Imagine you wanted to launch a new product to the world.
A product that would help define your business for the next decade.
A product that would encapsulate all the values of style, innovation, and modern living that your prospective customers yearned for.
A product which would blow those pesky competitors who had been stealing market share from you right out the water.
How would you go about doing this?
Well, if you’re like most people, you would invest a significant amount of time and money to make sure this new product would really hit the mark – after all, you’re hiring loads of new people, building a new factory, creating a boatload of marketing collateral from scratch.
None of those are cheap, right? None of those are cost-free or risk-free – you need to hire the staff and build the factory before you sell a single one of your exciting new products. So you’re in the hole by a significant amount of money before you make a single sale to a customer.
So, naturally, you’re not going to launch this product on a whim. You’re going to do your homework.
The homework
The obvious place to start is to find out what your customers want.
I say “the obvious place”, although many organisations launch ideas that someone tinkering away in a lab thought was a good idea before they check a single detail with their potential customers.
But let’s assume you’re neither a tech bro nor a mad scientist and that you decide to do what someone sensible might do.
You might start by trying to find out the reasons why people who used to buy from you have drifted away to other suppliers. By understanding their motivation, you might have a better idea as to what customers value, so you can build whatever that is into your new product.
So, for example, if my former customers told me that the design of my products was looking rather staid in a market which prized style over functionality more than it used to, then I might consider hiring some top design talent to make sure my product was every bit as stylish as the competition’s.
I might also discover there are some features my existing product doesn’t have, but which the market generally now expects to have “as standard” for those products. Perhaps I’ve been doing this for a long time and I have concentrated on becoming more efficient at producing my old products, so I ended up missing the new features people have come to expect as standard.
No problem, I’ll build those into my new product. Even though it means I might need to re-tool the factory, and it could add some time to the new product development cycle.
But still, if it’s what the market is demanding as table stakes from suppliers in my industry, I can hardly ignore that, can I?
As time goes on, I realise there are more and more features I had been blind to previously, so I decide to ramp up the market research to make sure we don’t miss anything obvious – after all, this new product will define our company for the next decade, so we don’t want to miss any up-and-coming ideas which might go mainstream over the next few years.
It means the development cycle will be longer, but that can’t be helped. The importance of understanding our customers’ motivation for buying products like ours is pivotal to our success in the next decade, so we can’t skimp on it.
The business case
We’re running a business here. So of course we need a business case – the clue is in the title.
How do we know that we will be able to sell enough of our new product to earn a return on our investment in people, factories, design, customer research and marketing?
Well, naturally, we do some market analysis.
Although there are many downsides to being behind the market, there is one important upside – we know how our competitors are doing with the products they sell which, increasingly, our customers prefer to ours.
So, if we add up all the sales the competition makes, and assume our super-duper product will be better than theirs, thereby gaining market share at their expense in the years to come, we should be able to make an assessment of the likely return on investment.
Now, this piece of work will take a team of analysts a significant amount of time. But it’ll be worth it. After all, we can hardly employ all these people and build a new factory without knowing it will all make a positive bottom line return at the end of the day, can we?
We’re running a business, not a hippy commune.
Of course, this adds a bit of time to the new business development cycle, but it’s an essential part of the process. There’s no point in creating a new product to sell that we can’t make any money on.
The future
Because we run a sober, sensible business, we don’t just run the numbers based on the market as it is today.
We want to ride a wave into the future because sales growth is always easier in a market that is expanding, rather than slugging it out for market share in a stagnant or declining market.
So we need to find people who can’t just tell us what the market is doing today, important though that is. We need people who can tell us what’s going to happen 10 years from now because we recover all our factory building and tooling costs over an assumed 10 year useful life.
You know what these “brain scientists” are like. Smart as anything, they can extrapolate trends and work out forthcoming changes in society – information like there will be more families with teenagers !0 years from now than there are today. So products which appeal to families with teenagers are likely to be a growing market – that sort of thing.
Thankfully, the brain scientists told us that, 10 years from now, over half the people in the country are going to be in the sweet spot for products like the one we’re planning to launch.
While we’re a little bit behind our competition, the upside between the potential market as it is today, and the potential market 10 years from now, when half the country is going to be fighting to buy products like ours, is enormous.
So if we get to the level that our competitors are today soon after launch and then, through superior products and better marketing, capture an outsized share of the upside over the next 10 years period, this new product will be a sure-fire money-maker.
Being distinctive
Now, we’re not idiots. Although we have competitors who are doing well with their offering – better than us, if truth be told – we can’t just slavishly copy what they do.
We need to be distinctive. We need to stand out from the rest of the market so people see our product and want to buy it.
We need to be bold – that’s what our market research said. We can’t just blend into the background.
While all of our competitors were doing better than us, according to the target customer groups our researchers spoke with all our competitors were seen as much of a muchness. It was hard for customers to identify which product came from which company.
Our target customers wanted something that stood out. Something that would show they were the sort of people who choose products which were distinctively different and rather stylish, rather than one of the “fade to grey” offerings from our competitors.
Armed with that insight, of course we commissioned some of the top designers to come up with the visual identity for our product. And boy, was that distinctive…! You knew that was ours straight away – it looked like nothing else on the market.
Of course, that meant we had to make some more adjustments to our manufacturing processes, because we weren’t just doing what everyone else did. It’s a problem, on the one hand, but it’s also what makes us distinctive, so it’s a worthwhile investment.
And don’t forget the ads
As we all know, having brilliant products is great. But having brilliant products nobody knows about is pretty much pointless.
We need to get the word out.
Now, because this is a keystone product for our company, we’re going to the very best.
We’re going to get 19 of Madison Avenue’s finest ad agencies to pitch for our exciting new product, after which we’re going to commit serious cash to the launch and follow-up marketing to make sure everyone in our target market is itching to hand over their cash to us.
Yes, that’s going to take a little while because until we know exactly what we’re selling, we can’t even begin to create, much less run, the ads.
But anything worth doing is worth doing well. So let’s get all the big ad agencies in to see what they have to say for themselves. Then we’ll pick whichever agency we like the best and give them the cash they need to create the ads and buy all the media they need to run those ads.
It’ll be worth it, though.
A combination of an exciting new product, meeting our target market’s desired preferences, and the promotional input from one of Madison Avenue’s finest ad agencies…surely we’re onto a winner?
Or are we?
Well, dear reader, it might not surprise you to learn that, in this particular case, the answer was “no”. We aren’t onto a winner at all. Far from it.
Despite “doing everything right”, it’s still possible to create one of the business world’s more celebrated failures.
The story above is a lightly fictionalised version of the story behind the launch of the Ford Edsel.
Younger readers might not have heard of the Ford Edsel for the very simple reason that it was launched with a great fanfare in the late 1950s, but bombed more or less straight off the launchpad, and was killed just a couple of years later.
Ford did everything right. All the research. All the engineering. All the marketing.
But it took them 10 years to get to launch. And by then, the market had shifted and what might have been a desirable product at the start of the process had been overtaken by events.
And because they did everything right, it cost an estimated $250million to get to the point of launch.
They spent so much money to get everything right that the Edsel had to hit a home run right off the starting line if Ford was ever going to stand a chance of recovering their investment.
But after an initial rush of interest, sales figures fell off a cliff. Within three years of launch, with total sales to that point less than 50% of the level of sales required just to break even, Ford pulled the plug.
There are many contributory factors to the failure of the Edsel, not all of them the fault of the company.
Yet, fundamentally, the Edsel was a failure despite Ford…in theory…doing everything right.
How to protect your bottom line
While there are many things Ford could have done differently, unless you build cars for a living, some of them are of limited use to you.
However there are some aspects every business can factor into their forward strategy:
1 – The market is all that matters
In the end, it doesn’t matter how clever you are and how much money you spend. If the market doesn’t like what you’ve done, your idea will fail.
2 – The theory vs the practice
It’s easy to get swept along by the brilliance of the people doing your market research, and all the charts and graphs they prepare. But everything is theoretical until your product launches – after launch, all anyone cares about is how well it works in practice. Theory becomes irrelevant at that point.
So you are probably best served by getting a real product, or something very close to it, in the hands of some of your target market as early as possible in the process, so you can get practical feedback to work with instead of the theoretical wishes and desires of people who the market research company spoke to.
3 – Distinctiveness isn’t always good
Standing out from the crowd is usually a good thing. However, that’s only true if people like the way it stands out.
If your target market hates the distinctive elements of the design (the vertical centre grille in the case of the Edsel), distinctiveness alone won’t save you.
4 – Cash commitments
In general, don’t go round committing $250 million until you know you’ve got something the market really values, as opposed to well-meaning statements your target market has shared with your market research company.
You ideally want to be investing more and more on the back of an idea which is clearly gaining traction than to push $250 million in chips onto the roulette table before spinning the wheel to see whether your numbers come up or not.
5 – Are your customers clear?
Pre-launch, Ford largely ran “teaser ads” to whip up interest in the new Edsel. As a marketing strategy that isn’t completely crazy, but it meant nobody in their target market really knew what was coming.
When you break down individual features, like improved air conditioning, and run your ads around that it’s hard to find anyone who doesn’t think better air conditioning is a good idea. So you get lulled into believing that you’re on the right track.
And your customers aren’t lying. They just don’t know the full picture. But what they probably didn’t expect you to think was that they would buy an ugly car with better air conditioning over a more attractive car with slightly poorer air conditioning.
Yet, in essence, that’s what Ford did. And it’s why, when the full picture was unveiled at launch, sales for the Edsel were underwhelming. No longer being asked for an opinion on one narrow aspect of their car purchase, buyers could see the full picture, and not enough of them liked that full picture for the Edsel to become a success.
The thing is, nobody really knows anything in advance. You can have all the theory in the world. All the research. All the business cases. All the advice from the very best people in their field.
And still, sometimes, it doesn’t work.
So whether you’re looking to make big changes in your business or small ones, it’s usually best to remember Charles Darwin’s line about it not being the strongest, or the most intelligent species which survive, but the ones which are most adaptable to change.
That’s never more true than in the field of new product development.
Of course you need an idea to work up, but from that point onwards, don’t become too attached to the outcome. That’s how Ford got tripped up.
Regard it as a hypothesis only. A Ver 1.0. A pre-launch sample.
Then get it out in the world as fast as possible and stay light on your toes. Be prepared to react to real world feedback as quickly as possible and build from there.
In businesses which like lots of rules and procedures, this is almost impossible. The concept of “staying light on your toes”, with a lot of flexibility about what happens post-launch is an anathema to many businesses, large and small.
But there’s a good reason to do things that way.
Because that way you don’t waste $250 million creating a product people don’t want to buy, and your company doesn’t end up as a business school case on how not to launch a new product.