December 2023 | New Product Research

6 Guidelines For New Product Success

How many new products are introduced in the U.S. each year? The number is in the tens of thousands, especially when you count line extensions and other new SKUs. With such a flood of new products each year, from small and large companies alike, it’s easy to understand why so many fail (over 90% by some estimates).

Decision Analyst has been deeply involved in new product research for decades. Here are six things we’ve learned about developing successful new products. These are especially true for large companies with big budgets, but many of the principles apply to more modest innovation efforts, too.

1. Exploratory Research
   Start by reviewing market and industry trends, existing marketing research data, and new product development activity within the target product category. Look carefully at smaller companies that have introduced new products in the target category. Smaller companies often develop innovative new products but lack the marketing muscle to successfully introduce them. As a large firm, you might be able to buy some of these new products from small companies at pennies on the dollar. In addition, market segmentation data, if available, can often serve as a good guide for new product development. Exploratory qualitative research among target-market consumers (especially heavy users) can also identify the needs, perceptions, motives, wishes, aspirations, and problems consumers have. All of this information can serve as starting points and springboards for ideation.
2. Top-Notch Ideation Process
   The more new product ideas you create, the greater the chances that some of them will succeed in the marketplace. The goal of ideation, then, is to generate as many unique ideas as possible. A robust ideation process would include ideas from employees, from consumers, from AI systems, and, lastly, from extraordinarily creative individuals. It’s best to use outside experts to guide the ideation process. Outside consultants won’t be encumbered by corporate politics, corporate biases, or corporate folklore. The outside experts can lead the ideation processes and help assemble all of the ideas and idea fragments into rough or early-stage new product concepts, ready to review.
3. Good Vetting Protocols
   The next step in the process is screening and testing these hundreds of new product ideas. Typically, the first level of screening is based on human judgment. The company and its new products consultants scan through the hundreds of ideas and choose those that best meet the new product objectives. This human screening might reduce the number of new product ideas from hundreds down to 50 or so. This is the point at which target consumers must be brought into the process. First, screening surveys can identify early-stage concepts with the greatest potential. These winners at the screening stage often go through small-scale qualitative research to fine-tune and improve them. The final stage is testing the fully fleshed-out new product concepts among target market consumers. Often, if budgets permit, the sales volume potential of each new product concept is estimated. The estimated sales volume potential (also known as volumetric forecasting) should be the ultimate determinant of which concepts move forward, and which are scuttled.
4. Product Quality Focus
   When scientists or engineers go to work developing a product, a variety of ingredients, components, and processes come together to form the new creation. It’s vital to test early prototypes and the final formulation or design to ensure that the new product is equal to or better than competitive products in the judgment of target consumers. If it’s not, test and tweak and retest until it is. The product testing should take place in the environment in which the product is typically used. For many consumer products that environment is the home.
   
   In-home usage testing (also known as iHUT) is the recommended method. Typically, consumers are asked to use the product in their homes for one or two weeks (or at least a couple of regular usage cycles), and then fill out a questionnaire that measures their reactions to the new product. If the new product is truly outstanding, the chances of in-market success are greatly improved. Repeat purchase rates will be higher and you will be able to charge a higher price if the product is truly superior to competitive products. Product testing should not stop once the product is launched. Periodic quality-assurance testing is essential. Of course, there are protocols and quality assurance processes for testing what comes off the assembly line, but it’s important to also conduct independent consumer tests with products that have made their way from factory to warehouse to retail store. Assessing the quality of products purchased from retail shelves is the best way to ensure new products continue to outperform competitive products
5. Effective Marketing
   Rarely do products sell themselves, so good marketing is a must. Everything from the package design to the pricing and distribution strategies should be carefully researched and optimized to give the new product a fighting chance. Advertising to support the launch should be aimed at generating trial. As the product gains traction, brand-building messages should be dialed up. Copy testing programs are very helpful to ensure the right positionings and messages are featured in creative at every stage. All of this support should be well funded and carried out to ensure that sales continue to build. Launching a product without adequate marketing support is a huge gamble no matter the category.
6. Strong Trade Story
   Building a strong case for your new product with buyers and other gatekeepers in distribution channels is key. In meeting with retail buyers, for example, the sales force needs to be able to demonstrate that shoppers want the product (another way to use the results of in-home usage testing). Selling the marketing plan to the trade is also important so then the trade will support the new product with good distribution and shelf placement.

In Conclusion

An organization’s ability to survive today is often defined by its capacity to listen to its consumers and to innovate. Companies must continuously adapt to changing markets, changing technologies, and changing consumer habits and preferences. Successful new products don’t just happen. They require relentless effort and consistent hard work.

Jerry W. Thomas

CEO

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Bonnie Janzen

President

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Felicia Rogers

Corporate Executive Vice President

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Elizabeth Horn, Ph.D.

SVP, Advanced Analytics

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Clay Dethloff

SVP, Qualitative Research & Innovation

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