new product development
How to reduce commercial risks by understanding your markets and customers better
Whether your company is entering a new market or launching a new product, or even pursuing both of these strategies at the same time, there is some level of risk attached to your investment. However, it is a necessary risk that needs to be continuously taken. If you're not always on the lookout for the opportunity to develop both new and existing markets and customers, then you can bet your last pound that your competitors are.
Best practice suggests that good managers address the risk issue by undertaking objective market research to assess the future demand of their product in the market. It is also vital to understand the main barriers to the uptake of your product and which levers you need to pull to build awareness and then maximise sales. We consistently find that companies underestimate the time it takes to do this, especially in the construction industry where the supply chain is often so long and the decision making so complex.
Ideally you need a development brief for entry into a 'new' market. This should include a revenue forecast, competitor analysis, market penetration strategy and tactical plans for market launch and beyond. Only then can you say your investment plans are underpinned by the best objective advice you can get. There is no reason to be exposed to risk and loss of revenue through a lack of understanding of the market.
At Leading Edge we have the tools and experience necessary to produce an informed development brief, and we have helped a number of companies reduce the level of risk on their investment decisions.
Planning the launch of a new product into the construction market
To achieve the fastest return on a new product investment, a specialist company needed to bring the technology to market as soon as possible. To achieve this, the company needed to fully scope the market, including the competitors, and to identify the most attractive opportunities for growth within the different sectors of the construction market.
In order to ensure they set the price of the new product at the right level, the potential market demand and value for the new technology needed to be estimated. A detailed look at the current UK build programme was identified as an important part of this approach.
Based on planning data, Leading Edge identified the types of projects where the technology had the best chance of being specified. Using a carefully customised questionnaire, we then spoke to 62 members of the construction supply chain who worked on projects in the key sectors.
The questionnaire was specifically designed to establish respondents' attitudes and awareness towards the new technology, and the price they would be willing to pay for it over a traditional solution. We also spoke with a number of industry experts to gain their thoughts on the future market potential for the new technology, the success so far of competitors' products, and to gain an appreciation of the main barriers to entry into the market.
Once all the data was analysed, we then provided a detailed plan for the potential best and worst case market sales over the next 5 years. This forecast was based on the current uptake rate of the technology, the UK build programme and the respondents' current awareness and attitude towards the use of the technology. We gave the company insights into how to maximise their profit by providing information on the sales that the company could potentially achieve by setting the price at different levels. A full competitor analysis revealed no direct competitors offering the same product.
The research has provided the company with the information it needed to complete its strategic marketing plan. It has also given a robust overview of the potential pricing strategies and the expected revenue and profit levels for each. This was supported with findings on what potential customers' attitudes are, as well as insights into the best way of utilising their resources to grow market demand for the new technology through their marketing communications plan.
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