When launching a new product, you face the challenge of making sure it generates revenues that are profitable. To do this, answer the following questions.
Do You Have a Good Idea?
Yes, you’ll never know how good your idea is until you test it. But when you’re brainstorming, it pays to ask.
So how do you define “good”?
Is it better than other products? Does the market need it? These are good questions to ask, but they’re not sufficient for your business purpose.
You want to grow by selling lots of products. And unless it can sell a certain minimum amount, you can’t say it’s good.
To quantify “good,” get input from your marketing team about a sales target. Based on that conversation, set the target.
If someone doubts the target you establish, ask, “How can we make this product good enough to reach our target of selling 5,000 units?” Speaking in terms of quality is more productive, because it focuses your thinking on the customer.
Remember, if the product is as good as you think it is, it should be easy to sell because it’s just that good.
This is the attitude you should have about every product you’re about to launch.
Does It Feel Like It’ll Work?
If you had to choose between formally analyzing whether an idea is good enough to be successful, and relying on the intuition of an experienced businessperson, choose the latter.
Intuition is based on years of experience and observations. Charts, graphs, and calculations – even those from professional consultants – are not.
A checklist to evaluate the feasibility of a new idea might include 100 questions. But the instinct of a veteran businessperson is based on thousands of experiences.
So listen to those who have much more experience in bringing new products to the market.
Are Your Sales Targets Realistic?
After you’ve set a specific sales target, you need to ask yourself if it’s realistic. Since actual business results are rarely as good as expected, do the following quick calculation.
- Determine the cost to make your idea come to life. Take that number, and double it.
- Figure out how many units will sell (and how much extra cash it’ll bring in), and cut that number in half.
After you’ve halved your returns and doubled your costs, if the result still shows that you have a profitable venture, move forward. If it’s marginal or negative, drop it and move on to the next idea.
Can You Test the Idea?
When ideas are important or costly to implement, it makes sense to test them before they’re put into action.
The good news is that this can be done cheaply by selling it to a sample group first. If it works, then you can roll it out to the general market.
Do You Know What Tasks Need to be Done?
Before launching a new product, it helps to create a simple list of primary tasks that need to be completed. This is useful in identifying obstacles, estimating costs, and determining the team that’ll be in charge of the product.
Suppose you sell dog food, and you have a new idea for organic dog food. You assume that your market is the millions of dog owners who eat organic food themselves.
Here’s a list of tasks that would need to be completed for a test mailing.
|Identify customers who eat organic food||Marketing Department||Done to collect data for test mailing.|
|Write promotion||Copywriters||Copy must appeal to this group.|
|Mail promotions to these customers||Circulation Department||To test salability of organic dog food.|
|Analyze results||Marketing Deparment||To determine if test was successful enough to launch to general market.|
Do You Have People Who Can Do the Tasks?
Great ideas need great people in order to succeed. The most important person to look for is a champion for your idea. This person must
- Believe in your idea
- Have the authority to execute it
- Have experience to make wise decisions along the way.
In addition to a primary champion, you should also look for
- A supplier who can produce the product
- A seller who can test it in the marketplace
- A person to be in charge of fulfillment and operations.
Do You Have a Plan B?
Sometimes you will have done everything right on your part, but the product will be a bust when you roll it out. Rather than being blindsided by it, plan for it in advance. If it does happen, you’ll be better prepared to bounce back.
For instance, what would happen if…
- You lost your biggest account?
- Cost of goods increased 15 percent?
- Your most important employee quit?
- Your bank closed your line of credit?
Think about these questions, and write up a plan. If they actually happen, you’ll be better prepared to act.
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