Great technologies and great ideas do not automatically become great new products. Just because engineers think they have a great product, or because sales has an excited customer, does not guarantee you will have a successful new product.
Most new products fail. Worse yet, the reasons often go undetected and plague future products.
Your go-to-market strategy has to answer four key questions that will lead to a successful, profitable product.
Is this a viable offering?
What channels and support are needed for this new product?
What position and brand should your product / service have?
QDI’s New Product / Technology Market Assessments Provide the Answer
New product teams can determine if an offering is viable if:
The product delivers some highly sought after benefits for specific customers – and enough customers to be economically viable
Enough of these customers are ready and able to purchase and use the product to justify market launch
The product is superior to the alternatives that the customer has so you have a great chance to make a sale.
Creating or entering a brand new market poses a more complex, high stakes set of challenges. Businesses must target a new set of customers, deal with new competitors and new channels. Frequently a company will hit an economic or psychological road block because its market entry strategy is off target … negatively impacting the company’s ability to build sales momentum.
The sooner the sales force learns to sell into a new market, the more the company will save valuable marketing dollars. Making changes to the overall value proposition late in the game requires investment levels that may leave no option but to abandon the market. Learning the risks beforehand can save hundreds of thousands if not millions of dollars and put the company in a better position to meet its business objectives.
We define a new market entry problem as any marketing scenario where the buyer types and / or buyer organizations are new. From our experience, unfocused segmentation, inadequate value proposition and channel strategy are common roadblocks impeding a company’s ability to successfully enter new markets. Costly mistakes can be avoided with better, up-front, fact-based new market entry strategy planning.
QDI’s business is to help our clients answer the questions:
What is the market for this product?
How big will it be?
How fast will it grow?
Who are the target customers?
How will I reach them?
Will my product win – and what must I change to have a winner?
Whether you’re in the initial planning stage or assessing your first year’s performance, QDI can help you determine if you have a commercially viable product and for products that have commercial viability develop a successful new product marketing strategy designed to ramp up new product sales quickly and keep you from falling into the chasm that kill many new offerings.
What channels and support are needed for this new product?
QDI’s New Product / Market Entry Strategy development provides the answer.
Launching a new product and particularly launching a new product into a new market requires three major initiatives:
Identify the potential channels
Determine what is required to get them to support your product line
Determine what support / development activities your organization will have to do to recruit and grow these channels – or to get existing channels to devote significant resources to your new product
Identifying Potential Channels
Not only do manufacturers have to develop innovative new products, they have to create high capacity channels and reduce channel conflict. The success of your product or service is riding on the quality of your channel strategy.
Your channel management team needs to be able to assess a channel’s ability on four key dimensions which support successful channel strategies.
Channel Coverage which measures the channels presence and importance to the target segments.
Does your channel strategy give you access to each customer segment? To achieve success, you must be present at the point of sale. Do you have the ability to reach your target audience at each purchasing crossroad and at the key buying time? Are your channels calling on the right customers?
To find this out, talk to your target customers and find out whom they buy this type of product from today or similar or related products. Then talk to the channel members they deal with – distributors, dealers or reps they deal with today to see how important this product category is, or could be in their business.
This ultimately is a geographic issue and potentially a market segment issue if you have products that cover multiple market segments. It is unusual that a channel will chase a new customer segment to sell your product. This only happens when the channel see significant upside to its overall business or revenue by doing this.
Channel Competency is a measure of channel’s ability to deliver market share for your products.
Do the channels you are evaluating have the skills and capabilities to communicate and deliver your value proposition? Value represents the benefits the customer perceives versus the total cost the customer incurs. These costs include all adoption costs, risk and the purchase price the customer pays. You “win” more when customers perceive your offer as a greater value than the alternatives. Thus, your channel strategy must meet the needs and expectations of your customers if you expect to be successful. For example, do your customers want knowledgeable sales help or is this a product they would prefer to buy with minimal sales interactions.
What capabilities or skills does the channel have that makes you believe it can deliver the presale, transaction, and post-sales value you need? What tools will you use to ensure the channel will allocated those resources to your products?
Channel Connection which measures the channel’s ability to create and manage meaningful relationships with its customers.
Your channel marketing strategy must provide the customer relationships necessary to become a valued customer partner. The channels should introduce you to customers’ senior management, planning, and R&D to expand knowledge of your customers’ needs. The affiliation between your channel and customer should allow you to conduct development and product testing programs with key customers. Above all, your channel partner should not be “just another vendor.” Your goal is to develop structural and social bonds with your target customers. What role is your channel strategy playing to make this happen? Is it a help, a hindrance or not a factor at all?
As you consider possible channel partners, ask to see their customer list and ask about key relationships that you want access to in order to determine if they have these relationships, or instead only have limited relationships, such as possibly only purchasing, with their customers.
Channel Commitment is a measure of the channels’ willingness to work with you to support your products.
You can’t overestimate the importance of your relationship with your channel partners. Your success depends on their success. If your channels are congested with conflicting product lines, you’re not receiving the level of commitment you need to win the sale.
Determine what you can offer the channel partner to increase his commitment. The clearer the economic and business model the channel can see – what he has to do and how he makes money, the better chance you have of getting commitment.
Keeping commitment requires that you deliver on your side of the “deal” and the channel on his “side of the deal.” Doing so requires regular communications at a level of detail to understand what is working and not working, and how to change for success.
How to position and brand your product / service?
QDI’s Positioning & Branding research helps you determine how to communicate your value
Clear positioning for your product is critical to a go-to-market strategy. This requires:
Determining who the customer is (industry and audience in the industry)
What your value proposition is – what you have that specifically meets the needs of different influencers and decision-makers – hitting their “hot buttons” and if necessary, repositioning from existing product categories
What messages to give sales and marketing to break-through the market clutter with clear differentiation
Positioning requires learning what the customer values and his language to describe it. This means letting the customer talk and listening to what he says. Too often marketers want to sell the customer before determining the correct positioning. So they spend too much time talking, not listening. As a result their positioning is a description of features for marketers not benefits for the customer. An effective a position has to have clear, compelling value to the customer – a value he can quickly see and understand.
The better job you do of positioning and communicating that positioning to your sales channel the greater your chances of success. Sales channels will give your new products a chance, but if they fail too often, they will walk away from your offering which you can’t afford.
What’s the right price?
QDI’s Price and Value Research helps answer the question.
Pricing and positioning go hand in hand, after all when you set a price you are doing so for some value the customer perceives. If the customer perceives something that is less valuable than you think you have, you won’t get the price you want.
Thus your pricing efforts must:
Clearly define the benefits that a customer will or is expected to perceive
Clearly define the customer alternatives and quantify their value relative to your offering
The price and pricing strategy you select will be a function of:
The speed of adoption you are looking for
The share you want to capture
The profit / gross margins you are targeting
The pricing strategy and the channel pricing model including discounts and other incentives is the foundation of the economic model you are offering to the channels. The channel economic model needs to be very sensitive to the role you are asking the channel to play, the maturity of the market, and the expected sales cycle and adoption rate. The higher the perceived risk and investment the channel perceives, the more your economic model, including your pricing strategy, needs to be designed to offset the channel’s risk.
For new products, the right price is the price that will get channels to sell and customer to buy at a rate that sustains your business and a profit than enables growth. This is a calculus that is much more subtle than traditional profit and margin calculations!
“QDI’s work is very well respected around here. It’s actionable – unlike much of what we see.” Roger Baker, Caterpillar
“What differentiates QDI Strategies is that they have a proven track record of getting results for their clients. They get results because they pursue marketing consulting assignments that involve both the strategy development and the implementation of those strategies to achieve client objectives. That total approach has resulted in both (a) a proven track record of getting results and (b) experience and know-how that is transferable in the most important deliverable of a consulting assignment….RESULTS!” Guido DiGregorio, Communication Intelligence Corporation
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.