Do you know that only five out of a hundred new products introduced into the market survive beyond the year? That is a rather discouraging fact confirmed by studies. Introducing new products into the market requires a systematic approach that attends to key success parameters. We discuss such an approach in this post. We will start with a closer look at the terms new product and successful product.
Table of Contents
- Introducing New Products – Different Contexts
- Launch Success
- The Concept of Product Life Cycle
Introducing New Products – Different Contexts
Introducing new products can mean:
- An existing business introducing new products to an existing product line. This can be done to fill a gap in meeting customer needs or to improve your competitiveness.
- An existing business launching a completely new product that consumers are not yet familiar with.
- A new business starting its operations by launching a product into a competitive market.
- A new business launching a disruptive new product the market is not familiar with.
Each of the above will require a different approach to:
- Where the product is a line extension you have to be very clear about the specific objectives of adding to the line. And plan your tactics to meet that objective.
- Where the product is completely unfamiliar to consumers, you have to educate the consumer about its use and value, in addition to promoting the product itself.
- Where the product is a competitive product, you have to get a clear idea of what competitors are offering, how they are promoting their offers and how you will compete in the market.
- Where the product launch is done by a new business working on a tight budget, the launch will have to identify low-budget campaigns to start with.
Two things, working together, lead to a successful product launch:
- Product market fit leading to acceptance of the product by the market and
- Achieving a sales momentum that leads of sales in profitable volumes
How do you achieve these? We look at these issues next.
Product Market Fit
Product market fit means that what you offer is what the market needs. You start the process of developing such a product by researching the market.
Before you invest in the market research exercise to introduce new products, you should have a good idea about the specific market you are trying to understand.
- What is the customer value that you plan to deliver?
- Who are the customers to whom this value is important?
- How can you reach these customers?
If you are a new business, your best option is to find out who uses your competitors’ products. Find out answers to questions like:
- Where are they located?
- Are they men or women?
- Do they belong to a specific age group?
- Do they fall under high income, middle income or low income groups?
- What value do they get by using the product?
- What price are they paying for it?
Answers to the above questions will help you get a clear picture about the people you want to sell to. In the ideal scenario, you will understand how customers use the product and what they expect from it.
Actually, it is not just the product with certain features that you sell. Instead, customers see a bundle that includes:
- Ease of buying and getting delivery
- Support in using the product to get the value it promises
- A price that is value for money
By working on all these elements, you should create an offer package that will appeal highly to a certain segment of the customers. Start by profiling your ideal customer, the customer whom you can satisfy best, and then develop the offer package to deliver superior value to this customer segment.
Effective Marketing Strategy while Introducing New Products
Develop a USP
Marketing becomes easier and effective when customers perceive your offer as better than other offers in the market. How can you make them see your offer as better?
You can do it best if you get answers to a few more questions during your competitor research exercise:
- Are customers satisfied with the offers of your competitors?
- If not fully satisfied, what makes them unhappy about existing offers?
- Do they face any inconveniences for purchasing the product?
- Do they face any frustrations in using the product?
If you find any problems with existing offers, you can explore the possibility of developing an offer that overcomes these problems. If you can do that, you have a better offer.
In marketing terms, such “betterness” is known as a USP – Unique Selling Proposition.
The first thing you have to do about your USP is to make sure that it is not only unique but also useful. Answer the question: What specific value does the customer receive from the unique feature(s) I have added?
Creating a USP alone is not enough, however.
You also have to communicate the USP and its value to your customers. And do it in a way that reaches prospective customers and generates credibility.
Communicate the USP
This starts with finding out how to reach people who are likely to buy your product. Again, answers to a few additional questions during the market research will help. Get answers to questions like the following from research respondents:
- What brand do you use?
- How did you become aware of this brand? Through word of mouth or some advertisement?
- What kinds of advertisements do you see – news papers, magazines, TV, Radio, Billboards, digital ads?
- Which newspaper/ magazine, TV program, website do you see regularly?
Authentic answers to these questions will allow you to plan marketing campaigns that reach your audience. Without such insights, you could be wasting money on campaigns that never reach prospective buyers of your product.
Run Multichannel Campaigns
Studies have found that multichannel campaigns do best. Here is an example:
- Start with a public relations exercise:
- News stories about you and your offer in local or regional or national press, as appropriate,
- Sponsorship of a charity event
- Generate awareness through some publicity efforts:
- A stall in a trade fair or exhibition
- Going out into the street with flyers and free samples
- Develop a marketing message that clearly communicates the value you deliver and your USP compared to other offers. Adapt this marketing message to different contexts – advertisements, product packaging, brochures, website and other materials that prospective buyers see.
- Establish a presence at social media that your buyers frequent e.g. young people tend to frequent Instagram while businesspersons and professionals prefer LinkedIn.
- Participate regularly in the conversations at the media so that others become aware of you in a positive way, i.e. friendly and helpful (and not just as a salesperson). Once you have a good image in the media, your business offers will also become more acceptable.
Make the most of limited Publicity Budgets
Whereas multinationals and other large companies can afford huge publicity spends, small businesses typically have low budgets. How can they get most out of the small budgets?
One way is to focus on the ideal customer. The ideal customer is a person or entity:
- For whom the value your product or service delivers is very important
- Who can afford to pay for it and
- Who has already demonstrated interest in the product or service through past purchases
Find out the situation and expectations of this customer group and tailor your marketing messages to catch their attention. Use the specific marketing channels that reach this group.
Another option is to proceed gradually with your campaigns. Test both the product and the marketing message before scaling up the campaigns:
- Test the offer package. Which features and benefits evoke positive reactions? This is best done through focus groups or personal discussions with buyers.
- Test the marketing message. Which versions of ad copy draw responses to justify the ad spends? Which channels generate good return on investment? Testing is particularly easy with digital campaigns. They are both low cost and highly trackable.
Select the best Time to Launch Your Offer
Some products are seasonal. Launching a product during off season will not give you a true picture of their potential.
Another related issue is your production capacity. Can you meet the demand created by the campaigns? If you are just starting you might not be in a position to meet the demand created by a big marketing campaign. Your distribution network might not be fully in place. Your production capacity has not yet been stabilized. In such cases, start with small campaigns and scale up gradually.
The Concept of Product Life Cycle
All products go through a life cycle:
- Introduction: Introducing new products requires a business to spend heavily to educate users and create awareness about its benefits.
- Growth: Demand and availability grows for successful products. It is increasingly accepted by consumers.
- Maturity: Costs and prices both tend to go down with economies of scale and growing competition. Profits are still good.
- Decline: Increasing competition and emergence of better products makes survival in the industry difficult.
How do you know which stage your product is in?
You can do it by checking the results of your marketing campaigns. If responses to campaigns are declining compared to past periods, it could signal a declining market. If that is confirmed (though other observations) it will be time for you to think about:
- Modifying your offer to fit changing customer expectations or
- Modifying your marketing message to project your offer in a way that works in the changing scenario or
- Phasing out the product or service and bringing in something different.
New product launches can happen in different contexts. The method of launch will differ depending on the particular context. Introducing an innovative new product will need a different type of campaign compared to entering a competitive market in a well known product category.
Campaigns will also differ between a large corporation with a substantial publicity budget and a small business with a low marketing budget.
We looked at certain aspects that can enhance the effectiveness of new product launches. These included developing a product that fits market needs, creating a USP that differentiates your offer from competing offers, communicating that USP through the right media and testing your campaigns at low costs before scaling up.
We concluded with a look at the concept of product life cycle and how to respond to a declining market.