Successful new product development starts with the ability to identify good and timely product ideas and using reliable criteria to decide which ideas to pursue.
That said, innovative new products fuel growth for suppliers and marketers large and small. Most small companies will find it difficult to grow, much less rapidly, without a constant stream of new products that meet all its customer’s needs.
Many companies can experience periodic sales slumps. However, if company revenues remain flat or decline over an extended period of time, management has to evaluate why this is happening. Often there may be external factors beyond your control. These may include a negative shift in the economy, issues with the sales team, or supply chain problems. Nonetheless, it is management’s responsibility to be proactive and be constantly evaluating new product ideas.
Constant Communication with Customers
Furthermore, it is vitally important to be in constant communication with your key customers. Be sure to evaluate any possible changes in their business model and their target markets. Understanding market share and creating metrics to ensure you are not losing ground is crucial. If your key customers’ businesses are growing and the business you get from them isn’t, your current product offerings may be the problem. In fact, it is likely one of your competitors is meeting your customers’ needs better than you are.
Steps to Take Before Funding Product Development
So, in order to avoid the aforementioned scenarios, there are certain basic steps suppliers and marketers need to take before allocating funds for product development. One very important step is determining or re-evaluating the needs of your customers. Generate a “Customer Needs” list based on your current relationship and where you see them in the future. You should try to identify existing weaknesses in your products, gaps in your product offerings and areas for product improvement. Are your products non-GMO, Kosher, Halal, Organic, etc. Are you using the latest ingredients? Do you keep abreast of the latest science? Is there a need in a particular category?
Be sure to work with your existing team members and brainstorm product ideas. Your sales and service team speak to customers daily. This feedback is often vital intel about your products, your customers’ needs and whether you are satisfying those needs. Once your “Customer Needs” list is generated, decide which ideas to pursue and which to discard. Take into consideration your competition, your existing products, and market or category needs. Ultimately, you need to determine what criteria will be used and what will be discarded. Your criteria might include:
- Most needed product improvements
- Product benefits: Do they address customer needs
- Technical requirements: Are they realistic?
- R&D: Scope of research and development required
- Profitability: What is its potential market appeal?
- Pricing and margins: Can it sell?
- Market niche: Where does the product fit in a particular category? How does it compare to competitor products?
- Marketing potential: Is the product marketable?
- Business fit: Does the new product coincide with business objectives
Interestingly, product development teams don’t think about the marketing and distribution of the new product upon launch. Many believe the new products can just piggyback on existing product marketing efforts. True, many of the marketing and distribution practices that apply to existing products also apply to marketing and distributing new products. However, new products have some additional considerations. For example, new product marketing will consist of increased customer education and training since you will be offering them something they have never seen before. Also, marketing may have to be broader than the niche efforts used in the past because there will be some uncertainty as to actual demand despite what your research has revealed. Finally, you may need to test some completely new distribution channels until you find the right channel.
Measure Your Progress
Finally, establish a system of metrics to monitor progress. Include figures that provide data that will guide future efforts.
The new product development process is an ever evolving testing platform where errors will be made, formulas will get trashed, and loss is inevitable. Having your entire team working together will ensure the successful launch of viable products that will fuel growth for your company. Productivity during product development can be achieved if, and only if, goals are clearly defined along the way and each process has contingencies clearly documented. New products are necessity for growth. Successful suppliers and marketers understand this and spare no expense to drive this area of their business.