Business owners hoping to launch a new product face many risks. Competitors, consumers and economic changes can doom even the best marketing plan. The only solution is to assess risk as best you can and prepare your company to handle the problems most likely to confront your new product.

Marketing Plan Risk

A large part of the risk for a new product depends on the marketing plan. For example, if your strategy is to sell a product for twice the price of similar substitutes, your risk of failure is high. Your competitors will undersell you, driving down your sales and profits. On the other hand, planning to sell your product at a very low price can be equally risky: If your prices are too low to cover costs, your business model will fail. In other words, controlling risk for a new product depends largely on devising a marketing plan that is strategically sound and financially viable.

Brand New Market Risks

If your type of product has never been seen before, you'll have little competition at first. But as it becomes clear your product is profitable, competitors will start to mount their own product campaigns. One preventative solution is to create a high barrier for entry. Securing a patent, for instance, can stop competitors. If that’s not possible, perhaps you can forge an exclusive deal with a major retailer, which will make it harder for other companies to compete with you. Anything you can do to stifle the competition will reduce the risk for your new product.

Existing Market Risks

If your new product already has many competitors, you face a more difficult path. To outcompete existing products, your new product must offer something novel and distinct. For instance, if you plan to sell tax-preparation software, you must offer customers a compelling feature your competitors don't, such as a much lower price or some element that makes yours the superior product. If you can’t identify a distinctive selling point, your product might fail to lure customers from established competitors.

Consumer Behavior Risk

Consumers are fickle, and there's always a risk that consumers won't like your product for some unpredictable reason or they'll like it for a while and then abandon it when they grow bored or dissatisfied. One way to minimize such risks is to identify a niche your competitors don't serve. For instance, if your major competitors focus on making a product with mass appeal, target a narrow but profitable consumer segment, such as high-income homeowners in a well-defined region. Market your product directly to these consumers, customizing it to meet their needs as much as possible. With careful research and targeting, you'll develop a loyal customer base your competitors can’t easily steal.

Timing Risks

Shifting economic trends are a constant risk when offering a new product. For example, during economic downturns, consumers are less likely to buy luxury goods. If you happen to launch a luxury product just before an economic downturn, chances are your product won’t sell well. To minimize the risk of bad product-launch timing, monitor market trends by learning what industry experts have to say about likely economic changes. For example, hire a professional market research firm to analyze prevailing economic trends and also forecast likely market and consumer reactions. Paying for a professional analysis might seem costly, but the expense is worthwhile if it helps you avoid much more costly mistakes.