Synopsis: Pump Manufacturer – New Product Assessment – New Product Commercialization
At great expense, our client previously launched several products with disappointing results. To avoid another costly mistake, the client retained QDI to conduct research to measure their new product’s potential for success before the actual launch.
Truly new products carry the highest potential for reward, but also carry the highest risk of failure. These risks and rewards apply to the customer as well as the marketer. The customer takes a risk that a purchase will not perform as he has expected and the results could cost a lot, or very little. The marketer’s risk is launching a product that does not have enough market appeal to be adopted by the market.
Ultimately for a product or service to be successful, it has to provide enough value to an identifiable customer segment that compels them to adopt the product and offsets the risk perceive in adoption of the product. If a product has this type of a compelling value proposition, then the only questions the marketer has to ask are:
- Is this market opportunity big enough to justify the investments needed? This includes the revenue and profits that could be gained as well as potential sales that could be lost from existing products or related products.
- Does the marketer have the sales organization and distribution network to reach this market – if not all of it how much, and if not all of it, how much market presence could the marketer develop and how fast.
Our assignment for this pump manufacturer was to evaluate the market for a new pump technology. Specifically, our role was to:
- “Define and validate” the value proposition that the client had created and determine its value in different markets:
- Chemical processing
- Commercial buildings
- OEM equipment
- Determine if the product concept needs to be modified to increase its commercial viability.
The Research
We designed a research process that was based on “customer discussion groups”. This methodology brought together the key influencers and decision-makers within select target companies to explore the product concept.
What We Learned
The core product benefits that our client believed existed were very real. However, they had limited value to the chemical processing industry because the key issue in that industry was proven safety. Thus, even though our pump displayed some performance benefits, the fact that it was unproven make customers hesitant to even test it. Thus, in this market our value proposition was not great enough to be successful.
However, we discovered that the commercial market saw the value and did not have the severe safety concerns. Trial was likely if we could approach the price points they required. The pump’s unique features could command a price premium, but nothing near the price required for the prototype which was designed for the chemical processing industry. Our client had the challenge of designing the pump with different materials to meet the price point requirements of the commercial market. If he can get the cost in line (which he thought he could), he could expect significant adoption, as more than half of our respondents expressed strong interest. Thus, we concluded that in the commercial market our client’s value proposition had great power and therefore we recommended pursuing the commercial market design project.