What to think about when you consider new products.

Posted by Tom LarsenOct 15, 2014 Marketing, Organization, Planning, Product Development 0 Comment

You’ve created some productive products. You have a sizable percentage or quantity of your target audience carrying the products and they are selling through in those stores. You have a consumer following of people who care about what you do or make. You have a sales force that can deliver whatever you come up with to the retailer audience so that your efforts in developing the new products are not a waste of time. You have a presence at trade shows that makes your products shine and attracts your existing customers and new ones to your space at any show you do. It’s time to look at something new.

I am a firm believer in a systemic approach to the process, informed by any kind of market awareness. At the earliest possible stage evaluate new products with the inclusion of market awareness of the number of existing stores that would likely carry the new products, how much getting to new stores might cost in time and resources (perhaps new shows, new sales people, etc.) and eventually the sales and gross margin contribution potential for each investment.

Let’s take a hypothetical example; a healthy energy bar has 5 flavors and wants to consider how to grow their business. After 3 years, the business has 800 doors carrying at least 3 of the 5 flavors. The product is available through outdoor stores (REI, etc.), natural food stores (Whole Foods, etc.) and assorted other locations where people who are health conscious and active shop.

To establish their focus on the future, they need to determine a new nexus of health conscious consumers that are active, the internal capabilities of their company and the retail channels they are in, or aspire to be in to grow their business.

They could easily expand to another couple of flavors, which could expand their existing real estate. They could create new packaging or new marketing efforts to find other retail locations that might be productive like college stores or airport stores. Both of these are inexpensive and are considered product extensions. A great place to start.

They could go into energy drinks, which could be sold to both of the existing channels, is still a consumable but might need to meet new buyers although not new stores. They may not have any expertise in energy drinks, so the development might be time consuming.

They could modify their energy bar recipe to make it into a granola recipe and go after a deeper penetration into the Natural Food business. That would not extend the Outdoor store market and would also require the establishment of the brand as a healthy breakfast product for more every day consumption. Their existing supply chain may be able to do this reducing the development costs.

They could create a multipack of some sort, which would extend their real estate but likely not their audience.

They could look at their retail or consumer audience and find a niche to develop something completely different like performance apparel for example. That would likely not expand the natural food store business, but could get it into more apparel oriented locations, but, they have no relationships there, so it will be time consuming and expensive in resource commitment. This also would begin to transform the business from a consumables to a durables business and require an entirely new supply chain. Another resource depleting effort.

Depending on the 3-5 year desires and the resource commitments and expected revenue streams these ideas and more would be considered prior to going down any specific path. The more disciplined and thoughtful the evaluation, the more likely the company is to create products that are meaningful to their customers and meaningful to their business.

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