Is Your New Product Introduction Process Launching Your Company to Success (Part 2)?
In this blog post, I will continue the conversation about key success factors for new product introductions. In the last blog (Part 1) we identified 6 factors that are crucial to your company’s product launch success. In this blog, I will discuss 3 more and offer some conclusions.
Accurate Supply and Demand Planning
Related to rollover strategy, having the right demand and supply plan is crucial for a successful product launch. In addition to the uncertainty of fluctuating introduction dates and slipping R & D schedules, a poorly executed supply and demand plan will knock the wind out of the sails of any new product launch, no matter how well executed or creative the other elements of the marketing mix are. This topic, in more detail, will be the subject of another blog post. But the short answer is that (often times) significant inventory needs to be built in advance of a product introduction, in order to accommodate the initial ordering spike and channel stocking requirements. There is no hard and fast or easy rule to apply here. The decision on how much inventory to build is a function of many factors including B2B or B2C segmentation, forecast accuracy, long lead time parts procurement, channel stocking requirements, and of course the rollover strategy – hard or soft. Also to be considered is the inventory policies for that range of products. For example, you may choose to have a higher degree of inventory, manufacturing and mix flexibility with a $199 product than a $99 product. Why? Because (generally speaking) there is more revenue, profit etc. in selling the higher priced products. When companies have a broad portfolio of products (like HP did) – low end and low priced products generally had lower levels of profitability than higher end and higher priced products. This should not be a surprise. As a result in some companies, low end volumes are limited to a certain percentage of total products sold or to a specific market share goal, in order to prevent too much erosion of profitability and mix to the low end.
Delivering Broad Communications
The importance of delivering broad launch communications to suppliers, the channel, key customers, and sales reps are crucial to coordinating a successful product introduction across key stakeholders. Some companies (like Apple) don’t let their sales reps know about their new products the day of the launch. This often results in end user confusion as nobody can answer the inquiries/support calls of end users when the product is announced. While there are legitimate issues with wanting to maintain confidentiality of a product launch (e.g. to prevent a premature competitive response), years of experience have told me the more open and coordinated conversations around the new products, their launch strategy, rollover plans, key messages, etc. are, the better the outcomes for OEMs and their channel partners and customers.
Having An Integrated Marketing Plan
For many people, the launch plan is synonymous with marketing communications – PR, marketing, demo units, marketing collateral, advertising, and promotions. While these are certainly important elements of any new product intro, there is another layer of thinking in the launch plan that needs to be considered. For example, how strategic is this product for the company’s future revenues or company/brand image and how strong is the story? Is there any announcement within this intro (e.g. hardware, technology, partnerships) that fortifies or offers proof points for the company’s strategy along a new or existing dimension? Each product introduction should be like a piece of gigantic jigsaw puzzle that fortifies and moves the company to improved competitive advantage. Master this concept and you will beat out 95% of your competition in the effectiveness of your product launch process. If you start thinking like this right now, I am confident you will get the new product launch results you are looking for.
Here are some additional questions to think about, related to your launch strategy.
10 Questions to Consider About Your Launch Strategy
- Is the new product strategic or tactical? Both in financial performance and market segment
- What is the key value proposition and messaging of the product? Is it compelling and sustainable?
- What is the positioning of the product, related to the competition, and other products the company manufactures? Is the product innovative and can it disrupt the competition?
- How does this product contribute to the longer term vision and financial performance of the businesses? Is it a big contributor to future growth?
- Is this product newsworthy? Will the press or industry analysts run a story about it?
- How much do end users care, read or follow the news of a new product announcement?
- How frequently does the company launch products – monthly, quarterly, or annually? The idea being is that the velocity of any particular introduction, and its activities, will be a function of how often introductions are done the business unit. Not all of them can be strategic.
- Will there be enough inventory available at launch? A related question … is there too much inventory remaining for the old product? If so, what do we do about it?
- Are all of the elements of the launch aligned and ready to go? For example in addition to product availability are demo units ready, advertising creatives media buying plan in place?
- Is the product launch coordinated with end user and channel seasonality? If timing is not synched, the potential exists that you will not get enough channel or end user momentum for the launch.
Let’s recap. There are 9 factors that are key to successful product introductions. They include:
- Reliability of the Product Development Schedule
- Strategic Nature of the Product
- What is The Story Behind the Product?
- Availability of the Product after the Launch Announcement
- Rollover Strategy
- Windows Planning
- Accurate Supply and Demand Planning
- Delivering Broad Communications
- Having an Integrated Marketing Plan
In conclusion, a product launch is one of those top 5 things marketing can do to help ensure the successful viability of the future business. Careful consideration about the right focus, resourcing, and support given to a new product launch will go a long way in helping build brand awareness and preference and future financial and market share growth. One final comment and that is as it relates to services and software. In the case of these product groups (vs. hardware), there may not be a physical product to rollover. But the think most of the other factors apply to these product categories. So please let me know your NPI success factors in your comments back to me on this blog.