Smart entrepreneurs rely on new product launches to help boost numbers and grow their overall business. Product launches can also be exciting and energizing for your team - if you have helped them see overall fit and purpose behind the new product.
But without these elements and a sound business plan, product launches can be distracting, and worse, can be a drain on the company's morale, brand, and financial resources.
Each line (or brand) extension should be looked at with the same care and evaluation that would go into starting a new company. Adding some complexity to that, there are some additional layers to consider given that your new product needs to roll into an existing company and brand. For example:
1. The new product should have qualities similar to your existing product line.
This allows you to a) tap your existing customer base and b) lean on the brand you've already built around serving a certain audience in a certain way. Often, your best new product is something your current customers are already asking you for. Do you have a review mechanism in place to capture and evaluate their feedback?
2. In a similar vein, stick to what you know and do best.
Making a right turn into a totally new territory brings the risk of expensive mistakes, costly new infrastructure and training, and confusion amongst your employees and customers. Is this an area you know well enough to avoid those setbacks?
For example, our core business at Greenleaf Book Group is oriented around creating content and distributing it to wholesalers and retailers. When the eBook market began to grow, we frequently debated the question of whether we should sell eBooks direct to consumers via our website.
Ultimately we decided against it. Readers generally buy eBooks through the company that manufactures their eReading device, not from the publisher. On top of that, we're not set up to sell direct to consumers and the potential upside was low weighed against infrastructure and development costs. The risk/reward ratio doesn't make sense for us.
3. Be careful not to cut your feet out from beneath you by alienating current partners.
Your business may be enjoying referrals from companies with complementary products or services that don't compete with yours. If you move into their space, there's a good chance you'll also lose their referrals going forward. Are your referral sources diverse enough to weather that storm?
Let's say you're running a landscape services company. A local nursery may frequently refer business to you for installations and maintenance of the plants and trees they sell. Then, you decide to start selling plants and trees, making yourself a competitor to the nursery.
Chances are good that you'll drop off their referral list. That's not to say that you should never bite the hand that feeds you - you'll just need to think through the implications and be ready to adjust accordingly.
4. Don't launch a new product as a last-ditch effort when there's a deeper problem in the company.
If past launches failed, have you fixed any underlying issues in research, development, branding, marketing, sales, etc? Are you rushing a not-quite-ready product to market out of panic or desperation? Is your financial house in order so that you can support growth without compromising quality if the product hits?
All of these elements need to be tackled proactively well in advance of the launch for your effort to fall on the favorable side of new product launch statistics.
Launching new products and brand extensions can be exciting and daunting all at once. Channel your energy towards buttoning up these strategic questions on the front end, laying a solid foundation for the hard work that must follow in product research and development and the market launch itself.