Did you know that 80% of new products fail within their first year? Launching a new product is a high-stakes game, but with the right retail strategy, you can significantly tilt the odds in your favor.
In this article, you'll explore the essence of introducing new products and what it means for your business. You'll closely examine the process, from the decision to the new product launch, uncovering the key stages and strategies defining successful product entries.
Let's also discover the art of pricing new products, which implies finding the right balance of price perception, consumer value, and market dynamics. You will see how cutting-edge pricing technologies offer retailers powerful tools to navigate uncertainties and maximize the potential of new entries. Ready to turn your product launch into a roaring success? Let's dive in.
What does product launching mean?
Introducing a new product in the retail industry implies launching and integrating a new SKU into an existing product line or portfolio. It involves a series of strategic decisions and actions aimed at successfully bringing the product to market, creating awareness among the shoppers, and eventually driving sales and increasing competitiveness.
The process begins with identifying a market opportunity or particular consumer needs the new product aims to address. Once you've identified the market need, you can conceptualize and develop the product under your private label or explore the vendor market offerings. T
Factors like design, product features, potential pricing segments, and market positioning are worth considering. The initial phase also often involves extensive market research, prototyping, and testing to ensure the new SKU meets consumer expectations and fits within your product release strategy and overall market positioning.
Once the new product is ready for launch, ensure you have a marketing and promotional plan to generate buzz and attract customers. The latter may include advertising campaigns, in-store promotions, and digital marketing efforts to reach target audiences. Consider the marketing perspective in new product development to create excitement and anticipation around the new product launch.
How to introduce a new product
Introducing a new product in retail requires a well-thought-out strategy, determination, and focus during every stage preceding the launch. Here's a step-by-step guide to help you navigate the process:
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Market research. As mentioned above, you should develop a thorough product release strategy to identify consumer needs, preferences, and trends that align with your new product. Make sure you leverage the potential of Big Data in market research and product development. Here is a fact: more than 90% of businesses are receiving returns on their AI and data investments. Simply put, the data pays off.
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Product development. Design and develop your product or find an existing one on the market, keeping in mind quality, functionality, and uniqueness to stand out among the competitors.
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Pricing strategy. Determine a sustainable pricing strategy based on research and development costs, competitor pricing, the perceived value of a new product, and other pricing and non-pricing factors.
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Distribution planning. McKinsey considers 'excellence in strategy and planning’ to be one of the three key factors underlying the success of launch champions. Make sure that while planning you consider the best distribution channels to reach your target audience, whether through offline stores, online platforms, or both.
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Marketing and promotion. An effective launch strategy for a product requires comprehensive new product development in marketing, including advertising, promotions, and PR efforts to build anticipation and awareness around a new SKU.
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Product launch event. Organizing a launch event or campaign to introduce your product to the public can generate interest and drive initial sales. Just look at Apple: their product launch events have made a genuine revolution in marketing new products. The release of iPhone 15 is a perfect example of how a launch event can result in an immediate sales surge. It is definitely worth a try if you present a premium segment product.
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Feedback and iteration. Make sure to plan the post-launch routing, which involves gathering feedback from customers and making necessary changes to product positioning or pricing.
What can you bring to the market?
When introducing a new product to the market, it's crucial to consider what unique value you can offer consumers. You can identify what sets your product apart from competitors and why customers should choose it over existing options. It could be a unique feature, a smarter price, or a better overall user experience.
However, even if you develop a unique value proposition, you must go the extra mile to win customers' hearts with a new release product. Here are a few unconventional tips that create the extra buzz that your new entry deserves:
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Leverage influencer partnerships. The global influencer marketing market is expected to reach the point of $24 billion this year. Consider collaborating with social media influencers or industry experts to become brand ambassadors that will generate excitement around your new product. Such endorsement can significantly impact consumer perception and drive sales.
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Create limited editions. Did you know that more than 60% of purchases are driven by FOMO? And limited offerings are one of the best tactics to capitalize on FOMO. You can also offer limited edition versions of your product to create exclusivity and boost consumer interest. It can increase demand, especially if you work in the premium or luxury segment.
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Utilize gamification. Incorporate gamification elements into your new product launch or marketing strategy to engage customers and create a more interactive and enjoyable experience. This point is especially relevant for the consumer electronics segment targeting young people.
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Offer customization. 80% of consumers think personalized product recommendations are “cool”. Allow customers to customize their purchases by adding extra services, like custom packing or advanced delivery options.
Implementing one or a combination of these tips can significantly increase the chances of introducing the new product successfully and ultimately drive profitability.
A smart way to price new products
Here is a fact: pricing serves as a critical communication interface between retailers and shoppers. It means that pricing wisely is essential when introducing a new product. Please do so to ensure your store's price perception is maintained.
Common pitfalls in new-release product pricing include:
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Relying on misleading reference prices.
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Making decisions based on intuition rather than data.
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Lacking relevant historical sales data.
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Misunderstanding consumer behavior.
It would help if you relied on a sustainable approach to establish an optimal initial price. This involves two key factors: creating an evidence-based consumer decision tree and accurately selecting similar products from past or current sales history.
While constructing the decision tree requires direct engagement with shoppers through polls and questionnaires, AI-driven pricing software, like Competera, can be used to identify the most similar products. Once the algorithms identify these similar products, the software analyzes historical prices, turnover rates, demand elasticity, and other factors to recommend an optimal initial cost for the new entry.
So, you want to keep customers satisfied and drive successful product launches. In that case, your pricing decisions and overall product release strategy should be based on accurate consumer insights and intelligent algorithms.
