“Genius is 1% inspiration and 99% perspiration.” Thomas Edison.
Though vital for long term competitiveness, innovation does not guarantee a product’s success. Execution is the key. When Vijay Govindarajan and Chris Trimble (authors of The Other Side of Innovation) surveyed executives in Fortune 500 companies to rate their organizations’ skills on a 10-point scale, participants overwhelmingly believed that their companies were better at generating ideas (average score of six) than at commercializing them (average score of one).
All aspects of brand management, which are covered in this text, come into play in commercialization. The uniqueness of the product influences how it is launched. Novel products often require greater investment in all elements of the marketing mix. They also require high level of training, education and adjustment for both internal staff and customers.
An important consideration is whether to launch on a rolling basis from one region to another, or to go global. Global launch provides for faster acceleration in sales and quicker ROI, which in turn can fuel further product development. Yet it is riskier and does require deeper pockets.
A rolling launch allows for savings in investment particularly for technology and consultancy companies, where service and support requirements are quite high. A core launch team can move from region to region, training personnel and supporting launch activities.
Besides delays in the return on investment, a key drawback with rolling launch is that it gives competitors more time to analyse the new launch and respond with a counter strategy.
Once a product is launched, marketers eagerly await sales and market share information to assess how well the product is received by consumers. They need to however remain cognizant that the early sales and market share readings for a new product do not reveal the product’s future performance, particularly in sectors like FMCG, where goods are repeat purchased. In some cases, the initial sales data may even be misleading. High trials result in encouraging sales growth during launch, prompting companies to expand their supply base. However, if a FMCG product is not generating repeat purchases, irrespective of how good the trial rate might be, it is doomed to fail.
Where repeat purchasing is the norm, a new product can succeed only if it develops a strong base of regular consumers, i.e. a substantial number of consumers must try it, and an adequate number of them must continue to buy it again and again.
To evaluate the launch of a new product, more than sales numbers, companies need to use analytic techniques to forecast and validate the sales potential of the new product. This is important considering also the high proportion of new product failures.
Techniques such as the TRB Share Prediction model, provide reliable sales forecast based on the product’s trial and repeat buying rates (RBR). The RBR, which provides an understanding of the rate of adoption, is a critical gauge for the success of the new product, in markets where goods are repeat purchased.
Note: To find content on MarketingMind type the acronym ‘MM’ followed by your query into the search bar. For example, if you enter ‘mm consumer analytics’ into Chrome’s search bar, relevant pages from MarketingMind will appear in Google’s result pages.