46% of new product investment is wasted or misspent
Even the most successful of new products may take years to recoup launch costs. Those that are unsuccessful never get there. Some of these take their company down with them.
Market analysis is the only way to minimize upfront risk and focus resources. This is why the largest consumer products manufacturers conduct it routinely and why you must, too.
Investing in existing products is almost as risky.
Poorly informed pricing decisions, slow reaction times to competitive activity, ineffective messaging, incorrect target marketing and channel choices will cost you millions in lost sales and share.
Invest in research now to save fortunes later.
The list of product and market development costs is long and daunting. Virtually all initiatives include at least the following:
- Product R&D
- Trademark & Legal expenses
- Production sourcing
- Production contracting
- Ingredient/component sourcing
- Volume contract minimums
- Package design
- Package configuration
- Test production
- Test formulae
- Quality/shelf life testing
- Nutritional and regulatory compliance
- Sample production
- Direct Selling resources & expenses
- Broker/rep fees & minimums
- Introductory discounts & allowances
- Inventory financing
- Warehouse logistics
- Inbound/outbound transportation
- Accounts Receivable financing
- Working Capital financing
- Ongoing promotion
- Consumer sampling & demos
- Customer co-op programs
- Shrinkage & damage
- End of Life write-downs
- ...and so on
The reality is that the most modest of undertakings will quickly absorb hundreds of thousands of dollars completely at risk. It is dangerous to launch first, see how it works later. Depending upon your resources, later may never come.
Bottom line: Learn Before You Launch