Fall 2007: by Brent Banda

Timing a Product Launch

When is the right time to begin selling a new product? Do you want to jump into the market right away or wait and learn from your competitors' mistakes? Like most decisions in business, there is no right answer. You'll have to make a judgment call. The following factors commonly have an impact when a product is launched.

Like most decisions in business, there is no right answer. You'll have to make a judgment call.

Financial Resources
Marketing decisions need to be tied to the company's overall financial management. Do you have the cash to support your launch plan? An early launch often requires a slow burn of cash, because it takes many months or years for customers to adopt your product. You just have to wait it out. A late product launch usually means sales will ramp up more quickly, but you'll have higher immediate launch costs as you must deal with a crowded marketplace. Both strategies can work, but timing of cash is different for each scenario.

Tolerance for Risk
Is your company willing to make mistakes? Some companies are not, and they hate dealing with the unknown. Large multinationals are notorious for this. Most of their new product concepts are poached from independent manufacturers. The concept is reworked and launched on a grand scale, usually with several revisions and improvements that genuinely appeal to a broader customer base. However, early-to-market companies with a great new idea can still generate profit quickly; they just have less certainty that customers will want to buy their product.

Receptive Customers
Customers must be ready to buy your product. Are people aware that they have a problem? If not, you must first educate people on the fact that they have a problem to solve before you begin selling your solution. Customer education can require a long and expensive advertising campaign and a complex sales process. A later launch will avoid these upfront costs.

A Fragmented Market
In some industries, the market quickly becomes crowded with competitors and all are fighting for a foothold. In this situation, the market is highly fragmented and no one company is dominant. Eventually consolidation will occur as successful companies begin to buy competitors and poor performers drop from the market. The key is to either hold onto a niche or be the company with the broad appeal that can become the recognized brand in the industry. It is difficult to enter a crowded market late because you're just another competitor in the pack.

Mistakes Confuse Customers
Companies that sell mature products in mature markets have worked out the kinks in their marketing strategy. For example, they know how many units they'll sell next quarter and can set pricing appropriately. The same companies make mistakes when launching products. A manufacturer may sell through a retailer that has no appeal to their target customer. Prices are often too high or too low. Product quality or value may range wildly between competitors. Any number of problems emerge, and customers are easily confused. The company that works out the kinks quickly is bound to offer the most logical 'experience' to their customer, and this product will eventually surge ahead of the competition. Being early to market will help you gain this experience quickly.

Broader Acceptance
How much time is required until the mass market is ready for your product? Most new products sell well into a small segment at first, but require broader acceptance for the product to be profitable. Customers are finicky. Your corporate profitability and entire launch effort may be derailed if a broader market is slow in adopting your new technology. A later launch is likely to lead more quickly into a broader market appeal.

Much of strategic marketing comes down to judgment. Timing a product launch is no different. You need a deep understanding of how customers will view your technology and how your competitors will approach the situation. But you also need a good understanding of your own capabilities and resources. Business is a chess game, and it is important to consider all the factors when making a move.

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