Why launch a new product?
Got a bright new product idea? Business is booming and you're ready to expand? Launching new products now could make a big splash, broadening your appeal to existing customers and attracting more. It’s also a dive into the unknown, in more ways than one – you’ll need to take a deep dive into your market research, and you’ll need to take a deep breath because, regardless of whether you’re leaping off the low or high platform, you’re taking a risk. The fortune or flop of a new product hinges on knowing your market and customers. Before you take the plunge, you might want to test the waters.
What goes into a new product launch?
Just like the perfect dive, a successful product launch is planned, targeted, and strategic. A good product launch strategy follows distinct steps: market research, purposeful design, testing, quality control, commerce and marketing strategy, evaluation, and adjustment.
Depending on your business and the product, you might opt for a soft product launch (think of it as the lower, springboard diving platform, a limited release to gather feedback and test the market) or a hard product launch (launching from the high diving platform, with a full release and promotion).
There's no one perfect approach to introducing new products – your industry and market, business situation and resources will all influence how you do it. But some fundamental principles apply.
How to launch a new product
A staged approach to launching new products involves conceptualisation, market research, development and testing, marketing strategy, and release. A staged approach means grounding the launch of a new product in good research and mitigating the risks so that, even if a launch fails, your business will be fine.
It also means you’ll be less stressed on launch day. Ever noticed the water sprayed onto Olympic diving pools? It’s to help divers judge their distance from the surface. Think of risk mitigation strategies as the water disturbing the surface of the pool, so you can launch with confidence.
Decide on new products and services
What are you going to launch? A successful product provides a compelling solution to an existing problem. This is your value proposition. The problem may be a need being unmet, or an identified consumer desire. Whatever it is, decide what makes it unique, and sellable.
Research the need
Why are you going to launch this? Even if you think you’ve got a good clear view of your market, and are confident your new product will make a splash, do new research now. Check out our guide on how to do market research for some tips. Research might steer you away, or at least for now. It's not wasted time, as you'll apply your learnings.
Identify the solution that solves the need
Include your current products as well as competitor products in your research. How does your new product stack up against them? Does it offer a distinct solution? The answer to these questions will give you your marketing hook.
Define the target audience
Identify your potential customers and create consumer profiles. Who will want to buy your new product, and why?
Do a SWOT analysis
A SWOT analysis explores four significant factors that affect any business venture: Strengths, Weaknesses, Opportunities, and Threats. This analysis will reveal your new product's viability and impact on your business. Consider both internal and external factors and develop action plans to address any issues.
Analyse the risk
Is your business comfortable diving off the 10 metre platform? Or is 5 meters enough for now? Knowing your risk tolerance is great business management, and having a risk register is your safety net. Your risk register should highlight potential risks and lay out mitigation strategies. It can be as simple as a spreadsheet, or a more complicated software tool. Asana has a good explainer.
Budget your development
Costs will differ depending on the kind of product, but everything costs something. The time, energy, and funds spent in development can impact your business financing, so get a good picture of where you’re headed before you begin to introduce a new product.
Design the product
At the prototyping stage, apply your research to drafts or models of the new product. Your prototype could be drawings, models, or complete product examples (MVPs or minimum viable products), depending on the project.
Test the product
Whether you’re offering a good or a service, big or small, find ways to test your new product before launch. If it’s physical, make sure it works and stands up to use (and misuse). If it’s a service, get feedback from people aligned with your target demographic. Test workload, costs, production and distribution pipelines.
Produce and refine the product
If it’s all looking good, you’re ready for commercialisation. Finalise manufacture, refine production and delivery processes, and ecommerce or sales points.
Are you ready for launch?
You’ve researched and prepared. You’ve checked the depth of the water, and chosen the platform. You're confident, and you know the crowd is out there. You step out, curl your toes over the edge of the platform… But wait! What kind of dive are you going to do? You’ll need a strategy for this, too.
Create a product launch strategy
You’ll need a product launch strategy that lays out how, when, and to whom you’re promoting your new product. Your aim is to maximise the product's visibility and appeal, create a buzz, and get the timing right.
Set a launch date and lead-up timings
The decision about when and how (and maybe where) to launch will have an impact on your success – this is where knowing your market really comes into play. If you’re launching a new swimsuit design, would you only choose to launch just before summer? If it’s a suit designed for diving, would the time of year matter? Give yourself some lead time as well, building momentum towards your launch date.
Get your financials straight
With solid financial systems and budgets in place you’ll be less likely to overspend when launching new products, and more able to manage unexpected costs. Setting up your finances and forecasts in accounting software like Xero gives you full control over your numbers and the ability to budget, then track, your new product.
A budget for introducing new products should account for:
- the costs of buying, making, or providing the new product (for a service, that might include computers or software, travel, and expertise; for a product, it might include materials, manufacture, shipping, and packaging)
- marketing and advertising
- ongoing research and development
- commerce and sales
- contingency for unforeseen costs, including rises in production costs or having to buy more stock if sales go well
Set sales goals and KPIs
Set clear goals and performance measures and be ready to adapt if you need to. Key performance indicators (KPIs) are a simple way to track a new product once it’s in the market. Check out our business KPI examples.
Set your pricing strategy
Work out your pricing strategy in advance, and be realistic. Ultimately, your product's revenue should exceed its production costs – that’s your margin. As simple as that is, all kinds of unexpected things can impact a product's costs and revenue.
You might decide to use pricing strategies to launch your product, for example, penetration pricing (setting prices low for launch then raising later), price skimming (setting prices high for launch then dropping later), or sweetener deals (introductory discounts or specials). Balance the value of these strategies with customer loyalty and your profit margin. Check out our pricing strategies guide for more advice.
Predict your BEP and ROI
Know the path ahead, and use tools like BEP and ROI to measure success. Your break-even point (BEP) is when your total income equals your total revenue – it means your business has recouped its expenditure. Your return on investment (ROI) is a measure of how well your business is using resources to generate revenue – calculated by dividing product-generated revenue by its total cost.
Create your messaging and value proposition
Your new product's value proposition is your key message, and your promise to customers. It forms the cornerstone of your marketing campaigns. A well crafted value proposition consists of a concise, impactful headline and a 2-3 sentence description of key benefits. It should resonate with your target audience's core decision-making factors, inspiring them to act (to buy your product). Prioritise your customer's experience, ensuring it's exceptional in all aspects.
Plan your marketing tactics
From your value proposition, create a targeted marketing campaign. Utilise partnerships, stakeholders, businesses, and influencers, alongside your website, social media, and other channels. This will take time so make sure you have enough of that. Even if you’re a one-person-show, you can execute an effective campaign and launch plan without exhausting yourself, by thinking ahead.
Know your distribution channels
By the launch planning stage you should have a comprehensive understanding of your product's distribution channels. These are the pathways products and services follow from producers to customers. Incorporate your distribution channels into your marketing strategy – every stop along the way is a partnership, and potential avenue for sales expansion.
Bring staff and partners with you
Depending on your business and product, you may need to factor in staff and customer support training. Ensure that anyone involved with your sales understands the new product and is briefed in the value proposition, brand, sales strategies, pricing, and launch timelines. Whether your team is big or small, make sure communication is clear and constant. Clarify roles and responsibilities:
- your production and distribution team needs to know timeframes and resourcing
- your marketing team needs to understand the key promotional activities and when to release them
- your sales team needs to know pricing details and have access to sales enablement content
- your customer service teams need to know the product features and how it works.
Create a buzz
Your marketing campaign should have consistent, compelling messaging, across different media and platforms, all targeted to your customers. Start before you launch, using teasers on social media, customer sign-ups, pre-order incentives, and engagement with industry experts and publications to generate interest.
Ready to launch
Whether you plan a physical or digital launch, you might be working with partners, venues, and other stakeholders. Aim to launch in a way that makes sense for your product, your brand, and the customers you’re appealing to.
Your website and email lists are likely to be primary launch tools. Consider creating a new product page or using promotional features on your existing site to enhance visibility. Use your email lists for campaigns, giveaways, exclusives or member deals.
Deploy social media with clever ideas, or just great images, to encourage sharing. Engage influencers for reviews, and pitch to publications. Strategise your social media ads through timing and target customer demographics, offering special incentives like introductory discounts, free delivery, or sign-up rewards.
You’ve launched, performed the perfect dive, and now it’s time to evaluate. If you’re not selling out in week one, be patient, but keep an eye out for areas you could improve on. Track data, check your ROI and KPIs, and use feedback to improve marketing strategies or product delivery. Avoid completely switching lanes on your basic brand or value proposition – you don’t want to confuse customers, or your team.
In the long term, consider whether you need to protect your product or idea through intellectual property (IP) or trademarks. If you’re onto a great thing, you might want to protect that asset.
Unlike the perfect dive, the perfect launch will make a big splash. Otherwise, diving is a pretty good metaphor for launching new products, because both require preparation, practice, agility, flexibility, and nerves of steel.
Many great products fail due to unforeseen shifts in the market. Whether your product launch is a perfectly executed inward 3 1/2 somersault, or a belly flop, your effective risk management and research will mean that your business sails on, and you’ll be able to apply the lessons successfully to your next high dive.
Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.
Start using Xero for free
Access all Xero features for 30 days, then decide which plan best suits your business.
- Safe and secure
- Cancel any time
- 24/7 online support