Small business: Do the homework on new products
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Small businesses are always looking for ways to innovate and bring new products to market that can help expand their reach and boost sales.
But expansion of any kind in a down economy is risky, so if you're looking to add new products, you need to make sure you're not overextending or undercutting your core brand or resources.
"You want to make sure that whatever you're doing to expand on your core product line doesn't contradict it or hurt it in some way," says Ed Geiselhart, director of product development and planning at Insight Product Development in Chicago.
New product lines, particularly product enhancements, can cannibalize sales of existing products and divert valuable resources into products that may or may not reap any return, he notes.
On the other hand, your existing product line may be past its prime and a product extension may be just what your company needs to boost profits.
In any event, you won't be able to assess whether a new product line makes sense without doing careful market research, notes Ken Morrelly, president of the Long Island Forum for Technology in Bay Shore, which assists local manufacturers in their growth and development.
"You need a good understanding of the market," he explains. "You need to assess your strengths and take a look at cost and viability."
Look at costs associated with all phases of product development and carefully consider how you'll reach your market from "a sales, marketing and distribution standpoint," Morrelly says.
It helps to create a business plan around your product extension to address some of these key points, Geiselhart says.
Start the review process by mapping out your existing product lines and assessing where they are in their life cycle, suggests Beebe Nelson, co-author of "New Product Development for Dummies" (Wiley; $21.99) and director of the International Association for Product Development in Gloucester, Mass.
Carefully consider which product lines have the most potential to be enhanced either by addressing issues like new customer needs or new technologies, she adds.
Also, look at existing products that either service a very "small or hard-to-find audience" and get rid of them, suggests Andrea Feinberg, president of Coaching Insight Llc in Port Jefferson Station.
If you're looking for products to replace them, try tapping existing customers for ideas, Feinberg says. "Talk to your current customers about what their wish list is. Take a look at which product you can develop quickest and for the least amount of money."
Also, talk to vendors about what technologies you should be tapping into.
That's exactly what Pleatco Llc in Glen Cove did, resulting in the successful expansion of its line of pool and spa filters, according to chief operating officer John Antretter.
Its key vendor, Reemay, had licensed a Microban antimicrobial product that inhibits the growth of bacteria on filter cartridges and was looking for a company to make it. Pleatco decided the product would be a good addition to its existing offerings and started manufacturing it in 2008.
The product extension has been successful, says Antretter, noting that the company is experiencing double-digit growth.
"People like to work with a company that's innovative," he says.
Musts for new product success
For a new product to be successful, it must:
- Meet the needs of potential customers.
- Use technology your company has access to or can develop.
- Attract customers by being different from competitors' products.
- Be designed so you can manufacture, package, ship and/or service it.
- Enhance or be consistent with your company's brand image.
- Be promoted by a good marketing campaign.
- Provide a good return on investment.
