Launching a new product for any SME, and particularly in a new market in Asia, can be complicated but following established processes may improve the probability of success and profit. Before getting started, having knowledge of why the majority of new products fail can help to define what is required of a new product development process.
The main causes of new product failures for most SMEs are:
SMEs may benefit from following a New Product Development (NPD) process that is easy to follow and avoids getting tied up in ‘red tape’ and unnecessary meetings. Before launching any new product an SME must consider the new product or service, its position and impact and develop a commercialisation strategy. An SME owner or manager should start a commercialisation strategy by asking;
1/ What’s the offering?
Create an holistic statement which clearly states what your product is, what it does, and the benefits of using the product from a consumer’s point of view. You should also state what the pricing strategy is going to be for distribution channels and end-users
2/ How does the product align with your SME’s core business?
Understanding how closely the product being launched aligns to your current business’s strengths and competencies can determine some of the strategic directions required for the commercialization plan. The closer to the core, the fewer new strategies are required as a lot of the infrastructure will be re-usable
3/ Identifying target markets and customers
Carry out test marketing before you get started so you should have an initial target market and customer profile already identified within your strategic plan
4/ Business plan and forecast
Forecasting, generally looking ahead three years, is essential. The forecast generally includes; Sales quantities, Gross Margin, Operating Income, Capital Expenditure and Return On Net Assets, so that you can keep track of progress against goals and make changes pragmatically
5/ Commercialization risks & issues
You need to identify all the potential risks and issues that could affect the commercialization of your product, including theft, IP infringement and changes in law and compliance. Rate them from high to low and ensure you have risk mitigation actions in place to overcome the risks
6/ Don’t launch ‘blindly’
To maximize the probability of achieving your business goals, develop strategies behind your new products. Innovations can happen during the commercialization of a product as easily as in the product itself. Think about all the ways you can build upon and leverage your commercialization strategy and you might find your sales teams more engaged in the product launch..
Findings from a recent study of SMEs in Australia provide insights into ways SMEs approach commercialisation, and the trade-offs that must be made between anticipated return to investment and the allocation of scarce resources. Results from the SMEs examined suggest that while formal approaches to NPD and commercialisation are helpful, they are not essential for every SMEs, so long as the CEOs have competence in these areas. It also showed that as firm size and complexity increase there is a need for a more systematic NPD portfolio management process. In an environment of scarce resources, as found in most SMEs, an innovation being commercialised tends to only receive systematic or formal attention to the degree the owner feels is necessary to secure a return to any investment. A lot of the decision-making is made ad hoc, based on experience and intuition. If the CEO feels goals can be achieved without much formality or system they tend to try to do without it. Too much emphasis on formality and the use of legal protection for Intellectual Property or the acquisition of venture capital are unlikely to greatly assist innovators. More value is found in helping SME owner-managers and their teams to think systematically about their business models and developing strategic approaches for assessing their risk and return.
Tips from some experienced global entrepreneurs who have successfully executed NPD campaigns include:
1/ Get ready to collaborate
“We learned early on that if we wanted to launch products and grow, we needed help with printing, sewing, manufacturing, promoting and distribution. We couldn’t do it all ourselves. Working with other local credible businesses enables you to focus on the areas of the company where your skills and expertise are strongest, and manage cash flow for cyclical and seasonal activities.”
Tip by Helen Moulinos, co-founder and creative director, Space 1a Design
2/Consider crowd funding
“The first of three rounds of fundraising allowed us to develop a concept. The second allowed us to build a business and the third allowed us to launch a finished product. Crowd funding not only allows you to assess what works and what doesn’t, but it also helps you to reach a community of makers and early adopters, which grows along the way. If you get it right, the loyalty of your following grows too.”
Tip by Filippo Yacob, co-founder and chief executive, Primo Toys
3/ Don’t underestimate the importance of branding
“Branding and design is often overlooked by businesses, but it’s fundamental to how a product is received by customers. Many products and businesses are impersonal (this is particularly true of enterprise software such as ours), so try to keep everything – from your website to your press releases – as humanised and simple as possible. If your brand is consistently honest, useful and straightforward, it will be effective.”
Tip by Tom Meehan, founder, Minibarra
4/ Keep your operation lean while you enter the market
“It’s important to take a lean approach when taking a product or service to market – and avoid any unnecessary spending. Ask what you can do yourself rather than hiring someone or contracting out work. For example, could you self-build a website?”
Tip by Dana Zhinger, founder, Enclothed
5/ Don’t be afraid to shake things up
“The best products and services are those that challenge the status quo, so don’t be afraid to launch a new model into an already established industry. Particularly if you’re offering consumers a cheaper, more transparent or flexible alternative.”
Tip by John Whittle, chief executive, Unshackled.com