New Products and the Race for Revenue
By Bill Warner
What’s that? You say you’ve got a new product that will set the world on fire?
That’s great, but it’s just the beginning of the story. In order to succeed, you have to make buyers aware that your product solves an important problem they have. You have to structure appropriate marketing campaigns that raise buyer awareness of your product’s value and availability. You have to make all the sales partners who sit between you and the buyer aware of this, too.
Welcome to the race for revenue.
- How Does the Buyer Buy?
Surprisingly, many companies don’t know how the people who buy from them actually go about doing so. Advertising agencies and research firms get rich figuring this stuff out. The best way (and a lot cheaper!) is to ask buyers yourself. Approach representative buyers and ask:
- Who do you buy from?
- Where do you learn about new products?
- What are your payment requirements?
- What incentives are offered?
- What are the terms and conditions of purchase?
- Is credit required?
- What are the price ranges?
- How is the product delivered?
There will likely be many more questions, depending on the market segment and product. The idea is to thoroughly understand what factors influence the buyer’s final decision.
Who Does the Buyer’s Seller Buy From?
A food chain of buyers and sellers extends from your back door all the way to the consumer of your product. This food chain consists of:
- Manufacturers representatives
- Valued added resellers
As with the ultimate consumer, you have to understand how each point in the food chain affects your business. Remember, these are buyers too. Ask them:
- What discounts are expected?
- What value-add do you provide?
- What incentives have to be offered?
- What are the training requirements and costs?
- How exactly do goods flow through these channels?
This kind of research helps prevent unpleasant surprises later on. It may be time-consuming, but a comprehensive understanding of the distribution channel can avert costly mistakes when you’re trying to profit from all your hard work.
What’s Your Value Proposition(s)?
You probably think one value proposition per new product is enough. Wrong! What’s exciting to the consumer may not mean much to the wholesaler, and so on. Your message has to be customized for every point along the food chain.
For example, a distributor wants to know what kind of discount to expect and how quickly they can move the product. Value to them is defined in speed of product acceptance and the sales support you’re willing to provide (training, marketing campaigns, new product support line). Make it attractive to them and something they want to be part of.
Intel and others call this “feeding the ecosystem.” Think of the distribution channel as an ecosystem of organisms living in harmony because they complement each other with what they need in order to survive. In the business world, the creation of win-win relationships means all players live in economic harmony.
Marketing Push and Pull
Now that you’ve figured out the various value propositions and fully understand the intricacies of the distribution channels, it’s time to put things in motion. Your new product needs a launch campaign to raise public awareness. This calls for press releases, industry consultant briefings, early customer testimonials, reference accounts, announcement events and customer road show seminars. These activities serve as the starting gun for the race for revenue.
Marketing campaigns create awareness of your product among all the various buyers. This can take the form one or more of the following:
- A Web site with a call to action
- A telemarketing campaign
- Mail or e-mail campaigns
- Publicity in trade magazines
You want all the players in the food chain aware of and excited about your new product. This means making sales calls on wholesalers, integrators, distributors and other channel partners, so that their awareness is equal to that of the ultimate consumer. These channel partners have to see the product, receive training and gather an inventory on hand – all before the launch takes place. Timing is critical.
Feeding the ecosystem
You probably don’t own any part of the distribution channel, but you do have to structure relationships in a way that all the participants make money. Success factors include:
- Consistent discounts (avoid channel conflict)
- Competitive pricing
- Good return for value added
- Sufficient sales and support
- On time delivery
- Consistent product availability
As a business owner intent on launching a new product, you’re taking on the monumental task of ensuring that the entire food chain is “well-fed.” If you do it right, you’ll win the race to revenue.
Bill Warner is managing partner of Paladin and Associates, based in Wake Forest, North Carolina.