7 things to consider when launching a new product or service
Over the past few years, Blue Frog Marketing has helped commercialise a number of new product and brand concepts. Over this period, we have learned that a few key factors will markedly influence the success of any new concept launched into the market.
We have developed a 7 step review process for marketers or entrepreneurs wanting to assess the potential of their new idea.
Following these steps, a company can make more informed decisions before making large capital investments in the product or brand.
It is very important that an idea or concept can be protected especially if it represents a novel approach in the market in which it will compete.
Intellectual property is at the foundation of any strong brand business. Without protection of the idea, a concept can be copied by a better resourced competitor and the innovator – you or your client – can find that you have developed the market for someone else.
IP protection does not always mean patenting an idea. It may mean simply ensuring you have exclusive rights to distribute someone else’s product in a given territory. It may mean that you have secured the supply chain so that anyone else wanting to launch has a higher barrier to entry.
However you go about making life difficult for any potential competitors is a protection of your IP.
If the IP is not protected, then think carefully about the reality of how good a return you can make on your idea and how much capital you wish to invest.
USP is real
All good marketers know that having a product with a unique selling proposition or unique offer is a great opportunity.
However, you need to make sure that your USP is ‘real’ to the market that you want to promote too. Just because a product is different does not mean that the USP is worth anything to your customer. And is also does not mean that someone else could not satisfy the customers need in a different way.
Spend time closely analysing if a USP is worth anything before you invest capital. And lose the ego when analysing the USP. Just because you think it is good and you can market it better than someone else does not necessarily translate into a better return on the investment.
Does the brand/product or business have the capital resources to ensure cashflow is protected. Blue Frog has learned this the hard way with an excellent product from one of our clients failing due to insufficient capital to cover orders and the time to payment for those orders.
Do a conservative first year forecast of all costs, likely sales (be realistic) and then do a cashflow analysis assuming the worst possible payment terms. If the capital is looking a bit thin on the ground be careful about how you proceed until sufficient capital is raised.
Can you afford the distribution channel you have chosen and do you have a realistic understanding of how much margin the wholesalers, retailers and agents want.
In some cases, we have seen companies have unrealistic expectations of the final retail price and how much margin is required to fund the channel.
Also, do you have a good relationship with key buyers.
Finally, are you leaving yourself enough margin for investment in ‘pull’ marketing. In many channels, there is no salesperson standing there to assist consumers with your product and you cannot rely on the retailer to sell your product for you.
An understanding of the margin chain of your chosen distribution channel and good relationships with buyers are both critical factors in the successful launch of a new product. Do a careful margin chain analysis and make sure you have enough for pushing stock into the channel and then ‘pulling’ it out again with demand generation.
As mentioned above, margin is a critical factor in the success of a new product. If you are not making enough gross margin you cannot adequately fund a strong marketing and sales effort.
Make sure you have your pricing right to cover the margin chain in your chosen distribution channel and to deliver a retail price that is competitive but not too low. Once you launch a product at a specific price point it is very hard to increase price dramatically. Better to launch at a fair and competitive price which is a little too high that too low.
First and foremost in any good launch are your people. Do you have the right people in each key customer focused role? Are your sales people well drilled and successful at launching products? Can they drive volume orders and keep stock up to the A customers? Are your customer service people great at dealing with customers?
Make sure you have the right sales and customer service staff looking after your product. Without passion and drive even the best new product can fail at the starting block.
Increasingly, we are seeing real examples where poor ethical standards or business approaches are impacting the potential success of a product. No-one likes to be ripped off or given less than they expect. This includes your buyers, retailers, end customers and suppliers. Sure you can make a short-term gain by cheating someone but long-term success will elude you.
Make sure you deal with all your suppliers and customers with the highest integrity, honesty and fairness. Treat them how you would expect to be treated and you can look forward to long term success.