Small Biz Marketing Stategy: When to Launch a New Product
By Otilia Otlacan |
The first question an entrepreneur should ask himself when contemplating
whether to extend his product range is "why would I do that?"
A good
share of the entrepreneurs I know have a tendency to extend their product range
in a very curious, oportunistic way. Whenever the market has more opportunities
than suppliers, I see entrepreneurs deciding "Let's do this, too. We can do
this, why not doing it?"
For this reason, they end up developing
unrelated products that eventually lead to parallel businesses, very time and
effort-consuming for the small business. An entrepreneur should first be able to
address the following two questions:
- why does he feel the need to take
such step, launching a new product or service?
- will the product contribute
towards a better strategic positioning of the company?
- will the product
help sustain the company's message for the target market?
Some other
issues should be considered and answered too, before deciding to add a product
to the company's range:
- will the new product cannibalize the existing
products?
- if a new product is launched, will customers still purchase the
previous products?
- the new product's market is a new one, or is it the same
market as for the older products (is the business truly extending, or it is just
being updated?). A business update is surely not a bad idea, but not if it comes
as an unexpected result: the entrepreneur invests to extend the business and in
return he only succeeds to replace older products with new
ones.
Extending a product range should occur only when the target market
is ready to buy something new. This is especially true on emerging markets,
growing markets that need time to assimilate and learn new products, according
to existing needs. If a product is launched too early in the market's
development stage, one should brace himself for failure, or at least for a
costly adventure: marketing the new product can require more time and money than
planned and expected. Extending the products range for a small business is
actually a matter of inspiration rather than perspiration (read: "research")
since market research is often too costly for the small biz entrepreneur - thus
extending the products range is a pretty difficult task: what products can you
offer to people who are already buying?
When adding new products to the
business, focus become the crucial aspect, and not the number of products being
launched. If several new products are to be added to the range, they should be
positioned for different targets and must be taken care by different teams. You
can't give the market two products at one and you can't have one single team in
charge of launching two products. Multiple products should be launched
simultaneously only if the target market is large enough and there's an equally
large team to manage it.
Two frequent mistakes made by small biz
entrepreneurs are lack of innovation and focus. More exactly, they might launch
products that are too "down to earth" (read: "boring") for an expanding market,
or products that don't comply with the overall business strategy and direction.
If the launch of a new product was successfull, sales should get a boost, but if
the launch failed withdrawing the product is probably the best option. A
frequent syndrome when it comes of small businesses stretegy is that of buried
costs: the entrepreneur insists on keeping a failed product thinking "something"
can be done with it or else the money spent on development and launch are
lost.
If the new product was a failure, it is theoretically possible to try a
re-launch, a re-branding or a different communication campaign; though, most of
the times it's simply the wiser to just eliminate the product and cut the
possible further losses.
To conclude, here are some major question a
small business entrepreneur should ask himself before launching a new
product:
- will the product contribute towards a better strategic
positioning of the company?
- will the product help sustain the company's
message for the target market?
- will the new product cannibalize the
existing products?
- if a new product is launched, will customers still
purchase the previous products?
- the new product's market is a new one, or
is it the same market as for the older products (is the business truly
extending, or it is just being updated?)
About the Author
Otilia is a
certified professional with expertise in e-Marketing and e-Business, currently
working as independent consultant and e-publisher. She developed and teach her
own online course in Principles of e-Marketing and can
be contacted through her Marketing and eMarketing articles portal Tea with an Edge of Marketing.
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