Consider the following true story… one product, three continents, very different results. A new replacement electronic device was created for a medical market gobbling up millions of dollars of R&D funding. The product was launched in North American with all the major physicians contacted in an expensive market blitz campaign… the product failed miserably. Learning nothing for their North American colleagues the Asian team also launched the product pan Asia targeting all the relative users… the new product flopped. Having witnessed two failed product launches the European manager decided he better develop a more robust product launch strategy – he did.
First he commissioned a Customer InSight Survey to truly understand the voice of the customer. Based on the results the European team learned that only 10% of the physicians were truly interested in the new product so they developed a limited roll out strategy. The strategy was targeted only to the physicians who were identified as “Interested” no other physicians were contacted! As this small group of physicians started to use the product their peers started asking them about it. They also started to ask their sales reps about the new product. Today the new device comprises over 60% of the overall sales of this product line in Europe! Why the success in Europe and failures in North America and Asia? The answer… someone took the time to consider the market needs and developed a robust launch strategy targeting only the interested customers.
Consider the following facts about New Product Launches:
- 80% of a new product’s volume will be determined in the first six to nine months. Getting the launch strategy right the first time is imperative!
- Companies with robust strategic launch plans have almost double the launch success rate of companies that do not.
- Products supported by a strong launch strategy will earn two to four times the revenue of other equal products.
- The most important differentiator of new product launch success or failure (more important than the product attributes) is the strength of the launch strategy.
This recent economic environment is making it even tougher to launch new products. If your company is planning on launching a new product in the next 12 months:
- Conduct a Customer InSIght Survey to understand what customers value (and what they don’t)
- Take the time to develop a strong launch strategy.
- Find the target customer segment and focus your launch there – (in our story only 10% of the market was initially interested in the new product)
Developing new products is costly – botching the launch – deadly. Be disciplined, take the time to do it right. Don’t botch the launch!
Ref: presentation by Thomas Foster prof at Sloan business school