INTRODUCING NEW PRODUCTS IN NATIONAL MARKETS
Failure to assess actual use conditions can lead to big surprises as in the case of singer sewing machines sold in Asian markets.These machines manufactured in Scotland by singer were slightly redesigned by Scottish engineers. The location of a small bolt on the product’s base was changed the change had no effect on product performance but did save a few pennies per unit in manufacturing costs.
Market research is the key. Without the necessary information, you’re simply flying blind in a storm, headed for a crash landing. Market research does more than confirm your “gut feeling,” it provides critical information and direction. It identifies market needs and wants, product features, pricing, decision makers, distribution channels, motivation to buy. They’re all critical to the decision process.
Take the example of a company several years ago that introduced a new product to the electronics manufacturing market. The research identified the pricing, the distribution channels, product features, everything but the product decision maker. Despite the fact that the new product complemented an existing one, performed a complementary function in manufacturing, and was used in close physical proximity to the existing product, the decision makers were different. The sales force couldn’t efficiently call on the new decision makers, and the product failed.
Are all elements of the process coordinated? Is production on the same time schedule as the promotion? Will the product be ready when you announce it? Set a time frame for the roll out, and stick to it. Many products need to be timed to critical points in the business cycle. Miss it, and invite failure. There are marketing tales galore about companies making new product announcements and then having to re-announce when the product lags behind in manufacturing. The result is loss of credibility, loss of sales, and another failure.
If the new product or service is successful, do you have the personnel and manufacturing capacity to cope with the success? Extended lead times for new products can be just as deadly as bad timing.
Test-market the new product. Be sure it has the features the customer wants. Be sure the customer will pay the price being asked. Be sure the distributor and sales organization are comfortable selling it. You may need to test your advertising and promotion as well.
Who’s going to sell the product? Can you use the same distribution channels you currently use? Can you use the same independent representatives or sales force? Is there sufficient sales potential in the new product to convince a distributor, retailer, or agent to take on the new line? There are significant up-front selling costs involved in introducing new products. Everyone in the channel wants some assurance that the investment of time and money will be recovered.
Your sales organization, inside employees, and distribution channels will need to be trained about the new product. If the product is sufficiently complex, you may need to provide face-to-face training. Or perhaps some type of multimedia program will do the job. If the product is not that complex, literature may work. Again, timing is critical. Train before the product hits the shelves, not after.
Finally, you need the promotional program to support the introduction: advertising, trade shows, promotional literature, technical literature, samples, incentives, Web site, seminars, public relations. Time it all with production, inventory, shipments, and training. The new product will simply sit in the warehouse without the right support materials.
Define your market as accurately as possible so you have a deeper understanding of exactly who you’re selling to. For example, instead of all women, it may be working women with above-average incomes and kids under age 5. Instead of all men, it may be divorced men in their 40s with six-figure salaries. The more specific you get, the more accurately you’ll be able to target your sales and marketing efforts, choosing the sales channels most receptive to your product.Next, you’ll need to develop a sales plan. Before you groan, “Another plan,” understand this can be a simple document for your eyes only that’ll help you organize and think through your sales strategy. Write it in a way that makes sense for you. Typically, it should include the following: These goals should be specific and measurable, not something like selling a million units. Base them on the nature of your product and try to break them down into manageable parts. For example, sell 50 units to end-users in 30 days and sell 100 units to local independent retailers in six months.These are your tactics–how you plan to make the sale. You may say you’ll sell direct-to-consumer through a website or via craft shows, for instance. Or this part of the plan may include activities like developing a sell sheet to send to independent retail stores.Your sales plan should also include the accounts you want to sell to. If it’s end-users, for example, plan how you’re going to reach them through eBay, classified ads or your website.Put dates to all of the above elements so you can define your steps within a realistic timeline. Don’t forget that your timelines should be fluid–if you’re underachieving, your sales plan can help you figure out why and define the corrective steps you need to take.
Note that when dealing with these major accounts, the sale is just the beginning of the deal. Handling fulfillment, returns, rollbacks, slotting fees, advertising and more will require strengthening your business’s infrastructure and resources.