The development of a new product is exceptionally challenging. Many people have ideas of what they believe to be a new or revolutionary product that the general public would love to have. They have dreams of this new product hitting the market and people lining up to hand over their money just to have it in their hands. Most of those remain just that, dreams or ideas that never become reality.
The reality of product development is that it is very hard work and truthfully most new products, even if they get to the prototype stage, never make it to market. It takes a great idea, more work than can be imagined, a very thick skin and money, sometimes lots of money, to transform that idea into a tangible product ready to be introduced to the public.
Over the years I have worked with several inventors and idea people who have asked that I evaluated either an idea they have or an actual prototype product that they have produced. It's always interesting work and I marvel at times at the creativity that folks possess. I've seen some great ideas that have gone on to become successful products. I have seen others that have not made it off the drawing board and others that have gone through the entire evaluation process, been taken to market and failed.
Looking back at all of those experiences there seem to be some common threads to those products that have been successful and those that have not. A definition of success may be in order because we may not all see success in just the same way.
For some, success may be coming up with an idea, convincing others of its value, creating a tool room sample or prototype but never taking it further due to a decline in interest, a lack of funds or a lack of courage to put everything on the line to take it further. It may be a subject of conversation for years that starts out something like, “I developed a widget that would have revolutionized the shooting industry but just never took the time to have it produced.” For some that's enough.
For this discussion however, I'll define success as taking a product to market that is accepted, sells in volume, and after all expenses creates a positive cash flow for an extended period of time. That may not be a text book definition but frankly, it's what counts.
What are some of the ways to maximize the potential of a new product idea? What are some of the ways to doom a new product idea? I certainly don't have all the answers but I can discuss some pitfalls and opportunities that I've seen.
Greed is a killer. Several years ago I worked with an inventor who had what on the surface looked like a great idea. He had a prototype and unlike many inventors, he also had the ability to mass produce it economically. He came to me for evaluation.
I spent several hours with him, saw the product produced, worked with a marketing firm he'd hired and personally took his product to both wholesalers and retailers for their feedback. Everyone liked it and all agreed that it had a future. It was simple, it worked and it filled a need. All agreed that at a price certain it would sell.
I found a major national manufacturing company that, after looking at the product and trying it, wanted to purchase the product and market it under their brand name. It was a perfect fit. They did not ask for an exclusive but would purchase thousands, perform all marketing, packaging and sales. The inventor would only need to manufacture the product and sell them the product.
It looked like the perfect situation. Cash flow would begin immediately, a well funded national company would do all the hard work, just deliver the product to them and be paid. Their market research corresponded exactly to all the work I'd done about the retail price. Using the proper margins we established a wholesale price. Then the wheels fell off.
What happened? The inventor decided that he wanted more money. Although his profit margin was excellent and with the volume of sales anticipated, he would immediately become profitable, he demanded more money and we lost the sale. Despite counseling from both the marketing company he'd hired and similar counseling from me, he decided to take the product to market independently. That involved developing packaging, hiring a representative and calling upon those same retailers who had expressed initial interest. While more time consuming and requiring more investment of funds, it could still work.
Looking at the added expenses, the inventor decided that the retail price should be doubled, so that his margin would allow him to cover all of his costs and make more, a lot more, money on each item sold. That was a problem. At the retail price he wanted, no one was interested. Retailers know their business and their customer. They know what the typical consumer will pay and it was just too much. Folks who were enthusiastic about it became very disinterested very quickly. Because the inventor would not relent, it died.
Recently, I discussed this subject with a man who has developed and taken many new products to market in the last 3 decades. Frankly, he provided some insights that all of us need to read. In subsequent articles, I will discuss some of the observations from that conversation.