Tuesday, September 02, 2003

Relaunching Failed Technical Products
The reason for product failure are many: bad management, wrong choice of features, poor sales strategy, bad distribution, competitive actions, mispricing, poor marketing and messaging, inappropriate segmentation - the list goes on.

But practical experience and empirical measurement give some guidelines on what you can do to relaunch a failed product.

First, the empirical data: the data on new product launches is very clear.

- The single largest predictor of new product success is offering a high value and differentiated product/service offering. Companies in the top 20% on this rating have a 25X better economic performance than companies in the bottom 20% i.e. those offering undifferentiated me-too products.

- The major cause of new product failure is doing inadequate or no market research.

The two issues are connected. Value varies by segment, so if you have not done market research, you may well be pitching the wrong benefits or you may be pitching benefits that are only appropriate to one segment, while your overall marketing message is too dispersed across multiple segments.

Second, if your product is technical, it is extremely likely that you are spending way too much on the technical side of your features, and are not doing enough to put yourself in the shoes of the customers.

Third, if you are selling a product that you have developed, you probably have a bad case of NIH (Not Invented Here) Syndrome. Customers are profoundly indifferent to the source of R&D. They want superior value, so if you have limited resources, your likely first step, once you have established what value means to customer segments is to figure our how you can immediately increase your value proposition. Often this means:

- introducing a service element into your product mix
- licensing and incorporating third party technology and services
- identifying business ecosystems that you can become part of (i.e. becoming more compatible with standards)
- changing your pricing model
- altering the risk of doing business with your organization
- doing usability testing and user interaction design to improve the performance of the product for target users.

Fourth, if you really don't have a clear idea of which segment will buy your relaunched products, maybe it would be a good idea to put yourself in the shoes of the customer. Go live with your customer and observe them in the wild. How do they live? How do they talk about their problems? What triggers decision in their organizations?

Fifth, if you have a big product with a long development cycle and the product is incomplete (and inevitably you don't have the money to finish it), sell a service. Make up for your product imperfections with human beings. It may not be the business model you originally envisioned, but get revenues and interact with customes.

Sixth, consider the heretical. Stop developing your failed product. License a third party product. Sell it. Learn more about customers. Launch new versions based upon what you learn by servicing customers.

I will write more on this topic in a later blog.

Alistair Davidson

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