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7 Questions to Ask Before Launching a New Product or Service
Written by: Marian BankerArticle Overview: Launching a new product or service can be a great way to expand your business, if done strategically. Answer these 7 questions before finalizing your launch and avoid what could be costly mistakes.
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7 Questions to Ask Before Launching a New Product or Service
Are you preparing to ramp up for expansion through the launch of a new product or service? This can be an ideal way to grow your business if you do it strategically.
To help increase your odds of success with a new product launch, I suggest you analyze your business and market history. Here are seven questions that will assist you in analyzing your information and creating a growth plan.
1 - Is my business already on a solid foundation?
If your systems, processes and personnel are not ready, efforts to expand will overload your capabilities and set you up for failure. Before launching a new product or service, make sure you are ready to handle the orders, deliver the product or service and collect your money in a systematic and timely fashion.
Also, make sure you have one or more strong indications that there is a market for what you plan to offer. Strong past sales of something similar or a part of what you are expanding are usually a positive sign. Be careful you don't fall in love with an idea and disregard the warning signs that the market won't support it.
2 - What is the size of the market?
Do a competitive analysis (see checklist). How is your new product or service filling a market need? What will be your position within this market? Who is your target market and how will you reach them? You want to reach the conclusion that your efforts have the potential to pay off. If you are offering the same product to a new or broader market the same principles apply.
3 - How should I price it?
Pricing is an important consideration. When you do your competitive analysis you'll learn how similar products or services are priced. You want your price to be attractive enough to sway people to buy; unless you're pricing a luxury product and the higher the price, the higher the perceived value. The option for prospects to keep their money and not buy from anyone is always one of your competitors.
I find it's better to start on the low side to make sure the perceived value is greater than the cost. You can raise the price once demand has been established.
4 -How much revenue can I expect to generate within a specified time period (usually one year)
This is an important question and is dependent upon the actions you take to generate sales. You'll need to think through your Marketing Plan in order to come up with a realistic projection of how many widgets you can sell at $XX within a specified time period. Analyze your sales history to help you know what has worked in the past. If you have a long lead time for sales, that should be taken into consideration. This may mean hefty upfront expenses with corresponding delayed revenue income. To be conservative make your revenue projections and then knock off 30%.
5 - What will it take to realize this additional revenue and profit?
What additional resources will you need when launching a new product or service? Do you need to hire more people, buy more supplies or inventory, etc.? That additional cost must be taken into the equation. These may be in the form of fixed or variable costs.
Consider what the competition is doing and what market insights and trends you can utilize that will generate sales. Select one or two actions for your initial campaign and test on a small scale before committing major dollars.
At best, making a financial revenue and expense projection is always a guesstimate. Gathering and analyzing pertinent information is the key to accuracy.
6 - Where is the break even point and what is the potential profit?
The formula to determine how many you have to sell to start making a profit is Fixed Costs divided by (Revenue per unit minus Variable costs per unit). A quick and simple explanation of this can be viewed in the article, "Breakeven Analysis" . For some products or services the upfront investment is such that the breakeven doesn't happen for more than a year. If that is your situation, you'll definitely want to know how you're going to capitalize such a project.
7 - Is this new direction in line with my overall Business Vision and Long Term Goals?
This is a good time to determine if your new offering will take you closer to (or further from) where you want your business to be going. One of the real values of having a clear Vision and Goals is to help you make this type of decision for every opportunity that presents itself. Think long and hard before starting something new that does not have an obvious fit.
Answer these questions and you'll be a lot more confident about your plans and in a much better position to succeed when bringing a new product or service to market. Good luck with your new project!
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About the Author: Marian Banker RSS for Marian's articles - Visit Marian's website  Marian is co-producer and host of the annual Small Business Summit 2006-2009, an all-day conference that brings together small business owners and technology providers. She is creator of the "Business Success System", a step-by-step process with tools, text and a virtual classroom atmosphere. Since 1995, has coached Entrepreneurs, Professionals and Executives in transition to become business leaders. Emphasis is on what it takes to lead a business to success. Holds a Masters in Business Administration and has over 25 years experience as senior executive, consultant, entrepreneur, educator, mentor and coach. Founded Prime Strategies in 1996 to provide the small business community with coaching, consulting and training in business leadership, translated into plain English for the typical small business owner. Click here to visit Marian's website   Warning Signs Checklist Partner Questionnaire |
Related Forum Posts
Re: Service Or Product?
- I agree with starting a Service-based Business in the economy. Here is what I think is critical:
1. Researching that your Service business has a market.
2. Marketing the Service with as much leverage as possible.
3. Product-izing the Service (aka Package Expert Knowledge). This will only help elevate you as "the" expert in your niche and make you accessible to people in different price points.
Show the Benefits
- Offer a free test drive of the Product or Service with a Money Back Guarantee - Take the Risk out.
This will help them make the decision but you have to work with them to realize it by explicitly state the benefits they are receiving.
Offer Credit instead
- I'm not sure if ChrisH was referring to this but i'll state it more expicitly ..
Charge upfront and offer a refund of double the value back in "Credit" towards your Product or Service you have for sale at the end of the event.
Don't leave your Wallet on the table
- Targetzone,
Evan has great points on targeting you package. Also I read the revenue model you mentioned and i believe you are leaving a lot of money on the table.
Aisde from making just $15/sale of a package you could also be making income from sales generated after the people use the coupon on their second and ongoing visits to the Service/Product company.
I've sent you a PM - We can talk more advanced strategies.
BTW - I'm a Dollarmakers Member and have taken the Joint Venture BootCamp 101 and highly recommend it if you wish to pursue this idea. PM me privately and we can talk.
Who Said Twitter Doesn't Work...?
- Last month, the BBC World Service programme, The Strand, featured 21 year-old Icelandic pianist/composer Olafur Arnalds.
Arnalds achieved extraordinary success through his internet-led project to compose 7 tunes in 7 days, post them on his website and then post links to it via TWITTER. As a result his website got thousands of visitors eager to listen to his music, catapulting him to fame and bringing his music to the attention of the BBC, who featured an interview with him on the World Service programme, The Strand!
So who says Twitter doesn't work? (HINT: It does help if you have something uniquely your own that other people want to get hold of...)
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