There are many ways to introduce a new product in the market, and there's no single way that works for every business. You can create a detailed and sophisticated new product launch framework or you can use a lean startup strategy, investing little and learning as you go. Whatever approach you use, it should be consistent with your company's overall mission, direction and style.
TL;DR (Too Long; Didn't Read)
To introduce a new product to the market, develop an offering that you can produce cost-effectively and do marketing research to understand your audience.
Reasons for Introducing New Products
- Filling a niche. If you see an opportunity, such as demand for a product that doesn't yet exist, you may be able to successfully step in and develop an appropriate offering. Baby bottles shaped for tiny hands and peanut butter in a squeeze tube are examples of products that were developed to fill a need in an innovate fashion.
- Expanding an existing business. If you run a business and are looking to grow, you might introduce a new product that fits with your brand and systems. This approach to new product development initially comes from a need within your company, but it can only be successful in the long run if you also do a good job of filling a customer need.
- Pursuing a passion. You may choose to launch a new product simply because you love it and want to share it with the world. Whether your passion is hot sauce or soft flannel pajamas, your enthusiasm will be important in selling your product, although you'll also need to tend carefully to fundamentals such as finding the right audience and crafting a sound business model.
- Using raw and surplus materials. It makes good business sense to introduce products that use surplus materials from other products you're already selling. A bakery with leftover bread can make extra money toasting and packaging croutons from day-old loaves and small-scale meat producers can add to their revenue streams by selling leather.
New Product Development
The process of developing a new product requires attention to production systems as well as selling points. You'll work out the kinks in your manufacturing process so you can smoothly meet demand once you start selling your new product. You should also make sure that you can maintain quality once you transition from creating prototypes to producing in volume. Faulty production systems can doom a product launch because you only get one chance to make a first impression.
Your new product development process should also include market research to learn what features are most likely to bring in consistent sales. If you're introducing a toy, you should test it on children in the appropriate age range to get a sense of which features appeal to them and which bore them. You can do formal research, such as paying people to participate in focus groups, or you can test your ideas informally on friends and family.
Although it's important to listen to the feedback of potential customers when developing a new product, some products will require educating and enticing customers rather than simply meeting an existing need. If customers are used to smooth tomato sauce and you plan to introduce a sauce that's chunky because this version is more traditional, you may have an uphill marketing battle. But if you truly believe in your chunky sauce, you'll probably be able to bring customers around via effective marketing and a quality product.
New Product Marketing
You'll need to market your new product to potential customers to bring it to their attention and give them a reason to buy. If you have a loyal customer base and you're building onto an established set of offerings, your existing customers are a natural place to start your marketing efforts. Because they already appreciate and believe in your company, it will take less effort and convincing to get them to try a new addition to your product mix than it would to entice someone who has no idea of your company's history and mission.
Social media is an effective and inexpensive tool for raising awareness about your new product. It can help you to reach both existing customers who already follow your company and potential customers who fit the demographics and psychographics you're targeting but may not already know about your business and offerings. Develop a social media strategy that includes the message you plan to communicate, the frequency of your postings and a budget for promoting them and metrics for evaluating your success.
If you intend to wholesale your new product, you'll also need to market it to retailers who will carry it in their stores. To convince them to place wholesale orders, present selling points either showing how it will fill an underserved market or how it will meet an existing need more effectively than existing options. It helps to have a budget for promotion, which could include discounts to entice customers to buy, samples to encourage them to try and point-of-purchase materials to call attention to your offerings.
The Cost of Introducing a New Product
The costs you'll incur for your new product launch will depend on how you approach the process. If you follow lean startup principles, you'll develop prototypes as cost-effectively as possible and then introduce them to the market on a limited basis so you can make adjustments as you go. This approach allows you to see customers' real-time reactions and use them as the basis for tinkering with your product and packaging. However, lean startup methods can be risky if you roll out a premature or defective product.
If you're introducing a product on a national scale, you'll incur introductory costs when getting it to market and during the initial phase of its availability. Because so much is at stake with a large-scale product launch, you should do your homework thoroughly during the development period. This may include marketing research using paid subjects or hiring firms that dig into consumer trends and sales figures to tell you what's likely to gain traction.
In addition, if you plan to distribute your product widely, especially through large chains with consolidated payment arrangements, you may also need to have working capital available because it could take a long time to get paid. Although you'll eventually get your money, you'll still need to have cash in the bank so you can keep producing and filling orders, especially if your new product gains traction right off the bat.
Tenacity and Adaptation
Steve Demos, the founder of the WhiteWave company behind Silk Soymilk, manufactured and marketed his product for 20 years before it became successful. The crucial innovation was the shift to milk carton containers and relocating it to the dairy section of grocery stores. Sometimes it takes time and experimentation for a good idea to find a workable form. Other times, however, a new product idea may simply not be destined for success.
There's no way to know with absolute certainty whether it's worth sticking with a new product that's not immediately successful and for how long. The answer will likely depend on your conviction that it's worth your continued effort, the financial resources available to you and your ability to restructure and innovate.