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SELL SMARTER; NOT HARDER: Part 4

Guest post by: Neil Mahoney

Article Overview: THE PERILS OF PRODUCT LAUNCHES: Even for well-known, well-established companies, new-product launches aren't easy. From the Marketing standpoint, the most-serious mistakes are made while wearing rose-colored glasses when assessing prospects' Wants and Needs. Because you love the idea, you think everyone else will too.

SELL SMARTER; NOT HARDER: Part 4

ROSE-COLORED GLASSES:

When we introduced a new magazine focused exclusively on Designers and Builders of commercial buildings,we were sure we had targeted a unique, unserved niche in a huge market, which was complemented by one of our magazines that was read by Owners and Managers of the same types of commercial buildings. We reasoned that this unmatched combination now gave advertisers access to all the important buying influences in the market, and that they would flock to this great combination. Putting their ads in these two publications would let them get their sales messages to all four major buying influences. We were right in some instances, but were rudely surprised in several others.

It turned out that when given a choice such as we offered, some advertisers decided that certain parts of their line were better suited to one group of our readers rather than the other, and all we did was cause them to switch their advertising dollars from one magazine to the other. In other words, we created competition for ourselves in many instances, and now had the expense of publishing two magazines that failed to generate enough added revenue to offset the added investment.

Our sin: We didn't remove the rose-colored glasses when we analyzed the opportunity.

COMPROMISES AND TRADE-OFFS:

Second on the Perilous Pitfalls list are the trade-offs and compromises that often have to be made in product designs to trim costs to meet acceptable price points, or enhance one feature at the expense of another.

A company I worked for was faced with that while developing a control system that would automate conventional machine tools. The market for these types of contols was widespread and growing.All the trends were strongly in our favor, but there was just problem: Design and Development costs were getting out of hand. Engineering came up with a solution -- or so they thought. The design as originally conceived called for two capabilities -- point-to-point machining and contouring. Contouring was used only 10% of the time Engineering reasoned, so let's eliminate the contouring feature and costs will be back in line.

There was just one problem: Contouring capability was like brakes on a car. They're used less than 10% of the time, but you wouldn't buy a car that didn't have them. Needless to say, we dropped the project.

Other highly common major mistakes made by new-business planners include:

1. OVERESTIMATING THE SIZE OF THE MARKET -- both in units and in dollars.This is because: a) price lists usually overstate the true selling prices of the products listed, b) figures from Association data usually overstate the average size of the companies involved because a lot of smaller firms choose not to join the Associations for various reasons.

2. FAILURE TO FULLY UNDERSTAND THE MARKETS: The magazine we launched for Designers and Builders of commercial buildings is one example. Another striking example is a multi-million dollar fiasco that befell one of the largest and most-respected companies in the world. One of their divisions was developing an automated railroad-car identification system that promised to to be superior to identification systems then in use. They designed an electronic device that could be suspended under each car to report that car's location in any kind of weather.

a) MISTAKE #1:

A young non-technical trainee copywriter, who was writing a sales brochure for the system, noticed that the black boxes hung below the axles of of the cars and were susceptible to damage by large objects, such as fallen rocks, that might be on the tracks. He called my attention to it and I notified the client. The division engineers went back to their drawing boards and after much time and expense fixed the problem. They then tested it on the Union Pacific and it passed with flying colors.

b) MISTAKE #2:

A second test was conducted in Canada. In cold climates like that they have what are called de-icing sheds. The extreme heat from the sheds ruined the black boxes. Result: No product. Even worse, the giant corporation also manufactured diesel engines for railroads and had all the market information anyone would ever need. No one bothered to talk with their own experts in the other division.

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Article Tags: Case Histories, New Product Launches, Perils



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