Welcome to part three of our exploration of “Why New Products Are Launched.” Here we will explore three externally focused reasons for companies creating new products. In the first part we covered the success or failure rate of new products. The second part covered launching new products for the correct reason.
1. Publicity/Public Relations:
A product initiative may be used as a publicity tool. The direct impact on revenue may be negligible and, in fact, the costs of development and rollout may not be recouped via sales of the product.
Yet, the value of positive press stories and positioning by an expert cannot be overlooked. Because you are generating awareness about your expertise, the publicity in turn creates opportunities for sales representatives to generate face-to-face exposure with key customers or wholesalers. Furthermore, this two-way communications gives the added element of credibility for the company and the new product.
The reputation of your company is built over time. Appearing to be at the “cutting edge” in technical innovation or in addressing issues of the day should impart a halo effect on your company’s image and identity. The impression of your abilities contributes to your brand’s image and identity. Thereby, indirectly contributing to additional sales in the future, which may have gone to a competitor.
2. Research has shown that … :
Blind faith in research is an unsure or iffy proposition. If the findings are accurate and the development effort and rollout are well executed, then a success may occur.
However, research studies if not both planned and executed properly may simply set you up for failure. Temper enthusiasm about the research findings with your knowledge and experience before proceeding with product development.
Remember, a product flop can negatively impact the reputation of the team responsible for developing and launching the products and ultimately undermine profits.
3. Keeping up with the Joneses:
Many companies decide to “me too’ the offerings of competitors. Often, little strategic thought is given to the implications of replicating existing products. Product cannibalism has been known to undermine the best-laid plans. Marketers should ask; does the concept really fit the strategic direction of the company? What about profitability and lost opportunity cost?
The Marketing or R&D department may introduce, without proper analysis, an ill-conceived product in response to complaints by the Sales department about how Company X is “stealing” our business because of a product we lack.
A product, which arrives late to the market and is not sufficiently better and/or less expensive than what is already there, will be treated as too little, too late by potential purchasers.
Taking action to steer clear of faulty reasons for developing new products will assist you and your firm in having a higher success rate in business-to-business new product introductions.
That is what is on my mind. What do you think? Please post a reply in the Comments Section below.
- Is your Product Development Process externally or internally focused?
- Have you ever green lighted or worked on a Product Development effort that you did not fully believe in?
- How strongly do you follow the findings of research?