product.
Management must always challenge themselves to be better regardless of financial consideration within or outside the walls of the company. The new GM management team will be struggling with the reposition of the company in the coming years and it must start with new product development. Can the new GM deliver a new vehicle that the U.S. consumer wants? Will the new GM management team be able to use the old GM positioning to re-launch the company and bring it back to its former glory? The management team must answer the question of which market their business should be focused on? Where will their opportunities come from? How do we grow the business with existing product and the launch of new product?
There are three basic ways to increase revenue for any given company. The company can increase market share with existing lines in new channels, sell more of the products to the same channels or come up with a new product for key channels. ekn links has helped our clients recognize revenue growth through product development, market development and sales development. These are several strategies management can take to help accomplish growth goals and each one of those decisions have cost and ROI factors to consider. In today’s fast past market and in the case of the new GM, a new product is key to building the business. The concept of new product development and new product strategy is one that requires an understanding of who you are and who your customers. You cannot develop new products without knowing your existing business and how you fit into the marketplace.
The first goal of a company that wants to release a new product is to know where your company stands in the market place today and to know what your position is as a company. In marketing we often use product-positioning grids to identify where our products are and in this case I suggest using a company-positioning grid. There are several specific company strategy positions that most companies can be lumped into. Identifying your company strategy position type will be key to helping you plan out your new product release and outlining future plans.
A company strategy can be broken into these four types:
- Innovators: These companies are normally first to market with new product and generally rely on new technologies to help advance their market position. Innovative companies often respond very quickly to new emerging opportunities and can get a product out fast through their existing channels.
- Followers: If you are second in line than eventually you will be first. The followers believe in this strategy. These companies usually monitor their competitors and are rarely first to market but learn from the innovators mistakes. In some cases the followers can make a better model than the innovators and are able to reduce production cost. They also have the advantage of releasing a product into a familiar market and they ride the success of the innovators first mover advantage.
- Defenders: This company will generally serve a niche market or geographic environment in most cases. They will seek to hold a position in the market place and rarely follow the leader. Often times this company remains stagnant in growth but maintains a steady market share and profit. These defending companies may also offer a high quality product at competitive pricing which allows them to fortify their market position.
- Re-Actors: These companies are not aggressive at all in trying to gain market share. They normally hold their position well and are well funded with market resources. These types of companies only go into a new market because they have no other reasonable choice while being forced by the micro and macro environments to make a move.
Once you have defined the type of company position you are in your management team must identify the type of product strategy you follow. In some case companies you may have several different product lines that fall into different product strategies. If this is true than you should identify the strategy that best matches your new product launch.
Here are the basic product strategy choices:
- Differentiated: Your product is highly sophisticated and different. There are possible high growth markets and your product has little to no competition.
- Low Budget: These products are usually copycat products made of inferior components and quality. These products do rely on heavy marketing but drive revenue through volume of low prices.
- Tech Driven: Innovative high tech products that need to be released into a rapid changing market environment. These types of products may have a very steep product life cycle and often have a lack of focus towards their targeted market.
- Low Tech: This product lacks innovation and is low tech. These products exist for a small market and have very little market strategies.
- High Budget: These products use a large amount of company resources and do not have a string promise of success. Development of these products is key above all and their cost are evaluated based on the opportunity of future markets.
ekn links can help your management team understand your company market position and your product strategy. We will help you develop your product with your management team as they recognize the steps of developing a new product strategy. With a understanding of who you are as a company, the second step demands that you understand where your current products are now.
For this exercise, I like to create a grid that identifies all of the products by individual item. If you have many items across different product families you may only want to use those products that you feel are candidates in the comparison and that will help you define this new product launch strategy. Consider products that share the same marketing channels, the same consumer or same selling space. Will your new product launch affect current product sales? Do you want a consumer dollar swap as a new product launch result? Plot out your products, your competitors and your new product scheduled to be launched.
Take a look at your existing products and compare your new product against them does it fit in? If you sell white tennis shoes to men over 65 can you sell 4” high heel pumps to women under 25? If your new product doesn’t fit in you may need an additional set of resources to launch the new product. Using this comparison you should be able to identify gaps in the market place and in your product portfolio.
Define your new product target market and potential markets based on where the gaps may be located. Eliminate any markets that seem a far reach so that you can focus on the sure ones.
After you have identify some gaps in the current market and you have convinced yourself that your new product will have a shot you, you will need to answer what I call the Go Questions. The set of GO Questions are the basic fundamental questions you will need to have answered as you begin the product launch.
Now you have gathered enough data to understand where you are as a company and where you products currently sit in your existing market. You have also plotted your new product against your competitors and your current product portfolio to identify gaps in the market. You should have also thoroughly answered the GO Questions with well thought out answers. All of this information will be used to help you formulate your product launch plan. You should follow these basic steps to launch the product.
1 – Create your goals. Make them realistic and attainable for the first two years. When developing these goals ask yourself these questions:
a) How do these new products fit into your existing product portfolio?
b) How do these new products fit into your company?
c) What will our consumers think about these new products?
d) How will our channels react about our new products?
When creating your goal statement you should be very specific with exact deadlines and numbers to meet. A realistic achievable goal will help you set the pace for the launch.
2 – Identifying your target areas. Where will your new products be focused? Who will be your customers? How will you get the product to them? What do you need to do to reach them?
3- Allocate your resources and prioritize your spending. Create a budget that captures all of the potential areas of resources needed to complete your goal. Remember that resources also include people, places and things not just dollars.
4- Develop a plan for implementation that includes all of the information you have gathered so far. This is where you have to be as specific as possible to capture the details of the plan. You may want to use a project worksheet to help you keep track of all deliverables and assign specific team members task with clear objectives and deadlines.
Launching a new product is a wonderful experience that the entire company can be involved in. A successful product launch can help to re-position your company in the market place and take market share away from your competitors. A poor product launch could drain the company of valuable resources and allow the competitors to bite into your current market share due to a lack of focus and market rejection.
Your products tells a story and that story will help your product sell. Success of any product relies on proper planning, goal creation and the development of a unique selling proposition. Many products fail due to lack of planning from the manufacturer and limited buy-in from the market. Estimates have product failures at between 75% to 90% due to lack of planning, weak sales execution and poor product development. ekn links can help you with your product launch.