Is your market ready for your new product?

New startup leaders focus too much on the product, ignoring or minimizing the rest of the “launch problem” they are about to face.  Of course, a strong and reliable product offering is foundational to any chance of success.  Stories abound of startups flailing as they attempt to fix a tsunami of incoming bug reports from vocal early adopters.  But there is more to a startup launch that must be considered.

A recent post discussed the three types of market situations startups face when releasing a new product.   Depending on situation, a startup might find itself either creating an entirely new market, a new category within a market, or simply revitalizing a market with a unique category extension.  But the other side of this question is often ignored.  Is your market ready for you?  This might appear just a subtle nuance at first, but it’s much deeper.  Your success depends on more than you.   Market readiness depends on external factors that you do not directly control.

The question is:   “Regardless of the type of market you are entering, how ready is your intended market for your offering?”

How ready is your market?

Readiness issues can be grouped into four distinct factors: These are Product Viability, Software Ecosystem, Channel Fit, and Consumer Awareness.   Surely there are others, and some might be lumped with these.   And as a market matures, these factors remain but become more predictable.  These are the big 4.  Have answers and strategies before you launch, or plan for a “redo” upon your launch.

Market readiness #1: Product Viability.

The term achieving Product Market Fit has become popular in the startup world – it aptly describes this situation of product viability.  Even though you’ve obsessed over your product as a team, the market still has not spoken.  You have a product, but will the market accept it? Below is a photo of HP’s first digital camera in 1997. HPPhotoSmartcamera Take a look.  Boxy.  No LCD viewing screen – no review of photos immediately after being shot.  Limited memory.  Low resolution resulting in grainy images when printed (even though that was HP’s motivation for producing this camera.)  I keep this product as to never forget the pain it inflicted – even with much experience our team ignored all the signs and marched into a product disaster.

Why is this?  Two reasons usually emerge: First, new products are built based on “what you think customers want” crossed with all your own biases and motivations.  Often with little customer input, much of which is misleading.  Your perfect product may end up solving a problem few care to address.  In the case of digital cameras, the industry took a surprisingly long time to admit that a user’s primary motivation was to email images – not to print photos!  Turned out they were perfectly happy taking their old silver halide film to Wal-Mart and getting prints for pennies.  Such a miss seems silly in hindsight.  But cameras came out of an industry where prints drove revenue. Second, the organization is naive about their ability in this new market.   The development team is overconfident.  Under Board and financial pressure, senior management ships a product in pre-beta stage. Inevitably, harsh press and user feedback points out the error, but only as inventory gathers on shelves awaiting non-existent orders.

Many really new, new products fail this reason. The product was not ready. You need to achieve “Product Market Fit”.  Finding this balance takes time, and spending on demand generation and inventory before you have it is a waste of money.  It’s good to start by building a reasonable number and make your initial goals around finding that fit, vs. focusing effort trying to make some artificially derived forecast number that does not reflect these fundamental truths about product adoption.

Market readiness #2: Software ecosystem requirements.

Almost all consumer tech products – both hardware and software – now depend on web services to exist.  But this software dependency has been there since the dawn of the PC era.  HP’s printer leadership is not due so much to its printing technology as to its ISV software development efforts.   LaserJet print engines came from Canon, and Epson and others had inkjet technology that still thrives along with HP’s.    But starting very early HP worked tirelessly with software providers on PCL – the HP printer control language.  From humble beginnings, PCL evolved to supporting color photo printing, vector graphics, and extensive page formatting.  Today’s printers combine that with API’s for network management and productivity services. Through winning the printing software ecosystem war, HP become the #1 printer company in the world.

Every startup needs to consider its software dependencies.  Some such as the new NEST learning thermostat have relatively few (at launch).  They produce an app that operates in the well understood Apple and Android ecosystems.  But others such as Google Glass or the new Smart Watches will have success only if they court and develop a software ecosystem.  Same with the new SaaS marketplace offerings.  This takes time and effort.

Market readiness #3: Channel fit.

Many service based products are sold online today, seemingly not dependent on a channel. But with the exception of the true consumer mobile app-only plays, someone is making a sale to end-users.

For hardware and devices, the product still needs to be placed and sold by a physical retailers – Amazon and one’s own site is not enough.  For software services, extensive outreach is required via an inside sales team or a market development group focused on 3rd party affiliates and resellers. Big channel readiness issues include:

Is there a channel?  Is any retailer – speciality, big box, office supply, direct – selling into your targeted market?  For new, new products like Google Glass or VueZone, the answer is most likely no.  The VueZone personal video network had no category – Do-It-Yourself security was never profitable in consumer retailers and was not supported.  WiFi cameras were stocked (if at all) in computer accessories.  Fitbit had no home as a fitness category did not exist in retail when it launched in 2008.  The problem is working itself out – a new category of mobile apps and associated hardware is now forming in retailer.  Products like VueZone and FitBit are finding a home there. But that’s after 4 years of trying!

Is your new category stocked and supported?  For many new hardware products, being a category of one becomes their defining issue.  Once in the store, where will the consumer find your product?  This question of “where to put it” is the thorniest retail issue for nascent categories.  Retailers group products by category to 1) facilitate consumer choice, and 2) to allow pooling of vendor funding activities and dollars to support the entire category.  In-store category fit is found through simple experimentation – try a number of spots and pick one.  That takes time as retailers will not double slot product.  Digital cameras entered a well-known category of taking pictures, but at the time computer retailers did not sell film-based cameras, and most camera outlets did not offer electronics.  Camera vendors working with then emerging electronics retailers such as BestBuy and CircuitCity eventually created a digital camera category in retail.  At one point, BestBuy sold 30% of all digital cameras bought in the US.

Where on Amazon will you sell (or on the Apple App Store)? This is a defining question as most startups assume they’ll easily place and sell through Amazon.  But AMZN does not support single categories like a physical retailer.  And without extensive vendor paid promotion, unknown products fare very poorly.  Users coming to Amazon need to know what they want.  How will you get  found?

Other category specific issues include sales associate training, current category reputation, and retailer category profitability.  Refreshing tired old categories with new technology such as NEST is attempting is almost as hard as creating a new one.  They are targeting home centers such as Home Depot and Lowes.  Regular thermostats sell for $35-$50, make little money and have been around forever.  NEST sells for $249 and requires consumer knowledge of connected technology to be understood as useful.  Putting a few units next to the existing thermostats in some aisle proves useless – no one will find them.  Instead NEST is spending deeply to fund end-of-aisle displays at the front of the stores.

Market readiness #4: Consumer awareness.

Even if you have a product, a channel, and an ecosystem – does anyone know of your new offering?  Startups generally do appreciate the need to generate awareness, but usually wait too long before addressing.  Much is gained by building awareness in at the Design stage of product development.  And the issue is not just awareness.   You will need to bring prospects through an entire purchase process – education on benefit, purchase justification, setup complexities, and use.

Take NEST again.  They faced huge installation issues as consumers find changing out a thermostat to be scary.   Doing so in California is one thing, but quite another during a hard Wisconsin winter!   NEST created very careful installation instructions, and then adjusted the 2nd generation product to simplify installation (initially users had to determine before purchase if their house wiring would be compatible – which entailed removing the old thermostat!)  As with many highly technical consumer products, they set up an installer network for those unwilling to attempt it alone.

Face up to product readiness.

The graphic below compares these 4 market readiness factors across various new products from the past several decades.  They are grouped them by the market situation the faced upon entry (more on that here.)  The market situations and associated products are: New, new products.  No market exists at launch (date launched):

  • Google Glass  The new, new thing.  (2012)  Wearable computing.
  • Vuezone personal video network. (2009)  Home video monitoring on mobile devices.
  • FitBit fitness tracker. (2009)  Personal activity monitor.

New category, but known market:

  • NEST learning thermostat. (2010)  A net-connected smart thermostat that saves energy.
  • HP PaintJet color inkjet printer. (1987)  Color PC printing at a consumer price.
  • HP PhotoSmart digital camera. (1997)  Take photos digitally to get them online.

Category extensions:

  • Big Zoom  digital cameras. (2010)   Big zoom brought down to an affordable price.
  • HP OfficeJet All-in-one printers. (1995)   Printing, scanning, and copying in one integrated bundle.

Fcst_mkt_types

Considering the chart, new market products face nothing but RED; they will fight Readiness issues on all four fronts.  As you move left toward products extending their category, many of these readiness issues are resolved or nearly so.  The issue then becomes one of money to compete with entrenched market leaders!

A rule of thumb found to be generally true: New, new products take 3 generations and 5-7 years to hit the explosive growth stage in the consumer market.  You need to find the target, and the product needs time to come together.  The market needs to own it.  Channels developed.  And an ecosystem put in place.

When thinking about your new product, make sure you consider Market Readiness when predicting success.  You are following in well-trodden steps as you march toward your moment of truth.  The speed bumps and pot holes are known and foreseeable.

Want more on the future of marketing?  Follow me @gilbertdw.

Image courtesy of digitalfreeimages.com

Leave a Reply

Your email address will not be published. Required fields are marked *