Entrepreneurs get an idea of a product, sometimes ask the opinion of a few of their friends, do what looks like market research, and jump right into launching the product or service. Some get it right and others fail miserably. While there are several factors responsible for the failure and success of a new product, putting the offering through a litmus test often reveals flaws and assumptions and tweaks would help skew the odds of success. What then is the best way to launch a new product or service?
Another title for this discourse would be A safe way to launch your product or service. Safe is a word entrepreneurs think little of. Some would argue safe isn’t safe; that entrepreneurship is risky and fortune favours the bold. True, but one of several things an entrepreneur does is manage risks, and sometimes playing it safe is the best way to manage risks. Besides this, you only have so much money and resources to experiment with.
Factors To Consider Before You Launch A New Product Or Service
Below are four major factors worth considering when one wants to launch a new product or service.
This is the most important factor in the launch of a new product or service. Is there a need for your new offering? Is there something similar that already exists? What kinds of players dominate the industry? Are there clear industry leaders or is it an emerging market? What percentage of the market share does the leading player control? How do you intend to gain market share?
Equally important is to consider if the market is price or value-driven? The biggest assumption would be to think customers would suddenly just buy your offering because you created it. The safe way to launch is to avoid price-driven markets except where you can undersell the current price by as much as 30%.
Look for markets where differentiation is the main value driver. It is also safer to play in emerging industries rather than in mature industries. You also would want to play in markets where no industry leader holds more than a 25% market share. This increases your odds of becoming an industry leader.
As absurd as it might sound, I have met entrepreneurs who build businesses, especially in tech without a clear monetisation plan. Many are sometimes torn between the illusion of their offering making the world a better place and making money. Make up your mind if you want to be an NGO or business. Don’t hide behind the facade of an NGO when the real challenge is your ability to monetise (exceptions to those who genuinely run much needed NGOs addressing societal ills).
Interestingly, companies like Facebook.com and Google.com started out without any clear monetisation plans. They simply were building platforms that would create immense value. This value attracted investors who brought in money and the money was used to hire people, some of who had the responsibility of monetising the value the company had built. If you are a Nigerian entrepreneur, we don’t have the luxury of these seeming fairy tales. Your business must have a clear, distinct, and sustainable revenue model or you are only as alive as the money you have in the bank.
A few thoughts on expenses since we are talking about money. Avoid hiring in anticipation of a surge in business. I will rather you have the surge first and play catch up with hiring than take up the extra cost of salary and other overheads. Sometimes the additional sales don’t come in as anticipated and your current team can stretch and meet up with the added responsibilities.
Should I launch a new offering in a field where I have no experience? A safe thing to do is play where you have experience. Sometimes good opportunities emerge in fields where you have little or no experience and if you must explore these opportunities, there are three things to note that will help you stay safe.
First, understand that you will make mistakes and there’s going to be a learning curve. Avoid being hard on yourself or team members when you make mistakes. Second, read as many books, articles, and journals available on the industry where you intend to play. Third, go out and talk to the current industry stakeholders. Talk to the suppliers, talk to the consumers, talk to your potential competitors. You will learn a lot and you will save a ton of cash and time.
Marketing And Promotion
Before your offering, people managed to live without your product or service. You need to have a clear plan to get and hold people’s attention. The rule of thumb is 20% of your marketing effort will produce 80% of your results. The work is in finding the effective 20%. Just because a marketing channel is popular doesn’t make it necessary for you to use it.
Look for channels that give you the widest reach for your budget per time and be prepared to keep marketing the new offering longer than you think necessary. Sometimes new products take some time to catch on, not because it has no value but because sometimes new initiatives just take time to take hold.
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