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Tag Archives: New Product Success

Is Product Commoditization An Issue For You?

First published on January 6, 2016 on www.marketingprofs.com – a preminent resource on best practice marketing techniques for the benefit of the members. What is MarketingProfs? Individual marketers, teams, and entire marketing organizations at the world’s largest corporations rely on us to cut through the chaos to find the marketing experts you can trust and the information you need. Trusted by 600,000+ professionals globally, MarketingProfs is the only resource you need to stay ahead of the curve. Read more:

Is Product Commoditization An Issue For You? And What Can You Do About It

January 6, 2016

Commodity Graphic - 123rf
Your company sells unique and differentiated products – or at least that’s what you think. However, your competitors have been trying to match you or maybe offering similar products at a lower price. You also think your consumers/customers are loyal and won’t switch if given an opportunity. Yet, they are much smarter – and are rationalizing purchases more – than ever before.

Marketplace competitors – either direct or substitutes – can easily make your products or services a commodity where everything comes down to price.

How do you know if you’re being commoditized? And how can you avoid that undesirable fate?

Let’s examine what defines various states of product commoditization.

a) Your product is offered by many:
Examples include things like some food and non-food items, restaurants, law, financial services, even personal services like fitness and hair cutting, etc. Meaningful differentiation is essential to deflect lower prices. What do you do?

  • Be the #1 or #2 share leader. Being so gives you critical mass since it implies customer satisfaction and allows you to build entry barriers due to your size.
  • Have third parties talk good things about you – either in social media, product ratings or customer awards. However, don’t just rely on Facebook pages. Not everyone looks at Facebook all the time.
  • Don’t focus just on price. Remind customers/consumers of your products relevant features/benefits.
  • Be the marketplace expert and offer free advice/counsel. Doing so might not result in an instant sale, but people remember who’ve helped them in the past.
  • Be easy to do business with. Customer service/convenience can make or break a sale. Time, too, has value to your users.

b) Your product is offered by some:
You have a somewhat unique product. Also, your product category has substantial barriers to entry limiting competitive entrants. Examples may include utilities, cars, travel, telecommunications, capital equipment, etc. What now?

  • Offer aftermarket service. Buying a car, computer, or telecom services is more than a one-time transaction relationship, offering you a continuing opportunity to build future purchases or upgrades.
  • Off a full-line product/service. Depth can offer consumers/customers a “one-stop” shopping experience, “locking-out” competition. Wal-Mart is ALWAYS looking for “one-stop” suppliers/vendors.
  • Product availability is important. Nothing frustrates people more than being ready to buy but finding out what they want is unavailable – or they have to wait a long time for it. Be sure the logistics side of the business is in sync with the sales/marketing side.
  • Be sure your pricing is still competitive. Even though competition is limited, you can easily price yourself out of the market. Know what your competitors’ prices are, and respond appropriately.

c) Your product is very new, unique & different:
Congratulations! what you offer is new, solves real consumer problems, and is not easily copied (i.e. hopefully patented). You have a great advantage, but you still need to sell.
Ÿ Highlight your differentiation in a meaningful way to consumers/customers. Be sure product or service claims are accurate and relevant to them – not you.

  • Focus on core benefit(s) – not features per se. It might have a different feature, but does it REALLY matter to your customers/consumers?
  • Be sure you proudly communicate your differentiation. Do some type of advertising and/or event marketing to “tell your story” and build awareness.
  • Keep it simple. Differentiation can be very technical. Don’t assume your consumers/customers understand what you’re saying. Avoid jargon. If they don’t understand what you’re saying you can’t expect them to buy your stuff

The bottom line is that you and your sales force need to remember three basic rules when managing your offering in the marketplace.

1) Stay Relevant.  Can your customers/consumers see the value in your product benefits? Remember, they tend to look more at benefits than product features. Are your products still relevant and provide value?

2) Be Sure You Can Measure Your Differentiation.  If you can’t measure how you’re different, how can you expect consumers/customers to see it? Are your product claims accurate? Are you getting third party recommendations and/or awards? Visible differentiation is always better than conceptual.

3) Continuously maintain/upgrade your product line.  Competition is always out there, hard at work trying to gain a competitive advantage over you. Don’t assume your competition is standing still and doing nothing.

If can keep these basic rules in mind, you can avoid competitive lower pricing – and commoditization – you will maintain a profitable and sustainable business.

Rick Steinbrenner
Global Marketing Officer
Brand Marketing Advsiors
www.globalbrandguy.com
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Brand Marketing Advisors are specialists in global brand marketing and new product development.  We help consumer product companies to more effectively compete in product categories in/around the home.  We strive to uncover unmet consumer “need gaps” while partnering up with R&D/engineering to come up with true innovative product and marketing solutions.  We accomplish this through a combination of marketing research, consumer insights and creative thinking.  In most cases, this leads to a strategic and sustainable competitive advantage for our clients.

Rick Steinbrenner Head Shot - Cropped w/red borders

Our team is led by Rick Steinbrenner – Chief Marketing Officer / Principal.  He’s led and managed leading global brands like General Mills, Kraft, Remington Products and Black & Decker – just to name a few.  He’s worked as a brand leader and general manager in both small & large companies up to $12 billion in sales.  His track record speaks for itself – developing and launching over 20 new products that are generating over $200mm+ in sales – both in the B2C and B2B sectors.

How To Make Sure You’re Working On The Right New Products

First published on 1/30/2013 on www.marketingprofs.com – a preminent resource on best practice marketing technigues for the benefit of the members. Their editorial team cuts through all of this marketing noise to  find the experts and in-the-trenches marketers who know what they are talking  about. Then we take their know-how and mix it with our marketing smarts to turn  it into practical advice that you can actually use through our newsletters,  conferences, seminars, podcast, articles, and webcasts. We must be doing it  right, because we’re a multi-million dollar company that serves a community of  more than 496,000 entrepreneurs, small-business owners, and professional  marketers at the world’s largest corporations. Read more: http://www.marketingprofs.com/about/#ixzz2IHCDaHq8

Product Portfolio Management

It happens all the time.  You learn your active new product programs are either falling behind or the scope of the project has radically changed.  Your teams are telling you they don’t have enough resources to do ALL programs.  Moreover, they seem to be working at cross purposes to one another and have different opinions on the probability of getting the idea to work.  You need to figure out a way to get everyone on the same page so you can keep your new product programs on track and get your ideas to market in a timely fashion.  In this article we will discuss ways to make sure you’re properly resourcing your new product portfolio and then develop tracking tools to make sure they launch on time.  In a prior article (Are your new product ideas attractive enough?), I discussed the major types of new products as well as their differing risk/reward profiles: Type 1:  Simple derivatives/new models of current product lines – easiest to do, lowest risk. Type 2:  Line extensions. Type 3:  New products/innovations in a company’s core category. Type 4:  New product platforms in a new category (to the company) – hardest to do, highest risk. I then recommended using an objective assessment tool to help rank alternative new concept attractiveness from high to low.  The goal is to prioritize your new product portfolio – just like your individual financial investments.  Once completed you then need to determine if your new product portfolio is “balanced” and can potentially deliver results vs. expectations.  There are three critical elements to consider to make sure your new product portfolio is “balanced”.

  • Are your new product ideas strategically aligned with business and innovation growth strategies
  • Is your new product portfolio balanced across product type, risk, time and resources
  • Can they deliver against new product revenue growth expectations – are they sufficient?

One tool than can help in this assessment is development of a new product road map.  A graphical hypothetical product road example is shown below:

New Product Portfolio Management - Product Road Status

 Click On Image To Enlarge

As you can see this graphical plot shows the type of new product, the size of the opportunity, where it is in the new product process as well as its estimated development timeline.  This tool can then be used to help allocate limited development resources to achieve the desired risk vs. reward balance requirements. 

Fortunately, this same tool can also help you track and manage your new product portfolio.  All one needs do is plot progress along the launch time line as well as its current status in the new product development process at different points in time (i.e. quarterly reviews) as shown in the example below:New Product Portfolio Management - Product Road Quarterly Update

 Click On Image To Enlarge

As you can see, these tools are straightforward, easy to understand and really helps to get everyone on the same page.  One minor caveat – in very large/global organizations there can be literally hundreds of new product initiatives making tracking more of a challenge.  Fortunately, there a number of available automated product portfolio management tools on the market.  Once such program is called “Clarity” owned by Computer Associates.  This type of automated tracking programs use a dashboard concept to assist in tracking a large number of new product programs.  See screen shot examples below show how this can be used in larger organizations.

Computer Associates Clarity Program Dashboard Example

 Click On Image To Enlarge

 Computer Associate Clarity Product Portfolio Dashboard Example

Click On Image To Enlarge

One final note.  It’s VERY important both senior and line managers be consistent in their new product resource management decision-making process.  What this means is line managers need to have “straight talk” with their senior leaders regarding realistic risk vs. reward opportunities.  Senior managers also need to realize their teams can’t do everything.  If priorities change too much this sends confusing messages to the organization which can easily cripple getting anything out the door.  Finally, the type of tracking tool that’s used is not as important as having A tool to help manage and track alternative new product concepts.  Product portfolio tracking roadmaps are considered “best practice” at many leading global companies like Proctor and Gamble, General Mills, Coca-Cola, Whirlpool, General Electric and Stanley Black & Decker, etc.  They consistently manage and track their portfolios to make sure they’re delivering the right mix of big and small ideas sufficient to meet the strategic growth objectives of their organizations.  It’s little wonder then that many of these companies are #1 or #2 in their respective product categories.  Can you say your company is on this list? 

Rick Steinbrenner
Chief Marketing Officer/Principal, Brand Marketing Advisors
www.globalbrandguy.com
The Global Brand Guy  

How To Make Sure New Products Don’t Fail

Post first published 11/20/12 in the “MENG Blend” on the Marketing Executives Networking Group website – www.mengonline.com.  The destination site for leading marketing executives looking to stay ahead of the curve.  We have more than 1800 of the leading marketing minds in the world eager to meet, communicate, help and share our expertise.

Improving Your New Product Success Rate

How can you make sure your new product idea doesn’t fail?  The answer is: do your upfront homework to fundamentally understand how your consumer/customer thinks/feels/uses your products, not just what they say or tell you in person.  The marketplace “wasteland” is literally littered with failed new products because companies didn’t do the right homework/research and/or took short cuts because they thought “we know what the consumers/customers wants better they do”. As most general managers know, alot of new products fail in year one of their launch.  According to Schneider Associates and other leading marketing professionals, nearly 3/4 of consumer products launches fail to achieve to $7.5MM in sales; and only 3% of launches achieve ~$50MM of “critical mass” and/or distribution.  The main reason seems to be most consumers tend to buy the same 150 items, which can constitute as much as 85% of household needs; thus it’s hard to get something new on the radar – according to Jack Trout – formerly of Trout & Ries. Doing the right kind of homework/research can dramatically improve your chances of new product success.  However, not everyone agrees research is the right answer.  Much has been written about the late Steve Jobs of Apple not believing in marketing research.  In Mr. Job’s obituary on the New York Times Web site, John Markoff quoted his aversion to market research this way: “It’s not the consumers’ job to know what they want.”  In other words, while Mr. Jobs tried to understand how technology could solve problems for his consumers, he wasn’t going to rely on them to demand specific solutions, just so he could avoid ever having to take a risk.  He referred to this as “leading”. I agree with Mr. Jobs to a point.  Research never really can “lead the way” to success – it never has.  Only creativity, ingenuity, enabling technology and yes, intuition are the only real ways to achieve new product success.  Research really only helps sort the “wheat from the chaff” and can help point the right way and/or reduce risk.  Market research is simply a tool; it doesn’t replace – and never has – good solid thinking.

The question is how a company can encourage outside the box thinking which could result in new product success.  One way is to break-through functional “silos” is use of cross-functional teams focused on the problem(s).  Kraft Foods taught a powerful strategic planning framework that assisted in the idea generation process to many of its senior managers.  It was called STEPS – short for Situation Analysis, Tracking, Execution, Plans and Strategies.  This technique either a) assisted solving complex problems and/or b) help identify new areas of opportunities.  The concept is summarized below.

Click on image to enlarge

When used effectively this framework could help identify a company’s or brand’s “strategic competitive advantage” based on marketplace differentiation and value.  You knew you had a competitive advantage if you could answer “yes” to the following: a) do we have an advantage?, b) do competitors want it?, and c) do consumers really need or desire it?  If you couldn’t answer “yes” to all three criteria you didn’t have a “SCA”.  This usually drove the next step – idea/concept brainstorming – commonly called the “fuzzy front end”.  This is where creativity, ingenuity and intuition come together to develop product concepts potentially addressing gaps in the strategic competitive advantage or “SCA”.

It starts with identifying consumer/customer, competitive and enabling technology trends for specific product categories and individual product concept opportunities.  You then move down the “funnel” using various marketing research tools to verify you’re using the right brand name along with the right product concept.  A concept needs to be specific – meaning how should it perform, what brand should be used, how does the product look, taste, smell, touch, to be substantially different vs. its competitors.  Product concept screening is the primary tool for this part of the process.  Below is a schematic of the opportunity identification/discovery “funnel” framework for the “fuzzy front end”.

Conceptual Framework

Click on image to enlarge

One thing to remember – while its fine to conduct monadic concept tests to help screen winners from losers; this is usually not sufficient to determine final marketplace viability.  Concept testing only yields simple purchase intent scores and other measures, but the key issue is how the concept(s) would perform in the marketplace relative to other consumers/customers product choices.  Once you identify “good” ideas via branded product concept testing , the next step would be to test these concept(s) by placing them in simulated marketplace situation.

Finally, one must also remember not all market research methodologies are created equal.  In my experience, I’ve found there seems to be a positive relationship between deeper levels of consumer/customer understanding and higher market share/volume.  This is because a substantial difference can occur between what consumers/customers say vs. what they actually do or think in purchase decisions.  Generally, qualitative research focuses on how consumer/customers describe themselves; while quantitative research facilitates can give insights into how consumers/customers think or feel – which tends to be more predictive of actual consumer behavior.  Below is an illustrative conceptual model: 

Conceptual Framework

Click on image to enlarge

Yes, quantitative research can be more expensive than qualitative.  However, I would argue the cost of bringing a bad idea to market and failing is FAR greater than doing the right research to help make the right decision in the first place.  You can actually save money via the right testing protocols.

So in summary, how does one make sure new products don’t fail or at least improve one’s chances of success?

1. Make sure your product/company is correctly aligned about your strategic competitive advantage.

2. If you don’t have one form a cross-functional team (usually led by marketing) to recommend how you can identify one.

3. If a new product is needed to help obtain a SCA, use the opportunity identification/discovery funnel to help focus the team’s creative juices to develop the right concept(s) with the right brand.

4. Finally, use the right  kind of research to pinpoint the strength/weaknesses of individual concepts  and ultimately how would it perform vs. competition.

If you follow this process, you will have a better chance of not having your next new product become one of those ideas ending up in the “marketplace” wasteland and also potentially detract from your company’s valuable reputation.  Good luck.

Rick Steinbrenner Chief Marketing Officer/Principal, Brand Marketing Advisors www.globalbrandguy.com The Global Brand Guy

Staged Tollgate NPD For Successful New Product Ideas

This presentation discusses the importance of BOTH product and branding as key drivers for commercial success in new product development.  It details a best practice staged tollgate new product development process along with an example of how it was used to successfully develop new product ideas from scratch.  Then successful development of effective branding and positioning are also presented along with three live examples of how they were successfully deployed in the marketplace.

(Note: this presentation includes three you tube videos which shows execution of the presented brands positioning.  In order to view the videos, you need to do three things.

1) Must have a live internet connection while viewing

2) Save & download the presentation.

3) Then view the presentation in slide show and enable the content when the security alert for macros and active X comes up – (this may or may not happen depending on your computers settings.)

Brand Marketing Advisors New Product Roadmap Successes

This details Rick Steinbrenner’s – the global brand guy – used new product roadmap (s) in developing successful new products .  It presents best practices using staged tollgate new product development processes and gives two examples on how it can be successfully used.