No Free Launch

Seven essential ingredients to effective new product introductions

By Dave Wendland

In the mid-1800s, the director of the U.S. Patent Office suggested that the office be closed because every invention that could possibly be developed had already been accomplished. What a mistake that would have been. Then again, with the failure rate of new items running as high as 80% (according to research conducted by Information Resources, Inc.), perhaps a number of product inventors would have saved a considerable sum of money. On the other hand, without innovation in our industry, life-saving drugs, symptom-relieving remedies and beauty enhancers would not be available for consumers. And that would stymie growth.

In this article I’ve identified seven ingredients to new product launches — and none of them is free. However, all of them are essential as a manufacturer looks to bring a new item into the supply chain.

Needs Analysis

Before moving into full-scale production of the latest and greatest, the question that begs an answer is, “Do consumers really need the product?” Whether through secondary research methods, questionnaires, consumer intercepts or focus groups, a thorough understanding of the market’s needs and opportunities must be determined.

Category Review

Developing a well-documented rationale and analysis of the availability of space within the category, current retail and consumer trends, as well as a comprehensive profit examination are fundamental to the process. It continues to surprise me when manufacturers simply believe that a particular new product belongs on the shelf because of prior success. Each innovative new product — and every line extension for that matter — must begin with a review of the category.

Promotional Plans

Retailers demand it, and consumers expect it. Creating a thorough marketing communications and promotional plan should not be taken lightly. Not so long ago it was relatively easy to develop a media campaign that drove behavior. Today’s market is much more complex with literally thousands of potential promotional outlets. And what’s on the horizon? Considerably more Internet-based and viral marketing. It would be very prudent to put some fresh perspective and talent around this issue.

Merchandising Strategy

Okay, you’ve convinced the buyer that the product is innovative and is well supported through promotional activity. Now, the question is, “where does it fit on the shelf?” We are advocating a new look at the staid and true path of category management. Instead of managing products on the shelf, we feel it is time to “think big” and “think ‘need states’ and ‘condition management.’” If you can determine when, why and how a consumer will buy the product off the shelf, you can better develop an effective shelf- management strategy.

Support Fees

Although the structure of support fees and inventory allocation practices have continued to change, it is essential to understand each customer’s view and expectations. Options abound, but spending money unwisely will only produce disappointing results. Be prepared to put some support dollars behind the launch — but don’t forget to ask for traceable metrics.

Retail Execution

Getting a product into the inventory pipeline is often easier than getting the product onto the shelf. This is often referenced to as the “last sixty feet.” It can make or break the success of a new item introduction and too often it is out of control. Collaborating with all of the affected stakeholders will help in the creation of a workable and traceable approach.

Measurement

To use the old cliché, you can’t track what you can’t measure. This may be the most important element within the new product launch process. Virtually every aspect of the new item introduction, from consumer reaction to promotional effectiveness, from shelf strategy to product turnover, must be measured. With each new item launch these measures should not only be evaluated, but also tweaked and modified to truly develop a best-in-class process.

Are new item launches expensive? You betcha. That’s why this article is called “No Free Launch.” The market demands innovation … it’s your job to make the most of it!