A Great Product Is Not A Great Strategy

Volume 17 Letter 7

Whether you’re pumping oil or pumping water, scale in the pipe is bad news. Scale builds up in the pipe to a point where fluid will no longer flow and suppliers are left with the choice of leaving oil or water in the ground or replacing the pipe.

Because pipe scaling is a problem around the world, service companies invested heavily to find a solution. High pressure water jets looked promising except once you got a small distance into the earth the pressure differential was no longer significant and even the biggest pump at surface could only product a dribble of water at depth. Chemical companies equally were trying to find a solution but at the time chemical solutions also killed or damaged the well defeating the purpose of removing the scale. Sand blasting held some promise but the sharp edges on each grain of sand effectively destroyed both the scale and the pipe.

Finally, one company came up with an ingenious solution. They discovered a bead material that looked like sand but didn’t have the sharp edges that sand has, meaning it was strong enough to destroy the scale but not strong enough to eat away at the pipe. It worked so well that even the polyurethane skin inside the pipe was preserved yet the scale was completely removed.

The product strategy was brilliant – only three sites in the world could produce this bead material and all three were put under contract to the company thus preventing copycat competitors from entering the market. Customers had a need, the company had the product – it was a match made in heaven. The product was launched with much fanfare and after six months was declared a total failure.

The company thought the new product was such a winner and the customer need was so great that they forgot to develop a marketing strategy before deciding to launch worldwide. Asked if there were any customers that might need the scale remover more than others, the answer was – its needed everywhere in every market. When the product launched, inevitable small technical issues arose. Turns out that scale might be a universal problem but the type of scale isn’t. Because different minerals are prevalent in different markets, the type of scale varied causing minor technical issues. Stretched to the breaking point R&D teams couldn’t respond in a timely manner frustrating both customers and sales people. Sales didn’t materialize and the product reputation quickly headed south.

What lessons can we learn that might apply to any product launch:

  • Think big but start small: It’s not ok to think small but it is ok to start small. Launching to your total market in one stroke is a risky strategy especially when there is a technical or service component to your product.
  • A great product strategy also needs a great marketing strategy:the descaling product was awesome. Securing the worldwide supply of the bead that made the product work was equally brilliant. However, a great product strategy is not a great marketing strategy! Products (no matter how brilliant) don’t sell themselves!
  • Identify key (beachhead) customers: When launching a new product. it’s imperative to find that group of customers with both the highest need and the highest “want”. (A conjoint study can help you here.) These customers will help you work out the kinks before expanding your launch!

In the end it wasn’t the customers who abandoned the new product – it was the sales team. Since technical people were stretched so thin and the product didn’t always perform as promised this damaged the reputation of the sales person with their client, something they would prefer not to risk a second time.

Are you launching a new product this year – make sure your marketing strategy is as good as your product!

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