A recent TNS study has revealed the damaging effect of innovation, in the form of poorly strategised product launches. The research firm assesses close to 10,000 new products globally every year, with more than 4,000 in Asia, it said. Read Is launching a product always the best move?
Â Ray Crook,Â director for innovation and product development for TNS APAC writes seven questions companies should ask themselves before launching:
1. Is there a financially viable opportunity in the market?
For those companies who are focused on ensuring commercial growth, the first question the businessÂ should ask themselves about potential innovations is also the most important. Oil companies donâ€™t drill
expensive wells just because somebodyâ€™s instincts tell them that thereâ€™s enough black stuff down there to justify the cost. Other businesses also need to take a scientific approach to sizing the opportunity before they commit resources to it. And they must do so from the earliest stages of idea generation.
2. Can my business deliver the benefits required to take advantage?
The key question that a business should ask itself, before launching into product development, is whether it is ready and able to meet those requirements: is it prepared to invest in the new machinery or processes necessary to deliver an ideal solution for example, or would it be forced to compromise in a way that undermines the end benefits for consumers?
3. Is the opportunity best served by an existing brand â€“ or must I create a new one?
More than 85 % of new product launches take the form of brand extensions, and there is a good reason for this. Leveraging the equity already established by the brand provides new launches with a vital leg-up in the market. However, businesses must first understand the precise nature of their brandâ€™s functional and emotional appeal, in order to assess whether and how it can stretch to new areas. Relying on superficial judgment alone can miss some opportunities whilst leading to overconfidence in others.
Bic, a famous maker of pens, razors and cigarette lighters, proved surprisingly successful when extending its brand to sailboards, which use similar materials in their construction and allowed the brand to extend its functional and emotional benefits of top-quality yet affordable. It proved far less successful when trying its hand in the womenâ€™s hosiery space, where disposability was the only functional benefit it had to offer.
4. Will taking advantage of the opportunity generate incremental revenue for my business?
Analysis of the TNS and Kantar Worldpanel database of new product launches reveals that basing the choice of which ideas to develop on incrementality would have resulted in a better launch decision being made on 44% of occasions. Innovators canâ€™t afford not to ask where their sales are really going to come from.
5. Is my business geared up to innovate â€“ and can it support a new product?
Â Although an innovation-friendly culture is a great start, it needs the support of the right systems and structures if it is to translate into success: employees in the right roles and with the right skills, a clearly defined process for generating, developing and launching ideas, and the necessary level of financial support.
The requirement for committed investment isnâ€™t limited to the development process. New products tend to require heavyweight marketing campaigns if they are to establish themselves in the market, and many apparent shortcuts compromise on a new launchâ€™s potential. The advertising spend for the first year of a new brand is typically double that for a line extension. However, advertising for line extensions is noticeably less effective (Millward Brown data shows that ads are wrongly attributed to the parent brand on one third of occasions and that this leads to a 35% drop in effectiveness).
6. Do I have enough time?
Businesses must first ask whether the time exists to develop a product effectively before the opportunity closes. Successful products can be developed rapidly (Indofoods is a master of the three-month turnaround, for example) but this can only be achieved when the business knows what is required to make the product a success, willing to take calculated risks â€“ and is fully geared up to deliver it. The next question is whether a new product can deliver success quickly enough to satisfy the expectations of the business â€“ and the trade partners that it relies upon. The key to survival is often to get sales and get them quickly, with a focus on attracting early adopters that can deliver the
immediate revenues the new launch requires. When it comes to broader communication across the category, brands need to focus on building levels of excitement that can persuade occasional buyers to bring their purchases of the new product forward.
7. Will people keep buying the product once it is launched?
Products do not need to be premium quality in order to be successful; the key to success is clear synergy between the proposition promise and the actual product experience. Overselling a product and masking its deficiencies through marketing spend can only delay failure; it cannot avert it. If a good enough product cannot be delivered in the time available â€“ or quickly optimised after launch – then positive answers to all the other questions are irrelevant; a business is still likely to see its innovation investment going to waste â€“ and its brand equity and trade reputation potentially compromised.
There is some considerable market evidence that deliberately avoiding overselling the product benefits delivers better prospects for long-term growth than promising benefits that the experience cannot deliver.
Smaller numbers of consumers who try a product and become loyal customers add up to considerably more value than large numbers who try and then reject it. Repeat purchases of a product that aligned perfectly with consumersâ€™ expectations and reasons for buying can bring larger volumes over time.
[Image from Shutterstock]