Launching a successful and profitable new product is hard!
70% of new product launches fail! If you are developing a new product, how are you ensuring that it will be successful and profitable?
The answer is to launch new products that add value to your customers and your customers are willing to pay for it. New product launches fail because they do not add value to customers and because they are not priced based on value to customers.
Very often, pricing of the product and its marketing is considered right at the end of the development and launch process. Product development teams can be internally focused and may not spend enough time listening to the voice of their customers.
In doing so, businesses risk overloading new products with unwanted features that add no value to customers, features that customers are unwilling to pay for and are therefore doomed to failure.
It is critical that businesses:
Understand their target customers’ needs
Evaluate competitive alternatives, both direct and indirect competition
Design an offering that creates value to their target customers
Develop a strong and compelling value proposition
Communicate the value to their customers in the customer’s language
Capture a share of the value created and set the price that will create a win-win situation for both their business and their customers
You must give your product every chance to succeed. Review your new product development and launch process. Do you start by designing the product, then build it, then market it and then price it?
There is a huge problem with this approach! Your price reflects value to your customers. If you leave pricing to the end, how do you determine what your customers’ value?
Your new product development process should start with marketing and pricing and include the following activities:
Create a cross-functional team and make them accountable
Understand your customers’ problems and unmet needs
Evaluate competitive offerings
Map features, benefits and value of your product versus the next best alternative
Quantify the value by using Economic Value Estimation model
Validate your assumptions, do not assume
Set the price and segment your customers; a one size fits all approach, fits no-one
Know your costs – if your costs are higher than value, challenge the costs
Develop compelling value communications
Develop your elevator pitch and new product launch pack for your go-to-market team
Don’t embark on your new product development journey hoping that your new product will be successful and profitable. Start with understanding what your customers value and how much they will pay and then design your product. This will ensure that you launch products that adds value to your customers and make your business money.
