Taking a product to market is no mean feat. It takes a lot more than a good idea to make a success of it. A new product or service needs to be viable commercially for it to have a real impact.
If you’re in the process of developing a new product or service, here are some commercial considerations to factor in to your planning.
Understand who your customer is
Without customers, you won’t sell anything and your innovation won’t have an impact. It’s important to know who you will sell to, and what problem your product or service solves for them.
To really understand your customer, carry out research so that you can create profiles. Consider including information on age, lifestyle, motivations, how best to reach them, how they buy, where they work and who influences them. Also, think about the value that your product brings to their lives.
It might seem overkill, but armed with this insight you’ll have a great idea of what your sales and marketing strategy should focus on. It can help with your product development too.
Know your competition
Knowing who your competitors are will show you what works well and what doesn’t, and will help you identify your unique selling point (USP). Start your research on the internet: it’s free, easy and you can find out a lot. But it’s important to go beyond what’s available online. Read trade publications, network within your industry and go to trade shows to see what others are doing and where trends are going.
And think of your competition from your customers’ point of view; it won’t always be businesses doing exactly the same as you. A wind turbine supplier’s competitors would include solar panel suppliers, for example.
Choose the right business model
A product can be brought to market in different ways, and the one you choose should be given careful thought.
Two options to consider are licensing the product, or producing it yourself. Licencing involves handing over the rights to produce and sell your product to someone else, often with you receiving royalties on each sale in return.
The benefits of licensing are numerous. You don’t need to make a significant investment in materials, a manufacturing site and equipment, and your licensee will likely have good market knowledge and be in a better position to make a success of sales and marketing than you would be. They may also be able to benefit from greater economies of scale.
You’ll can also enjoy ongoing royalties, whilst you’re free to concentrate on other ventures. But there are downsides too.
You give up control over your product, including how it is marketed, its packaging and where it is sold. You may not be involved in future product development and the earning potential might be lower. You won’t necessarily have access to accurate sales data either, meaning you have to place trust in your licensee to act ethically.
Don’t leave your pricing to guesswork
It can be hard to decide how to price a new product or service. Try to avoid the temptation to price based on cost, because your production costs have nothing to do with what people are prepared to pay, or the value your product or service provides. You should always aim to let the market determine how much you charge.
Do your due diligence
You must be confident that your innovation is legally compliant and meets any regulations of the industry you’re planning to sell in, otherwise you risk landing in hot water and compromising the whole project.
You also need to make sure that you’re not infringing on anyone else’s intellectual property, including not just the design of the product but also any name and logo that you choose.
And don’t forget the other side of the coin – protecting your own intellectual property. Without the right patents in place, others can copy your idea.
For advice and support around taking an innovation to market, contact your nearest Clean Growth UK regional hub to see how we could help.