Brand & Product Management

Fundamentals of Developing and launching new products:

The focus of this lecture is for you to learn the fundamentals of developing and launching
new products. Instead of providing you with a guided process, which may not apply to you
because of the nature of your industry. I will give you my key success factors to launching
and developing new products. I assume that after lecture 1.3, you have defined your
product strategy.
Questions that you should think about:
Who is the target of your new product?
What specific need of these target customers will your product satisfy? Which specific
benefits should the new product have?
How will you market and sell the new product? How will you manage costs to develop a
profitable new product without cannibalizing others in your product mix?
When is the best time to expand a product line, and with what strategy?
How should your organization respond to similar competitive products?
How should my company organize their pipeline of new products?
As you can see, this list is very comprehensive, and you should make sure that you have
answered the above. Before you over commit to your new product. Some of these, I will
answer in this lecture, and some in the next lecture. Which is about your product pipeline.
Let us begin with the first success factor. In my experience, it is crucial to listen to the
consumer along the way.
Keep in touch with the marketplace. Although this sounds obvious, companies do not
always keep open ended conversations with customers or potential customers. For
example, identify who are the early adapters and risk takers, allows you to know the
evolution of their needs and where are the gaps. Sharing with them the information. Asking
them questions, such as, what will help you achieve your objectives. Or what are your cost
constraints? What are the desired features, what are the redundant features? Will actually
help you fine tune your product.
Successful companies also talk to the distribution channels to understand their perspective
and their needs. Market research is crucial to measure the interaction between potential
customers and concepts or prototypes. But it is important that the market research be
relevant and open versus confirming. What does this mean? It means that it arrives on time,
to actually make decisions and now after. It means that it is rich in facts to make a relevant
decision. For example, that it helps to estimate the cannibalization of existing products. It
means that it does not document what is obvious. For example, that consumers want the
best quality at the least price. It also means, that it is not to confirm a point of view that we
already have.
That it is specific and non-standardized. And that it takes into consideration, the functional
needs of all of your team whether it is RD or marketing or production. Listening to consumer
can also be done by developing prototypes that you can test and learn. Your prototypes
might not be perfect, but they will allow you to learn what customers appreciate most and
least. What attributes they missed.
The feedback helps your developers reconcile the desired features with the constraints of
time and cost. Building a prototype also has the added benefit of getting all the internal
stake holders excited and energized about of your product. That leads to my second success
factor, getting everyone onboard, including those areas or functions not directly involved
with the development process. And do it early on, if possible, from the project's launch. I
will illustrate why this is important with a simple example. While working for a real estate
company, the team had developed a whole set of customization options for the new homes,
that would be soon launched. After having the models ready and the personnel trained to
sell these features. The development team approached IT and accounting to communicate
these new options. As it turned out, their internal system did not have enough "feels" to
capture the customization options, or even to invoice them. The necessary changes in
programming and testing would cost a three-month delay in the launch of the new product.
Which meant Hundreds of thousands of dollars. As you can see, something that seemed
unrelated to the product could set back your launch and add to your costs. My third success
factor is to set specific go-no go milestones with specific decision-making criteria and stick
to them.
I will illustrate this point with an example of my own experience as an entrepreneur. Some
years back, I purchased a right to an American franchise to open up stores in Spain. Having a
well-thought out business plan, we had to find the key premises for each store to be
profitable. One of the premises was the highest amount we could pay as a rent for where
the stores would be.
And also, the traffic footfall, the number of persons that we need to pass in front of our
store every day. In this line of business, the most difficult task was to get the retail space.
After visiting all shopping mall owners, realtors, et cetera. We were eagerly awaiting to find
something to open up. After some months, we finally got a call from a major mall owner,
offering a space in his new mall. Next to Carford and Ikea, we were amazed. How lucky
could we be? However, the price was 30% more than our business plan and the conditions
required a significant upfront cash payment.
Despite having a go-no go milestone and a criterion for deciding on locations. We let the
best or our hype on gut make the decision, launching the first store in this mall. It proved to
be a disaster. At the beginning, we could not sell enough product to pay the rent. As we
began to sell more and get acceptance of our product, the footfall of the mall decreased.
And thus, our sales went down. At the end, we had to close down within 18 months of
opening. My fourth success criteria, when launching your products are to consider the
competitive advantages of your organization.
For example, is your company small and with a flat structure? Then one of the advantages
that you may have, is that you communicate very well and can make joint decisions very
quickly. How can you incorporate this in your product launch? Maybe defining a plan for
monitoring the launch. And a system to make quick changes in pricing, in promotion, in
features, etc. That will allow you to test and learn. Let me share another example. I work
with a company that makes products for body shops. But they do not sell directly but rather
through distributors. However, this company, who had a technical team which visits body
shops regularly. To help the owners get the most out of the product. These visits allow them
to capture lots of customer insight that could provide a competitive advantage to the
company. But how the user would launch in your product? Well, beyond the obvious which
is feeding back the needs that could be the seed of new products. They can also help in
developing grade value propositions for the both the distribution and the body shop. They
can be the door openers for the new products.
They can also through their job of training. They can facilitate the quick adoptions of the
new products, etc. On the other hand, you should also include in your product action plans,
how to develop the capacities needed for the launch. Which are those critical competencies
to reach our objectives? Which ones are the nice to have? I think the best case is to
illustrate this our software companies. How many times they have launched a software
addressing a mainstream consumer. And they don’t' have the support hotline to help you
navigate through them or answer questions. It is also very common in the Telco Industry,
where they might launch a new plan. But nobody has been trained to activate it in their
systems. The fifth success factor is to generate a business case, that summarizes the
concept's viability. We also look at the new product in the context of the company
financials, and not as a standalone business. Well, if it is to be sustainable, we should
definitely evaluate what other resources that it requires. And develop a model with
scenarios from pessimist to optimist. We should even do a stress test, and evaluate the
organizational capacities and competencies required for success. To ensure that we are able
to deliver them within our model cost structure. Think of it. If we are a start-up, a new
product might eat up all of our resources. And at least we should be aware of the parameter
of the risk that we are taking. There are many other factors to consider when developing
and launching of new products.
Before I go, I want to share with you another crucial element to consider. Which is how you
organize your product launches, so you can maximize the return of each of your products.