Developing and launching new products (or product extensions) offers great potential for attracting new customers, encouraging repeat customers and increasing average order values.
But launching products must be handled properly if business owners are to realize that full potential for expanding sales and profit.
Here is a seven-step process that will enable business owners to dramatically increase the probability and magnitude of success on new product launches.
7-Steps to Launch a New Product
The following summary will give you a general idea of the approach:
Step 1: Identify high-potential products
Always maintain a list of potential new products.
When you visit a competitor and see an interesting product, note it down. Do some research online for potential product ideas in your industry and market. Think about your current product line up and where there are potential gaps and opportunities.
Always be watching in real-life for opportunities, and spend some time brainstorming by yourself or with collaborators to come up with a comprehensive list of ideas.
Then for each product idea, consider the following questions:
- How does the product fit with the current business?
- What existing products will the new products impact, and are you happy with the impact?
- What kind of customer will the new product attract, and at what price?
- Will the new product work with the existing equipment, infrastructure and structure?
- What is the cost-benefit analysis for this product?
After this step, you will have a comprehensive list of potential new products, assessed by attractiveness and which you can then rank from highest to lowest potential.
Step 2: Constantly validate during product development
Ad you start to develop your potential new product, you’ll start moving through some of the following questions:
- What is the product appearance, packaging and price?
- How well will the product fit into the current system?
- Can you make enough to satisfy projected demand?
It’s important to keep validating the product idea as you go through this process by asking the following questions:
- Is it desirable - do customers want the product?
- Is it feasible - can we deliver the product effectively?
- Is it viable - will the product be financially successful?
Constantly test the product against these three questions as you go through product development in your business and with your partners.
Step 3: Make a habit of customer testing
The product development process is underway and you have a working prototype, or example of the product. Get outside the four walls of your business and test the product with employees, existing customers and new customers.
Never skip this step.
Then, listen to the feedback and incorporate it into the product. As the business owner, operator or manager you might be too close to the product and the business, this is an example of where the customer is always right.
Change the product to customer tastes, preferences and behaviors if need be because, after all, they will be the ones buying it from you!
Step 4: Test distribution and marketing channels
Select test marketing times and locations that will address the development considerations mentioned under the product development step.
Step 5: Continuously track customer feedback
Once the product is in the market, continue to probe for customer reactions to the product. Make sure to go beyond the sales numbers. Why is the product selling? Why isn’t the product selling? What improvements can be made?
Step 6: Assess and then reassess the cost-benefit analysis
You have already looked at the following questions in the cost-benefit analysis conducted during Step 1:
- How much will you invest to introduce and sell your new product?
- What are the incremental earnings from the new product?
- What is the expected return?
It is important to revisit this analysis after the product has launched to assess the success. Write a post-mortem analysis if necessary. What went well? What could have gone better? What did you learn that can be applied to future product development or your wider business?
Step 7: Engage your employees and spread the message
Share your ideas with your entire business, making sure you bring in every employee's help in introducing, selling and testing reactions to the new product.
Seven steps might seem like a lot just to launch a new product.
Of course, you can pick and choose the steps you want to follow, but the most successful product launches follow a methodical approach that makes sure they are tested and validated during the development process.
Following these steps will keep you on the right path.
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