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Insights on business, and practical ways to improve your own.

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Knowing Your Limitations

Thinking of trying a new product category, such as scrapbooking? Answer these questions first.

by Kate (November, 2003)

(Note: Kate is a mid-level manager for a major industry company.)

I recently participated in a meeting with a new product manager. At one point there was a discussion about our developing a product unlike anything we currently have. After everyone's comments had been made, the new product manager offered hers. She asked why we were considering spending time and money developing a product completely different in function and component than anything we currently offer. The product, a gift product, has already been on the market for several years and in fact may have already peaked in popularity.

We all held our breath while we waited for "the boss" to say something. Though you couldn't hear them, there were sighs of relief when he agreed and killed the idea.

This illustrates the situation that many manufacturers are facing. Many buyers are reducing the number of vendors they deal with, preferring to buy larger varieties of products from the fewest vendors possible. How do you become one of the select few rather than one of the ousted?

I am all for helping my company grow and expand in other areas, but only after some serious consideration is given to the following questions:

1. Is this new product even remotely connected to your current product?

If not, do you have a staff with existing knowledge about this type of product, or the available time and resources to fully research it? It's not as simple as finding a source to make it. At the very least you need to learn what consumers do and don't like about the existing versions of the product, why it is the way it is in terms of construction and function, what the buyers are looking for, how many companies are already selling the product, and what the past, current, and estimated future sales are for this product.

2. Can you get on board before it's too late?

If your research indicates that this product is nearing its popularity peak, you need to determine if your company will have their product on the store shelves in time. A miss by even a few weeks can have disastrous results. (Don't forget to add in a couple extra months to your development time line for everything that will invariably go wrong.)

3. Can you develop the product at lower cost but maintain high quality? If you're still confident that developing this product is the right thing for your company, are you able to offer better pricing than what has been established but still maintain the same quality? Lower prices are a sure way to attract people's attention but buyers and consumers are savvy people. A price that is too low will immediately be met with skepticism about the product's quality.

4. What hook will you use to draw customers to purchase your product?

Once consumers find a brand that they like, they tend to remain faithful to it. We repeatedly eat at the same restaurant chain, buy the same make of car, and wear the same brand of clothes. Occasionally we can be lured to try another brand by coupons, lower prices, sales, or other special offers.

Unless you have a large advertising budget (and most of us don't), you must rely on three avenues for a direct line to the consumer's wallet: A) You're able to work with the buyer to have your product prominently placed in the store and in their advertisements. B) Your packaging clearly illustrates a new or improved feature, but is not so visually cluttered that the consumer doesn't read it. C) You're able to create even one-tenth of the Harry Potter-esque buzz about your product.

5. What is the long-term effect if your product becomes a shelf sitter?

By filling valuable shelf space with your product, a buyer is putting faith and trust in your product - and in your company. If your product ends up in the clearance bin, your company is now facing a double negative. First, the buyer will be wary in the future when you present additional products that are not your standard products. Second, for this type of product, the consumer may now associate your name with clearance bin for a long time to come.

6. Will passing on a new product have a negative impact on your company's bottom line?

Maybe, maybe not. It will, however, have two positive impacts. Time and expense will not be spent developing a product that most likely will have marginal returns at best. And since you're not so busy developing this "foreign" product, you will be able to spend time looking for and reacting to the "right" product for your company.

(Note: You can read Kate's previous columns by clicking on the titles in the right-hand column. Have any comments about stolen designs or products? Email Kate at katescollagecln@aol.com.)

xxx

 

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