New products and old? – How to balance profits
As any business, small or large, grows there comes a point when there is a decision to be made to add new products or services.
This is a crucial point in a company’s growth and development and one that needs considerable thought, planning and research.
Where the proper research and planning has been bypassed by “gut feeling”. Or “it looks like a good idea”. The chances of a successful introduction and a growth in the company are unlikely.
Before embarking on new product introduction, key questions need to be asked.
These generally fall into two groups, the Marketing and Finance:
- Is the new product a replacement of the old or does it add to the range?
- Will the new product compete with the old and take sales and customers away? Or will it expand the sales and customer base?
- Has the new product the potential to take over as the company’s lead product with regard to sales, customers and contributions?
- How much of the company’s financial and personnel resources will the new product need to use?
- Will the company need to look for more financial investment? And/or additional personnel?
- What is the potential financial contribution on the new product?
- When is the break-even point for the new product?
When these questions, and they are not exhaustive, are answered in full you will have a good idea of the direction you should be going with the new introduction.
If a new product or service is introduced it has to have the objective and the potential to do better than the existing line and to add to the company in financial terms, reputation and confidence. It should not have an adverse effect of the existing product. Unless it is a direct replacement.
By having a variety of successful products available, the customer will see the company as one that is innovative, responsive and a good partner. In the long term this can only benefit you and the company.
Remember any new introduction reflects on the company as a whole. It gives an indication of the competency of the management. The stability of the company and the future direction of the whole organisation.
If you would like to learn more about the process of challenge and question please contact us.