by Dave Wendland, CommunityVoice for Forbes Agency Council, as appeared on Forbes.com August 11, 2017
There was a time when a product’s success was measured by its ability to reach market saturation in record time – and for retail, that meant broad, ubiquitous distribution. My, how times have changed, thanks partly to the internet and the tremendous ability to target specific interest groups or sub-groups that can offer a fertile proving ground for a product concept. In more traditional brick-and-mortar retail settings, personalization and localization have also emerged to facilitate segmentation, clustering and laser-targeted launches.
It is this new “test-and-learn” mentality that is fueling innovation. Not only does it enable manufacturers to complete a market test more easily than previously, but brand developers can also establish short-term microcosm groups to test concepts and provide feedback so they can adjust and relaunch. This approach to bringing a concept to reality certainly mitigates much of the upfront risk of a far-reaching launch, while creating a collaborative effort between supplier and customer that fuels better communication, shared goals and improved results.
Most of the projects we work on at Hamacher Resource Group reach across the retail supply chain and revolve around brand development, product assortment planning and placement, and retail execution strategy. We work with Fortune 500 companies and startups and have learned valuable lessons that can be applied to any organization involved in developing a new product, process or service.
Listed below are four steps to a successful test-and-learn launch pad for new products.
Step 1: Market Identification
Who your product or service was developed for is a vitally important part of any successful strategy. For the manufacturer, understanding and narrowly defining the intended audience or user needs to be precise. Long gone are the days where a manufacturer can say with sincerity, “everyone needs this widget.” Working collaboratively with retailers, manufacturers must align targeted audiences with available data or user profiles, along with an honest appraisal and open dialogue about the right fit.
Step 2: Performance Thresholds
Defining the “what” is the next crucial step in the test-and-learn process. For a service, it may be the number of “interactions” or “experiences” with the service. Process changes can be evaluated based on productivity improvements (time, cost, resources) or improved service levels. Traditional consumer packaged goods (CPG) launches are most often evaluated based on a rate of sale, consumer satisfaction, category growth or other profitability factors.
Step 3: Product Deployment
Taking the necessary time to plan how to deploy the test-and-learn exercise can make or break a full-scale launch. The most successful efforts follow a project planning process that thoughtfully considers all “controllable” aspects of the deployment. For CPG deployments, elements should include raw material sourcing and manufacturing, regulatory review (where applicable), retail alignment, packaging, messaging and transportation logistics, to name a few.
Step 4: Rollout Strategy
Finally, presuming the test produced desired results, plans should be made to address when to scale the product or service to broader markets. On the other hand, if the performance of the test is lackluster and falls short of expected thresholds, manufacturers and sponsors must be willing to evaluate the failure, adjust if possible, and test again. If a retest is not feasible, then the long-term financial or inventory implications from the test-and-learn have been contained and the project should simply be deemed a learning experience.
Although I’m a proponent of the test-and-learn approach, it is not without risk or expense. The concerns to be aware of include: ignoring market feedback and making the necessary adjustments before full deployment; elongating the process and allowing a competitor to get to market more quickly to fill the need; and negative market reaction because of the slow, deliberate approach to launch – especially for an unestablished brand.
Whether following a purposeful test-and-learn process or entering the market with an all-out splash, keep innovating. New product introductions remain the lifeblood of any industry.