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Many new products are launched with a preconceived notion that
they will succeed. They come with the intention to skyrocket, a few float and
most sink.
What do you
have for breakfast? If you are a traditional, conservative, die-hard South
Indian like me, you would say, “Idli vada” with a cup of hot “Kappi”. If you
have a slightly western orientation, you might say,” Omelets and toast”. As
Mumbaite, you might say “Vada pav” and if you are from the north, you might
say, “Alu paratha”. And a few (I suspect) might even say breakfast cereals.
Dear reader, I can understand your impatience and almost hear you saying,
“Cut to the chase”. Yes, let me go to the topic which is about launching a
new product. Kellogg’s which was launched several years ago in India ran into
rough weather because people like you and me are habituated to having only
familiar stuff like the dishes listed above. Breakfast cereal was a concept
(perhaps) ahead of its time in India. Concept selling requires time, effort
and investment as Kelloggs discovered and India is just not another pin on
the global map. Another funny thing happened. Mohan’s Cornflakes which had
already been in existence, actually gained market share! What happened?
People bought the concept of breakfast cereals from Kelloggs (after a few
years) but went out and bought the actual bag of cereals from the cheaper
Indian company. This is just one of the many challenges that the marketer is
exposed to while launching new products. Sometimes we underestimate the power
of habits and customs. Take Indian drinking habits for example. Invariably we
drink (as if there is no tomorrow) on an empty stomach. We have dinner just
before the host throws us out. This is in startling contrast to the West
where people drink after dinner. Do you think our drinking habits can be
changed through promotions? Hardly! So the crucial thing in a new product
launch is the understanding of consumers, their life styles, habits and
aspirations.
Now let’s
look at the odds. Sadly enough they are stacked against success. According to
conventional wisdom, eight out of ten new products are failures. Some
(optimistic!) pundits claim that failure runs as high as 94%. That’s a
sobering thought. And yet, why do companies rush headlong into this
minefield? That’s because a successful new product can launch a company into
a different orbit (to borrow a phrase from the late Dhirubhai). Take TVS
Motor Company, formerly TVS Suzuki Ltd. The Indian company recently broke off
its alliance with Suzuki of Japan and the market was wondering about the
future of the Indian company. The bone of contention was the indigenously
developed TVS Victor. The company needed this new product to succeed and
prove a point that Indian design capabilities can hold their own bottom line.
The brand has been a clear winner crossing 100,000 unit sales. Yes,
successful new products can make a phenomenal difference, which is why
companies spend a lot of time and money on them. But the reality is that
Victors are too few and far between. Now, why is that?
Many
products are “me-too”. How many soaps, detergents, toothbrushes and floor
cleaners can you launch? How many variants, pack sizes, flavours and forms
can the consumer handle? The cost of launching a new brand and establishing
the brand name are much higher today than ever before. This is probably why
more and more companies are doing brand extensions, sometimes resulting in
the dilution of the mother brand’s equity. Does the extension add or
subtract? Extensions ideally should add to your brand’s equity. Today,
companies in their anxiety to build and grow market share are proliferating
their brands and eroding equity by launching many line extensions. Several of
which inevitably become failures. So don’t rush in with a “me-too” product,
which leads me to the next question of researching new products.
Research at
every stage is critical. What do consumers feel about your product? And yet,
it’s perhaps important to remember that whilst consumers may give you
insights and some sort of direction, you can’t expect them to tell you about
some revolutionary new product concept. They are customers not soothsayers.
Companies spend millions of rupees on product development, but often enough
research while helping in product refinements may not give dramatically new
direction. And sometimes consumers can give a completely different picture.
One of the biggest marketing fiascos of all time has been the launch and flop
of new Coke. As Pepsi was scoring in “taste tests”, Coke came up with a new
formula. This formula was tested and found superior by 1, 90,000 consumers
who overwhelmingly preferred the new taste of Coke to the old. And yet it was
summarily rejected at the market place when launched. So, research whilst
indicative has to be taken with a pinch of salt.
Still new
products provide dynamism, excitement and sales. Proceed with caution. And
remember there’s a victor lurking behind failure.
The author is CEO brand-comm a Brand Consulting, Advertising
and Public Relations firm. Feedback can be mailed to brandcomm@vsnl.com
From :- Jueeli Kale
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"Me Too..."narrated by Ramanujam Sridhar
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