New product launches can be very exciting times for a company. They quickly become shiny new toys and, as such, become the focus of sales, marketing, and other stakeholders. Resources are devoted to its launch, and they are seen as the holy grail of new revenue streams and good times ahead.
The success of many companies may be attributed to their leadership. Often companies are founded by entrepreneurial individuals who established their business with a winning idea, and off the back of this, they created highly successful businesses. Therefore, it is no wonder that when a new concept is born, the company flocks to the idea, often at the expense of its cash cow.
Why do we engage in new product development?
As the original product that launched the company into a success matures, its revenue stream flattens, competition becomes more aggressive and new, and substitute products erode market share. New product development (NPD) protects a company’s bottom and top lines by reinvigorating the market, protecting the customer base, and attracting new customers. Additionally, NPD reduces risk by diversification of the company’s product portfolio. For these reasons, NPD should be part of the continuing strategic focus of a company to ensure its competitiveness in the future.
Like all successful strategies, the measured application of systems, processes, and strategic thinking is required to ensure success.
The Dangers of New Product Development
Everyday boardrooms across the world conceive new product and service offerings, often spurred by the founding entrepreneurial spirit, which delivered success in the past. As such, the executive is sure their customers and prospects will buy as they always have.
Often with waves of enthusiasm and rapid internal adoption, these new product ideas quickly become the primary focus of the organisation. Initial attempts at validation are omitted, and the team swings into delivery mode. These omissions often arise as the organisation relies upon the word of the executive that the new product will be a success. In many cases, success will follow, and this, in effect, fosters a culture that does not encourage empirical justification of strategy. This culture can quickly become the Achilles heel of a company and, in spite of its market strength, can lead to its potential downfall.
The risk of bringing to market untested products and services can have a devastating effect on a company. The losses can amass into the millions, as demonstrated by the major marketing failures of the ’New Coke’ by Coca-Cola and VB’s (Victoria Bitter) attempt to reposition their brand.
Ensuring the success of New Product Development
In order to ensure successful new product development, analytical rigour, empirical justification, and a well-formulated strategy must occur. Often these processes will serve to justify the initial concept and, in some cases, will bring to light significant weaknesses that will save the company thousands of dollars by their early detection.
A major consideration required for new product success is the role that marketing must have in its delivery. To facilitate this, a revised marketing plan should be developed to incorporate the new product, accompanied by a communications plan that outlines the tactics for communications. This process will ensure that sufficient prospects and customers are targeted by appropriate communications and channels to produce a profitable response. As part of this process, a marketing research framework will explore and test the new product concept against customer and market responsiveness.
In addition to the marketing planning phase, appropriate resources must be allocated to brand development. Too often, branding becomes an afterthought and thus significantly hinders traction in the market.
These appropriate processes will ensure successful new product development and install successful frameworks for ongoing growth.
To gain further insight into what can go wrong when launching new products, please follow this link to download your complimentary case study – The Challenge of Expanding into New Markets
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Some other articles you may be interested to read:
- Customers Struggle with Why Change when You Launch New Products
- New Product Spark Rapid Growth
- Sales Strategy Development and Execution
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