When a small business launches a new product, it can be a hit and miss affair. The product could gain traction in the market and generate a new revenue stream for the company. There could be a jump in profits, and the company could gain the confidence to expand operations and venture into new geographies.
But if things don’t pan out, it could lead to a drain on the firm’s resources and be a waste of time for its people. If the company has spent years developing the product and invested a large sum on the project, the failure could be especially painful.
How often do new products fail? According to Harvard Business School professor Clayton Christensen, each year sees the launch of 30,000 new consumer products. Of these, 95% fail. That’s a depressing statistic, but it’s important to go into the reasons for this percentage.
Why does a new product fail?
Unsuccessful new product launches can fall into several categories:
- Incorrect design: A company may focus on giving its new product some features that the customer doesn’t want or is not interested in. These could push its price up without providing a corresponding benefit to the buyer. Why would a customer pay for an attribute that she doesn’t need?
In 2013, Google launched Google Glass. This was a combination of a pair of eyeglasses and a computer. The device could record videos, make calls, and even run apps.
But at $1,500 there were few buyers. The product, which was targeted at consumers, was discontinued in 2015. Recently, the company has introduced Google Glass Enterprise Edition 2, but this model is specifically for business clients.
- Getting the marketing strategy wrong: At times, companies can be unbelievably insensitive when devising their advertising campaigns. Even giant corporations can slip up and communicate an inappropriate brand message.
Last year, beer giant Heineken created a 30-second ad that had a bartender passing a beer to a light-skinned woman after ignoring three black customers. The slogan for the advertisement? “Sometimes, lighter is better.”
Predictably, the company pulled its racist ad within a few days.
- Creating a me-too product: A business may launch a product to catch up with the competition. While that’s perfectly all right, it can’t be the only reason to create something new. If a firm doesn’t offer its customers new features or some other inducement, it’s likely to meet with failure.
Does anybody remember the Zune? Microsoft’s answer to the iPod was a flop because it was merely trying to copy Apple’s lead. The former head of Microsoft’s home entertainment and mobile business, Robbie Bach, later admitted that the Zune was “too little, too late.”
- Selling a product that nobody wants: A product should meet a customer’s needs. It should provide a solution to a problem. However, if the product is merely an invention that is of little use to consumers, it will not sell.
The Segway, a two-wheeled, self-balancing vehicle, is the perfect example in this category of failures. When it was launched, there was tremendous hype around it. The media hailed it as the next big thing.
But the Segway soon fizzled out. Why? The manufacturers hadn’t thought about how it would be used. Customers wondered whether they should drive it on the road or the pavement. In some countries, the vehicle didn’t meet regulatory requirements, as it was neither a motorcycle or a car.
A new product’s failure can be attributed to any one of dozens of reasons. It’s difficult for companies to anticipate and avoid them all.
So, what should entrepreneurs do? How can they improve their chances of launching a successful product in the market?
Agile marketing could offer a solution
Agile started as a method for making the development of software more efficient. This new way of working on complex projects was introduced several decades ago when it was seen that software developers were often unable to meet the requirements specified by their project managers.
One of the founders of the Agile movement, Jeff Sutherland, teamed up with several other software practitioners to create an Agile Manifesto for Software Development. This is the Manifesto’s core message:
Manifesto for Agile Software Development
A careful reading of the Manifesto reveals that its message could also apply to marketing. Here’s how the principles of Agile could apply to developing and launching a new product.
The first, and possibly the most crucial rule that businesses need to follow, is that they must learn to adapt to changes as they occur.
The traditional way to develop a product and take it to market involves the “waterfall approach.” In this method, one activity follows the other. Individual departments work in silos. There is little exchange of information between them. Typically, a new product could be introduced in the following manner:
Stage 1: Deciding to launch a new product.
Stage 2: Considering various alternatives and narrowing down the choice to one or more.
Stage 3: Designing the product.
Stage 4: Testing it in the market.
Stage 5: Making changes to the product if they are needed.
Stage 6: Launching the product.
The key feature of the waterfall approach is that it follows a linear model. One stage leads to the other. There is an element of rigidity and structure to the entire exercise.
The Agile process is very different. It is less hierarchical and more outward-looking.
The Agile methodology involves team members focusing on customers and their needs, with speed being given top priority. It isn’t necessary to develop a perfect product. Instead, the organization tries to get the product to market as soon as possible so that customer feedback can be obtained. This is used to tweak the product.
Agile marketing is also characterized by teamwork, collaboration with other departments, and speeding up the learning cycle. Adaptability plays a critical role in ensuring that the marketing effort succeeds.
An Agile marketing playbook for small businesses
Most small firms can derive tremendous benefits from using Agile techniques when launching a new product.
The first step involves putting together an Agile team: Remember that the success of the Agile marketing project depends upon the composition of the team. An organization should select individuals who work well with others. Loners and poor communicators usually aren’t a good choice.
The team should have members from different departments of the organization. A cross-functional team ensures that there is sufficient bandwidth to understand the relevant issues as well as devise and implement solutions.
There are two other essential requirements that must be addressed. One, the team should have a clear objective. What are they working towards? Does everybody understand the goal? Secondly, the team must be customer-centric.
Another aspect that needs attention is team size.
If the Agile team is too small, it could have difficulty in gaining buy-in for its ideas across the organization. On the other hand, too large a team comes with its disadvantages. The problems with bloated teams include a lack of ownership and the danger that sub-teams would form.
For most projects, a team size of ten, preferably less, is ideal. Jeff Sutherland thinks that the best size is four to five people. If the number of members exceeds ten, it may be a good idea to split it the team.
Setting goals: The importance of establishing a clear and well-defined goal cannot be overemphasized.
Consider the “working backwards” process that Amazon follows when developing new products. According to Ian McAllister, Director, Amazon Day at Amazon, the practice at Amazon is to issue an internal press release for the launch of a new product before product development work starts. Why would they do that?
McAllister explains that it’s a lot easier to change a press release than a product.
The press release describes the product in non-technical language, explains the problem the product is going to solve, and how it is going to provide the solution. There’s another key feature that the press release includes. It has a quote from an imaginary customer describing how the product was useful.
This approach reportedly helped Amazon develop its virtual assistant, Alexa. Over 100 million devices with Alexa pre-installed in them have been sold.
The “working backwards” approach can definitely help when goals are being set. There are also several other things that should be kept in mind at the goal-setting stage:
- The goals should be aligned with the company’s overall strategy.
- They should be customer-centric.
- They should take market realities and competition into account.
- Every team member should be aware of the goals.
Measuring success: What is the best way to ascertain whether the Agile marketing efforts that have been implemented are yielding the desired results? It’s necessary to measure the progress that is being made against the goals that have been set.
Analyze the data that is collected and use it to identify problems and opportunities. The analysis could include things like product quality, on-time delivery, complaint resolution, and customer satisfaction.
At this stage, the data and feedback that is collected could be used to improve product features.
Why small businesses should adopt Agile marketing
Small firms can derive immense benefits by adopting Agile methods.
One of the most significant advantages of this approach is that it allows for the conservation of scarce resources. Companies don’t spend an excessive amount of time developing a product before taking it to market. Instead, they test what they have developed with customers, gather feedback, and release a new version of the product.
Small businesses that use Agile methods make extensive use of the concept of “minimum viable product.” This is a technique that allows the Agile team within the company to collect information on their product before it is fully developed. Customer feedback is sought even before the product reaches its final form.
How does this help? It enables a company to understand whether customers are interested in the product they are making. Does it meet their needs? What can be done to make it appeal to the target market?
No company wants to be in a situation where it takes months or even years developing a flawless product that nobody wants.
A second benefit that Agile offers is that it gets people within the company talking to each other. Cross-functional Agile teams help to foster trust and cooperation. Communication is faster, and the different departments within the organization don’t work in individual silos.
The positive effects that the Agile team generates soon percolate to other parts of the firm. People within the company no longer wonder what employees in other departments are doing. The spirit of working together towards a common goal reduces information hoarding and lessens distrust between different functions.
Another advantage that Agile teams bring with them is that they help the company change gears quickly. The data-driven approach ensures that non-productive initiatives are identified and scrapped. Resources are diverted to those activities that are producing the desired results.
|Santander Bank has extensive operations in the United States. The bank and its associate companies provide auto finance loans and are also active in consumer lending. Santander discovered that its traditional marketing cycle with its agencies was slowing it down. The lender was unable to respond to prospective clients quickly enough. To tackle this problem, Santander decided to adopt an Agile approach. They switched over to multiple small-budget campaigns. Additional resources were allocated to those that did well. Those that didn’t were scrapped. These changes resulted in customer loyalty increasing by 12%. An experiment that combined internal data with Facebook provided “staggering results” to the organization.|
The bottom line
Small business owners can benefit by adopting the principles of Agile. However, some firms are reluctant to make this change. They think that if certain practices have worked well in the past, they shouldn’t be changed.
But there’s always scope for improvement. Agile teams, low-budget campaigns, and the diversion of resources to successful initiatives have a lot to offer to every firm. Adopting these methods could help take a small business to the next level.