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Jan 20
2006

Launching a New Product or Service

Posted by: Steve Marr

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Every year, an astonishing 30,000 new consumer products are launched, and 90 percent fail. This is true despite the billions of dollars spent on development, billions more spent on customer research, and untold sums spent on advertising. When looking to launch a new product, you can increase the chances that your new offering will join the select few that connect with customers by following three key steps. King Solomon wrote, “It is not good for a person to be without knowledge” (Proverbs 19:2, NASB).

 

First, establish the need. Many businesspeople use Blackberries and other handheld devices to manage their schedules. The need is for business travelers and others on the go to stay connected. When e-mails can be received and sent, and phone communication maintained effectively with one device, people can become more productive. The “need” was created by the recent explosion in the use of e-mail, and it was fueled by the technological improvement of wireless technology that makes these devices practical. King Solemn wrote, “The wise are cautious and avoid danger; fools plunge ahead with great confidence” (Proverbs 14:16, NLT). Launching any new idea without establishing the need is foolish and costly.


The growth of the Hispanic community in many areas has created the need for traditional food products aimed at this market. Just look at the quick items on sale at convenience stores—tacos and burritos abound, filling the need.


A CPA specializing in tax returns opened a practice in a small town of 2,000 people, figuring he had a ready-made market. Unfortunately, in the town, only 175 people used any tax service at all, and only 35 need the help of a CPA, too little demand to support the CPA’s practice. A more careful analysis would have confirmed that there was insufficient demand.


Second, focus on your prospective customers’ ability and desire to pay for and use your new product. Many business owners seem to believe that if they create something their customers need, sales will automatically roll in. For example, several companies have launched software products that provide an excellent resource to help people plan for retirement. As many baby boomers begin to reach retirement age, one would think there would be a big need for these products. However, despite great product quality and heavy marketing, these products have flopped, most notably Quicken Financial Planner. Apparently, although many people might benefit from using these products, few are willing to buy them. When the Lord furnished manna to meet the needs of Israel in the wilderness, the people complained and wanted meat. The Lord then provided quail. Given a choice, the people would have rejected a good product that met their need.


Another example was American Airlines’ decision to give their customers more leg room by removing a few seats. The airline thought that ticket sales would increase dramatically, more than offsetting the cost of reduced seating capacity. And if asked, most passengers would wholeheartedly agree that they needed more leg room. However, simple research confirmed that most customers purchase tickets based on price and schedule, not comfort. Again, the perceived need was there, but not the customer demand.


Finally, when we successfully identify a customer need, and confirm their desire to buy our new product, we still need to deliver the product effectively to take advantage of the market opportunity. A bagel shop was struggling to turn a profit. The owner was confused because the shop was always busy but sales were consistently below projections. She discovered that several egg dishes she offered attracted sit-down customers, but also created a line. Customers who wanted a dozen bagels for the office, or one for the road, were forced to wait 10-12 minutes. As a result, they were going to a nearby supermarket for faster service. A simple decision to create an express line for bagels and coffee moved these customers quickly and resulted in a sharp increase in bagel sales. Customers needed and wanted fast service, and they were willing to buy the shop’s bagels if they didn’t have to wait too long. The point is that your customers’ needs must be met in a way that actually satisfies your customers.


King Solomon wrote, “Mere talk leads only to poverty” (Proverbs 14:23, NIV). We must turn our good ideas into effective action.

Steve Marr, Your Christian Business Coach

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