You have a successful business, or maybe one that needs rejuvenation, and new products are the key to growing to the next level. You look around the market and come with a great idea for a product to compliment your business offering. Something you believe will capture the hearts and minds (and wallets) of your customers and new customers. This is a lightning strike of entrepreneurialism in your mind, and it is your opportunity to take! Now is the time … full steam ahead so you no-one else catches it … just get on with it and …
Pause for a moment! Before you start investing time and money, you must determine whether there really is a market for your product or service. More importantly, how much of a market there potentially is for the product. Is the product offering right as you see it now or do you need to consider some fine-tuning before you go to market? Quite simply, you need to take the product through an independent review process that includes market research and customer desire research.
That is the fundamental difference between a true entrepreneur and someone working on guesswork.
Many businesses fail taking new products to market as they lack the discipline required around product development. They neglect this crucial step for the sole reason that they don’t want to hear any negative feedback. They are convinced they know the market and customers well enough that they can just barge ahead. Some are so convinced that any anecdotal feedback from co-workers around them is unnecessarily negative is overridden with their confidence in them knowing the market.
Other owners bypass the crucial steps of market and customer research believing it will be too expensive and take too much time. With all the other costs you face taking a new product to market, spending money on research may only prove what you already know: Your product is a winner.
The first sale is made – the one to the business owner. The question is how many more will follow?
Successful entrepreneurs are those that are disciplined and invest wisely in the process of taking a product to market. For large corporations, the task is relatively more straightforward as they have the resources of marketing departments and finance available. They are also aware of the transparency around new products required when dealing with shareholder funds.
For successful entrepreneurial business owners, they have learnt that time and funds invested now could be the difference between significant financial losses and profit further along. Missing the stages of market research can amount to a death sentence for your product or your bank account. Another consideration is the loss of faith in your company as customers become the test cycle for new ideas and concepts. Worse still is the confusion that can be caused by mixed messages, changing message as you attempt to fit the product into the market.
Companies that are making running adjustments to products because they did not invest in market research struggle to realise profits in any realistic timeline. Competitors can quickly learn from their mistakes and take over as market leaders.
Market research is an investment in your future. If you understand the potential uptake of the product, its value to the market (what they are willing to pay) the messaging and positioning you can produce accurate forecasts and understand how much you can afford to invest in the product to gain your ROI (return on investment ). If you take the necessary steps with your product or service before going to market, you will save a lot of money (profit) in the long run.
So what exactly is market research? Market research is the collection of independent information you can use to evaluate real market share, time to market, and importantly the necessary information to develop a marketing plan that delivers for you.
Market research enables you to identify the specific segments within a market that you want to target rather than taking a costly shotgun approach. Research assists you to create an identity for your product or service that separates it from your competitors and define to choose the best geographic location in which to launch your new products. Not all products fit all markets.
The key to research is independence. A real view of the market, the customers and competitiveness removing all subjective or passionate decision-making that may cause you to miss or overlook important factors.
As a rule of thumb, market research should provide you with information about three critical areas:
- Industry and market information review
When researching the industry, you are looking for the latest trends. Compare the statistics and growth in the industry. Is there growth in some geographic areas locations but not in others? Look broader than your existing market coverage. Consider what areas of the industry appear to be expanding, and what are in decline? You do not want to be investing in a declining industry sector or declining or stagnant geographical area.
Is the industry surviving on traditional customers or attracting new types of customers? What markets is the new customer movement occurring? How aligned are you currently to those markets? Will the new product place you back to being a start-up or be an extension to your existing products?
A thriving, stable industry is key; you don’t want to launch new products in an industry or market that is on the decline.
- Customer reviews
The common mistake is companies charge their salespeople with the task of asking their best customers for their feedback. Those customers feel an obligation to give favourable information and are loyal to your brand. They are not a good source of information.
The goal of new products should be to attract new customers and increase the spend of existing customers. The research needs to consider new markets and how accessible the new customers will be. What type of buyers are they? Are they early adopters or followers for this style of product?
Your best research will be from gaining feedback from different segments of the market to ascertain which is the most responsive and where the most potential revenue can be gained. A thorough market survey will assist you to make a reasonable sales forecast for both new and existing business too. You need to know the spending characteristics of the market as this is core to the success of your new product.
Finally, the most crucial step is the estimation of how much of the total sales revenue you can reasonably obtain in a 12-24-36 month timeline. Is the product going to redistribute the funds customers are already spending or is it going to increase their spending? Will the product create an end of life for another product you are already selling that is profitable?
- Competition review
Based on a combination of industry, market and customer research, a clearer picture of your competition will emerge. Do not only consider your current competitors or those you would like to take market leadership from. New products can often open the doors to new competitors as you move across their space. The competitors can also vary from one geographical area to another.
Study the competitor’s product offerings, strategies, market communications, and operations. A proper analysis should supply a clear picture of potential threats, opportunities, and the weaknesses and strengths of the competition facing your new products. You must be able to develop a substantial competitive advantage over your competitors to invest in the product. One that can withstand pricing pressures as competitors respond to your activity in the market.
By drawing on independent resources to support the review process, you can guarantee a quality set of reports. Do not rely on one company alone. Use several as a quantum test of the validity of their reports. Your marketing department (if you have one) can complete step one. Step two should be outsourced as like step three.
With the number of retiring senior personnel ex-sales departments, often a contract hire of someone with industry knowledge and experience can head up the review process minimising costs and ensuring the steps are thoroughly completed.
The investment in quality research will be the least expense you incur with new products to market!
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