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Emerging
Products Can Deliver More Sales
No
matter what it is that you sell or how well it’s
going now, every product has a life cycle that begins when it’s
introduced into the market and ends when it is eventually
discontinued. It’s essential that
you know where each of your products is positioned in its life cycle,
and that you use this information to plan the future product strategy of
your business.
A
firm with too many products nearing the end of their life cycle has a
serious problem. Businesses need to conduct regular reviews
of their existing products to identify those nearing the end of their
life cycle in sufficient time to plan and develop their replacements.
Decreasing
sales volumes are one indication of a product that may be approaching
the end of its life cycle. Falling profitability is another sign to
watch out for. We can conduct a product by product profitability
review that will show clearly which products are selling at sufficient
volume with a healthy margin of profit, and which products are in
decline and being carried by the more profitable ones.
Not
long ago CD players and cellular phones were emerging products. Now they’re
so common in most parts of the world they’ve
become almost commoditised, selling largely on price. So now, at
this new stage in their life cycle, differentiation by enhanced features
is essential to keep manufacturers in business. In the future they will
no doubt be replaced by a newer technology altogether.
Freshen up your offerings
An
aging product range is a drain on resources and can make your business
appear dated. Examine your present range of products to identify any
that are at the end of their life cycle and should be deleted to make
way for emerging products.
Emerging
products are good for the image of your business. They demonstrate to
present customers that you’re working to
give them something new and better. They also show potential customers
that you’re innovative and your products
are worth looking at.
Emerging
products can add excitement to your business and to the other products
in your range. They don’t have to be
totally new and can even be derived from existing products to save on
development costs. The most important thing is that they are seen as ‘new’
by customers.
Look around for good ideas
There are several places you can look for ideas about new
products you can profitably introduce:
-
Talk with your customers and ask them to recommend new
products that will improve your range. This is also a
good time to ask for their opinions on which of your
products have reached the end of their life cycles.
-
Examine your competitors’ offerings and consider
introducing products similar to those that are proving
successful for them.
-
Review trade journals and industry websites for ideas.
Good ideas for new products will often come from other
countries and can be discovered in the content of
editorials in trade publications.
-
Ask potential customers for their comments, including
whether they’d change suppliers and buy from you if the
new products were in your range.
-
Talk with members of your own team. It’s surprising how
many times successful ideas for new products have
originated from personnel within a firm.
Test and Research
When
you identify a product you believe you could successfully introduce,
prepare a marketing plan for it and calculate its potential contribution
to your profits. Especially critical in these calculations are product
development costs and pricing.
If
an emerging product is intended to replace an existing one, try a
calculation based on the sales levels of the product it replaces. Don’t
assume that sales of the emerging product will automatically be higher;
new products often take time to become established.
You
might be replacing an old product that has become unprofitable but still
retains a high degree of consumer loyalty. In this case your marketing
plan needs to incorporate a direct approach to existing customers that
will encourage them to switch to the ‘new and improved’ offering.
Manufacturers
of men’s razors are experts in this
technique. When a new razor cartridge is introduced the old product
remains on the supermarket shelves but the handles are dropped from the
range. Eventually the old razor handle fails, forcing a purchase of the
latest model handle/razor combination.
If
possible carry out a trial in a limited test market to judge customer
response. This is especially useful for retailers adding a new product
to their range.
The
ideal product portfolio incorporates a balance of products at various
stages of their life cycle; some emerging, some middle-aged and some
mature (but not yet in a state of decline). Mature products need to be
closely monitored so they can be phased out before they require
excessive marketing support and become unprofitable.
Offer Your Customers Value Propositions, Not Products
You
offer your customers and potential customers more than just a product.
What you’re really offering is a value
proposition – the sum total of the product, its benefits, its
price and the services you provide that go with it.
Your
value proposition will vary from one customer segment to another. It’s
important to define the value proposition for each segment in your
customer base before you begin your marketing.
What is a customer really looking for?
Remember
that customers buy for their own reasons – usually to acquire a
solution to a need. If you can segment your customers into groups that
share the same reasons for buying, you will be able to communicate the
right value proposition to each group and maximise your sales.
Very
few products appeal to only one segment of the total market. Computers
are a good example. They’re used by
businesses for commercial purposes and by young people for ‘chatting’,
playing games and downloading music.
If
you’re selling PCs, your value proposition
for business customers will be entirely different from the value
proposition for teenagers, although the product is the same. To
optimise your marketing you would target these segments separately with
an appropriate value proposition for each segment.
Promote your value proposition
Develop
a detailed profile for each segment in your customer base. Then you can
create a value proposition that appeals to each because it represents a
solution to their particular needs.
When
defining a customer segment identify all the important details. Gender,
age, lifestyle, frequency of product usage, preferred media and
geographic location are just some of the factors you need to identify
before you can begin your marketing work.
Going
back to our previous example of PCs where we segmented business
customers from teenagers, there are a number of ways to use this kind of
detailed information. A PC package for businesses could include software
designed for commercial purposes, would be advertised in the financial
press, and could include in-office installation.
Teenagers
on the other hand would be more likely to respond to bonus games
software, ads in youth-oriented publications or websites, and
high-quality sound and graphics.
Market to the most profitable segments
If
you analyse a product and find it sells to five identifiable customer
segments, does that mean you need to promote to all five segments? Not
necessarily. It does mean you need to identify your most important
segments and direct your marketing expenditures accordingly.
If
your business is like most SMEs it will
follow the 80/20 rule – 80% of your profits will come from 20% of your
customers. Focus on that 20% and you’ve
just done 80% of your marketing.
That
doesn’t mean that there will always be
only one customer segment represented in your top 20%. What it
does mean is that you should identify the most profitable segments and
concentrate on them.
Note
that you’re looking for 80% of the profits, not 80% of the sales
income. Chasing sales volumes without regard to profitability is a
trap that can lead to price being the only differentiator between you
and your competitors.
Remember,
the ideal value proposition is a statement of customer benefits rather
than product features - if you’re selling
hand lotion to women in the 40-60 years of age bracket and who
spend a lot of time outdoors, your value proposition is beautiful
hands that don’t show the effects of
weather and aging. If you also know the magazines she likes to
read, then you know both how, and where, to reach her.
Delegate And
You’ll
Manage Better
When
small businesses begin to grow, managers invariably find that they have
an increasingly time consuming administrative workload. At this point
they may add new members to the team to perform duties that they
previously handled themselves.
But
this situation also gives you the opportunity to delegate some of your
decision making to others as well. Delegating some of the decision
making gives you more time to focus on growing your business, and team
members more opportunity to grow in their jobs.
Analyse and cost what you do
Begin
by analysing the work you do. Most business owners don’t
realise how much time they spend doing work that could be more
effectively performed by others – work that is not really related to
the critical functions of the business.
Once
you identify the work you are doing that could be done by someone else,
list the decisions that these tasks require. These could be decisions
about duties as simple as ordering office stationery or handling the
petty cash.
Now
calculate the authority level needed for each task. If the usual
stationery order is $150 a month, then you have to give the person
handling the ordering the authority to commit $150 on behalf of your
business. Then identify a team member you believe is ready for handling
this duty and delegate it!
Develop trust and maintaining security
Delegation
requires trust. Many owners have a hard time letting go of
responsibilities because they aren’t
certain they can trust anyone else to do the work they’ve
been doing themselves. Part of delegating successfully involves ensuring
that the person to whom you delegate really is equipped to make the
decisions they will need to, and this may require specific training. You
need to set in place the reporting mechanisms that will allow you to
track how they are going.
You
also need to consider security issues, particularly when the firm’s
funds are involved. Make an assessment of how much is at risk if
something goes wrong. If your petty cash float is $200 that’s
the amount you can potentially lose. Don’t
create an opportunity for petty theft - trusting someone is much easier
if temptation has been removed.
Give it time
It
may take time for these new responsibilities to be fulfilled to your
complete satisfaction. Make yourself available for consultation and
review the effects of decisions that are made until you’re
certain you can fully pass on the responsibility for making them and not
worry.
Rose
Mihaly, of consulting firm Mihaly
Associates, sums up delegation’s benefits
to owners:
“When delegation is a tool for facilitating an employee’s growth
while the boss gains time to devote to his or her core
competencies, delegation becomes a win-win situation.
Discover Your Unique Core Differentiator - And Market It!
Unless
customers perceive something unique about your business or its products
they will relegate you to commodity status and make purchase decisions
solely on the basis of price.
Discovering
and promoting what makes you different, your Unique Core Differentiators
(or UCDs), will make your business and your
products stand out from the competition. UCDs
are powerful selling tools that can be used in all elements of your
marketing. They are key contributors to your image, and they are what
your customers and prospective customers relate to you and you alone.
Anyone
hearing the business’ name should instantly think of the UCD if you
get your marketing right.
Your
company’s UCD can be a slogan or a
graphic. It can be a customer perception of pricing or value. To make it
work for you it has to be both factual and demonstrable – a
deliverable to the marketplace. Your business name itself can be a UCD.
What's in a name?
Take
a hypothetical retailer: Bigger Discounts. Their advertising slogan
could be ‘The name is what you’ll
get when you shop with us’. The UCD is clearly articulated
in the company’s name and slogan, and is
intended to be perceived as a reflection of the store’s
pricing policy.
This
kind of UCD is simple but appeals to a large segment of the market. It
says to bargain shoppers ‘shop here and you’ll
save more money than if you shop elsewhere’.
What
if you’re trying to be an exclusive
retailer of luxury goods where customers want quality and aren’t
as interested in price as the Bigger Discounts shoppers? UCDs
can be a lot more than just a descriptive name.
Saks Fifth Avenue
and Harrods are names
that are, in themselves, meaningless but have connotations of wealth and
quality going back decades.
The
same principle applies to individual products. Scotch Tape and Kleenex
Tissues are products whose qualities are known worldwide, and the
strength of their branding ensures their success independent of the
companies that make them. (Can you name the makers of these two
products?). Both names are unique in the minds of consumers and worth
millions of dollars. That’s what’s
in a name.
Define your own UCD
Define
your own UCD by cataloguing all those things that you think make you
better than your competitors: your product mix, your standards of
service, your guarantee, the specialised knowledge of your team, or even
a service such as free home delivery.
Look
also at areas where you may not be better than competitors but can
promote differently - there’s nothing
inherently different about one builder’s
concrete from any others, but one successful marketer painted their
delivery trucks a shocking pink and gained all the attention they
wanted.
If
possible, relate your UCD to something that customers need, or relate it
to one of their major frustrations. Try and tell them that they can get
what they want from you and that they will enjoy the purchase experience
more than if they’d gone to one of your
competitors.
What
you say must have a genuine appeal to your target audience. And can’t
be something your competitors could also say. If you don’t
have a real point of difference, invent one. Even if it’s
only packaging your products in a distinctive wrapping, get away from
the herd!
Make it work for you
Integrate
your UCD into every part of your marketing. You may not want to change
the name of your business but you can certainly adopt a new advertising
slogan, graphics style, colour scheme, or amend other elements of your
business that will remind customers of your core promise and set you
apart from the competition.
Memorable Quotation
“An
executive is a person who always decides; sometimes he decides
correctly, but he always decides.” - John H. Patterson
How to make the most of your newsletter
Be
sure to read each article with the mindset "How could this apply to
our business." Thinking of it that way will guarantee that you get
value. Better yet, take notes as you read and commit to having the ideas
implemented by the time the next edition arrives. Also, make copies for
each team member. To really make sure something positive happens, work
with your business development specialist to talk your team through the
ideas and how to set a schedule for getting them implemented. We're here
to help you get started.
An important message
While
every effort has been made to provide valuable, useful information in
this publication, Shape Your Business PTY Ltd and any related suppliers or associated companies accept no
responsibility or any form of liability from reliance upon or use of its
contents. Any suggestions should be considered carefully within your own
particular circumstances, as they are intended as general information
only.
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