Due to the wealth of information available, the continuing need for new innovation, and the increasing number of entities willing to grant small business loans, new product launches have reached staggering heights of over 30,000 a year. The only problem? Depending on estimates, 80 to 95 percent of these launches are unsuccessful. Here, we will examine the reasons for that-and how you can avoid the same mistakes.
You should be thinking about this before you even apply to patent your product. Take an objective look at your offering and ask yourself ‘does the market really need this?’ Some markets are already saturated-for example, the Google Pixel smartphones have been largely a failure due to the chokehold Apple and Microsoft already have on the market. Make sure there’s no existing, established alternative on the market, and that your product, when launched, will have a target consumer base that has the capital and desire to purchase your product.
Clean up your product concept before you launch!
If you’re certain that a target market for your product does exist, your next task is to determine your specific goals for revenue and price point. The basic equation to turn a profit is: Fixed Costs + Variable Costs ≤ Number of Units Sold * Price Point. Make sure that you have your innovation priced high enough to actually turn a profit.
Lack of Beta Customers or References
This is especially important if you’re looking to license your product out to another business. When buying a product, we here at Ashogi consider the reviews to be the most important factor in determining our commitment to the purchase. Your potential customers are no different. It’s a good idea to make sure that your product has plenty of testers during the beta stage, and once the official market rollout occurs, that it’s generating reviews from customers. To this end, you might consider reconnecting with consumers after the purchase to request that they review your product, possibly providing incentive to do so. For example, Amazon subsidiary Zappos allows reviewers to participate in a review rewards program, which grants store credit in exchange for writing an extensive review on a recent purchase. Programs like this are a fantastic way to spread the good word about your product, generating additional impressions and increasing future sales.
What Does All This Mean?
Even when you have a good product, it’s very possible for it to fail upon entry to market. It’s important to make sure your product has a realistic market -if good alternatives are already established in the market, you might want to shift your focus elsewhere. Even if there is a market, plan a sustainable business model with room for growth in price point. Finally, you’ll need good word of mouth about your product-and you probably won’t get it by simply having a useful product. You’ll need to make references easily accessible and common to succeed.