Life science tools companies are under increasing pressure to reduce time-to-market and the cost of introducing new products. As product lifecycles continue to decrease, compressing development cycles and accelerating new product introductions are becoming critical. Companies that fail to consistently launch new products will lose ground to more innovative competitors who invest in new and improved solutions to advance their customers’ research. But new products alone are not enough – they need to be successful new products.
BioInformatics LLC has created a free guide to using market research to reduce the risk of product failure and maximize your chance of a successful launch. This 64 slide presentation is available for instant download at our website.
Numerous studies have show that the odds of new product becoming a commercial success are fairly low and failure can occur for many reasons. A product can fail because it’s poorly designed or manufactured. It can fail due to ineffective marketing. Or, it may just be too early or too late to market.
In our experience, however, many new products fail because there was simply a lack of understanding of what the market and customers need. Too many times, we’ve been brought in by companies where someone came up with an idea, they put together an ad hoc team, and 12 months and hundreds of thousands of dollars later they’re right back where they started. Now management wants to know should they keep pressing forward or kill it. Without denigrating the people who come up with great ideas, the notion that any single person’s judgment about what could be a winning new product—versus having firm criteria to determine what the marketplace wants—doesn’t make a lot of sense.
Let’s say you’re introducing an instrument. There are four variables that could affect how well it sells: price, packaging, size and product features. Let’s assume that each of these four variables has just four options under consideration. So that’s 256 different ways you can design that product. At some companies, the predominant technique used to choose among them is what we refer to as a “dartboard.” Smart people sit around a conference table with and say “let’s go with the benchtop configuration, three different markers per run, sort at 500 cells/second, and price it around $150K.” What’s the probability they’ve chosen correctly? By definition, it is one out of 256. These experienced product managers have market expertise and that certainly helps a bit; it increases their odds to 1:128. This is still not the best way of introducing new products. There are scientific ways of determining the right one by asking consumers directly which they prefer.
We’ve seen some companies use their R&D capabilities to come up with unique products; instead of making their customer needs the starting point. In other words they begin with what they are good at – manufacturing — as opposed to what the customer wants and then figuring how to manufacture it. The Build It and They Will Come approach is one we see less of now but it was fairly common when most tools companies were technology driven rather than marketing driven. But nowadays new products aren’t hunting digs that go find markets for themselves. They need to be addressing an unmet need.
Sometimes we’ll get a call and the client will tell us: “The competition just introduced an X, so we need an X, too and need to know how to price it.” While we’re of course happy to help, but I can’t help thinking that if all you have to offer is a me-too product you can only gain market share by cutting price, and who wants to go that route? We advise them need to find a gap in the competition’s offerings, one that meets a customer need, and go after it.
For a new product to succeed you need enough people to buy it. That sounds ridiculously obvious, doesn’t it? But you would be amazed at the number of companies that design a product for too small a market. Life science is a fairly small market to begin with and not understanding how few consumers there are for some solutions is a common mistake.
On the other hand, we also work with plenty of companies that pursue NPD with great discipline and a commitment to understanding and validating customer needs at every stage of their process. Having seen both the good and the bad approaches to NPD, we have created a Best Practices Guide for how to use market research and Voice of Customer research to increase your odds of commercial success. You can download it for free at our website.