To Market, To Market
After months, or perhaps years of developing concepts, research and fundraising, your great idea is now a tangible product or a service. You are nearly ready to launch your product or service onto the open market. However, you aren’t quite ready to post the “open for business” or “new and improved” signs.
As you begin your new product development, you must conduct several important steps before you are able to introduce your groundbreaking product or service. While it may be tempting to rush through this process, doing so is unwise. You may risk wasting all the effort you have placed into creating your product or service.
Determine Your Target Audience
To whom are you targeting your new product or service? You should have a rough idea of whether your product appeals to men or women, or to both. What age groups would be most interested in purchasing your product or using your service? Is your product seasonal or regionally based? Is your product designed to appeal to particular ethnic groups? Does your product hold more or less appeal for wealthy consumers or consumers who are well educated? Unless you can state something like “this product is designed to appeal to women of all ethnicities between the ages of 35 to 50 who are college educated and live in suburbs of major metropolitan areas,” then you have not yet completed the task of developing a target audience.
Generate a Price Estimate and Projected Sales Volume
Generating price estimates and projecting sales volume is a form of predicting the future. However, if you seek funding for your product launch, a lender or investor will want to see firm approximations for both your price estimate and projected sales volume. Instead of wild speculation, price estimates and projected sales volume should be based on research. For instance, your price estimates may be based on pricing and sales for similar products or services from your competitors. Sales volume projections may be drawn from input gained from conducting focus groups comprised of people much like those who make up your target audience.
Calculate Your Break-Even Point
How much product must you sell to recoup the costs of your research, development and launch? At what point will you have sold enough contracts for your services before you show a profit? Calculating your break-even point can help determine whether you need to raise more capital before launching your product or service.
Develop a Marketing Strategy
Getting the word out about your product or service is nearly as important as the product launch itself. After all, it doesn’t matter how good your product or service is if no one knows it exists. Your marketing strategy should be in line with your company’s size, with the demographic features of your target audience and with other relevant factors. Unless you have a budget to rival that of big box stores such as Home Depot, you must also be creative in developing your marketing strategy. Social media and Internet outreach will probably make up a larger proportion of your marketing strategy than television, radio or magazine and newspaper advertising.
Charles Talley is a new product engineer. He frequently shares his tips for developing new products on business blogs.