Getting a product to market is a big moment for any business. Whether or not you can successfully launch the new product determines how long it takes for the product to become financially viable, if it ever does, as you can see in the graphic below. The longer the introduction stage when profits are negative, the more of a financial drain the product is on the firm.
Getting a product to market effectively allows you to recoup your investment quickly, which increases the chances of success for the entire firm. Here, we’re going to look at a few tips that can help you get that product out more cost-effectively.
Getting a product to market
1, Build the right product
Not every product will generate success., so finding the right new product is the first step in getting it to market in a way that meets your goals. Marketers over the years developed a set of tools to help you identify which products fit your brand, the needs of your customers, and match your expertise. Chief among these is the product/market grid or Ansoff Matrix.
The notion behind this matrix is that it’s less risky to develop a new product when you have experience with the market (product development) or with the product (market development). For instance, selling your product overseas often involves less risk than the other types of new products. Market penetration is just regular marketing where there’s no new product involved. This strategy represents the lowest risk.
2. Budget your product
Building a new product involves a lot of expenses from product development to design to marketing the new product. Carefully budget for every step in the process and reduce costs by outsourcing as much of the process as possible. For instance, outsourcing production makes sense until you have sufficient demand to make your own facility feasible.
When budgeting, consider the different steps needed prior to launching the product, from designing, prototyping, testing, manufacturing, marketing, and then launching, and do your research to work out how much each step will likely cost. If there are some parts of the budget that look high, you can do research to figure out how to save money in those areas directly. It’s also important to make sure that you leave a little room in the budget for extra costs, as sometimes a part of the process might take a little extra time or work and this usually translates into costing more, as well.
3. Ensure you have the funding you need
If you want to make sure that you have the resources you need, then you might consider alternatives to self-financing with retained earnings. While a lot of businesses seek out funding when they first launch, many businesses also look for funding while they grow their business. Launching a new product is an essential moment of growth for your business so you might consider platforms like Funding Circle that can help you find the money you need to get your new product off the ground. Aside from the budget as mentioned above, you’re likely to need a business plan showing how you plan to pay off the loan and a timeline showing your breakeven point and estimated profits at each stage of development.
4. Work out how much you should produce
Determining demand is a critical piece of any effort at getting a product to market yet this element of your planning is fraught with challenges. Ask your target market how much of Product X they plan to buy, and you get garbage answers. I once worked with a team of undergraduates to determine the demand for a new aquarium in Tampa. Our study results showed sufficient demand but those visitors failed to show once the aquarium was built at great expense.
Others take the size of the proposed target market and cumulative demand in the product category to assume they’ll capture some portion of that demand. That often fails, as well.
Over the years of judging business plan competitions and listening to entrepreneurs’ pitches, I found this was the weakest element in their plan. Many just fudge in demand so it justifies expenses.
An experiment is the best tool for determining demand. Set up a simulation as close to real buying situations as possible then watch what real customers do. I once worked for a firm that created a simulated card store to watch which wrapping paper products customers purchased to help the firm determine anticipated demand for each new design.
5. Streamline your manufacturing process
Aside from being careful to make sure that you’re not spending more money on producing more products than you need to, you should also look at the manufacturing process itself to find ways to save money. Making your process more efficient and avoiding downtime is one strategy, but a lot of businesses outsource manufacturing to services like Royal Power Solutions, at first. By outsourcing some or even all of your manufacturing process, you don’t face the high set-up costs associated with buying or leasing manufacturing equipment or the labor that is required to use it until you have proof of concept.
They are a sourcing agent that specializes in helping buyers in western countries source products from China, such as Sourcing Nova. Unlike other sourcing agents, our clients only source from leading manufacturers, especially those who manufacture for world-renowned brands.
At some point, you might want to bring operations in-house once you prove your product has a sufficient demand, as owning your production process is more cost-effective in the long run and offers more control.
6. Test internally and rigorously
Aside from designing and manufacturing the product, you want to make sure that it’s going to meet all your customers’ needs and expectations, meets your quality standards, and is easy to use. To that end, you must test it rigorously at each stage of development both internally and with your target market. This is often an iterative process of design, testing, redesign, retesting …
However, rather than outsourcing the testing, you might perform testing more cheaply in-house. Envision looks at a variety of ways that you can test demand for your product.
7. Use cost-effective advertising
After the product is made, you must market it, of course. Marketing isn’t optional if you want to succeed but it’s often one of the most expensive elements in the process, at least in the beginning.
Advertising is highly effective for driving short-term sales, but it is also expensive, so it’s worth considering a more balanced approach to marketing. By comparison, tactics such as email marketing, digital marketing, and search engine optimization don’t cost as much, and they tend to produce more long-term benefits. One of the tips for making your product promotion more cost-effective is to do as much of it in-house as you can, as marketing agencies can be very expensive.
8. Price it correctly
You must think carefully about your pricing strategy if you want your product to succeed. Offering your product at a lower price isn’t a sustainable strategy unless it costs you much less to make the product than your competitors, as the price is easily matched. Offering your product at a lower price might also make consumers think your product isn’t as good.
Offering your product at a higher price also means you have marketing headaches. Customers might not pay extra for your product even if it has more features than your competition. Selling at a price that allows you to recoup the production costs also doesn’t meet customer needs in many cases, so don’t use your cost as the starting point in your pricing strategy.
Instead, customers want value which means offering benefits at a reasonable price, so use value as your starting point.
You might consider making a product a loss leader to generate interest at the beginning, something we call penetration pricing. If your product has distinct benefits over existing products, you might use price discrimination where products start at a high price and then become less expensive over time.
Sites like Mailchimp go over the details of how to price your products in a way that makes a profit.
Getting a product to market is challenging, as such, you need to ensure you’re ready to put more money in where the scope outgrows the plan. However, with the tips above, you may find you can better manage your costs while ensuring you’re getting a product to market effectively.
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What is the cost-effective promotional tool? ›
Email marketing is one of the most cost-effective marketing solutions for small businesses.What should you do to get enough market for your product? ›
- Create an email win-back campaign.
- Email or SMS sign-up coupons.
- Cross-sell and upsell potential customers.
- Use paid marketing campaigns.
- Build organic flywheels for acquisition.
- Convert more of the traffic you have.
A measure of media effectiveness based on a comparison of potential or actual audience and the cost for placement, usually expressed as cost-per-thousand persons viewing.Which is more effective tool for promotion process? ›
Email marketing is an effective promotions tool that can target individuals who are already interested in the product or resource. Email marketing campaigns are designed to encourage new website visitors to become consumers, or for current customers to make more purchases.What is a low cost way to market products? ›
Using email marketing is an easy, low-cost way to get your brand in front of your customers and potential customers. You can send store updates, product launch announcements, tease upcoming events and more. Just make sure there's value in each email or you run the risk of people unsubscribing.How do you get customers to buy more products? ›
- Drive Traffic to Your Website. ...
- Leave Perfect First Impressions & Encourage to Discover More Content. ...
- Build a Trust Relationship Between Your Brand and Customers. ...
- Convey the Benefits of Your Products More Than Features. ...
- Keep the Customers Engaged with Email Marketing.
- Make the platform easy to use. Since you only have a single shot at making the first impression, make sure you get it right. ...
- Invite referrals. ...
- Work on SEO optimization. ...
- Use social media to foster trust and build connections. ...
- Start a loyalty program.
Cost-effectiveness analysis (CEA) is a research method that characterizes the costs of interventions relative to the amount of benefit that they yield. CEA provides a standardized means of comparing interventions to identify those that provide maximal clinical effect per incremental unit of cost.What cost-effective examples? ›
A cost-effectiveness ratio is the net cost divided by changes in health outcomes. Examples include cost per case of disease prevented or cost per death averted. However, if the net costs are negative (which means a more effective intervention is less costly), the results are reported as net cost savings.What are cost-effective strategies? ›
Cost efficiencies are business strategies that strive to reduce the cost of creating a product or performing an activity without compromising quality. Determining cost efficiencies requires comparing the benefits of the output to the costs of the input.
Which is the best and free of cost marketing method? ›
What is the cheapest form of marketing? Digital marketing or social media marketing is the cheapest form of marketing. You can reach a larger target audience in a cost-effective and measurable way.How do you reduce the cost of customers? ›
- Comparing customer lifetime value (LTV) with customer acquisition cost (CAC) ...
- Understand what customers want. ...
- Identify the target audience. ...
- Reduce customer churn. ...
- Shorten the sales cycle. ...
- Reach customers on their preferred channels.
Advertising is also an important form of promotion and it costs less than personal selling.What are the four main tools methods of promotion? ›
- Advertising. Advertising is defined as any form of paid communication or promotion for product, service and idea. ...
- Sales Promotion. ...
- Public Relations. ...
- Direct Marketing.
The chief tools of sales promotion are discounts ("sales"), distribution of samples and coupons, the holding of sweepstakes and contests, special store displays, and offering premiums and rebates. All of these techniques require some kind of communication.What are the two most effective techniques for sales promotion? ›
- Providing Free Samples. ...
- Offering a Free Trial. ...
- Giving Free Gifts. ...
- Offering Customer Contests. ...
- Using Special Pricing. ...
- Social Media and Influencer Marketing. ...
- Using Digital Marketing.
- Water bottles.
- Tote bags.
Sales Promotion Tools and Techniques – 12 Commonly Used Tools: Coupons, Free Samples, Price-Off Offer, Fairs, Exhibition, Free Gifts, Competitions and a Few Others. To increase sales of any product, producers adopt different measures like distributing samples, gifts, coupons, bonus, etc.What is the simplest pricing strategy? ›
Cost-plus pricing is one of the simplest and most common pricing strategies that businesses use. With this method, simply add a percent-based markup to your product cost, and you'll know what to charge.What is a low cost strategy example? ›
In a low cost strategy, the true winner is the company with the actual lowest cost in the market place. For example, if two companies make essentially identical products that sell at the same price in the market place, the one with the lower costs has the advantage of a higher level of profit per sale.
What is the simplest pricing method? ›
The simplest approach to product pricing is the cost-plus model. To determine a selling price, you add a percentage markup to the total cost of your product. While this strategy can preserve a nice profit margin per sale, it has some drawbacks as well.What are 4 ways to attract customers? ›
- Offer new customers discounts and promotions. ...
- Ask for referrals. ...
- Recontact old customers. ...
- Network. ...
- Update your website. ...
- Partner with complementary businesses. ...
- Promote your expertise. ...
- Take advantage of online ratings and review sites.
The best way to convince customers to buy is by educating them through personal selling and advertising. You have a better chance of selling to people who are most likely to use your product, despite their age or income group.How do you grow demand in a Marketplace? ›
- Start focusing on customers before launch.
- Existing users to be super engaged with the marketplace.
- Has your supply brought your demand to your marketplace?
- Help sellers look professional!
- Take percentage.
- Generate your community.
- From your Android phone, tap. ...
- Tap Marketplace, then tap .
- In the Selling section, tap Your listings.
- Tap the listing you want to boost, then tap Boost Listing. ...
- If your listing is an item with delivery, select an audience. ...
- (Optional) Edit your audience or create a new one.
- Find a great marketplace idea and validate it.
- Choose your marketplace business model and pricing level.
- Build your Minimum Viable Platform (your marketplace MVP).
- Build your initial supply.
- Launch your marketplace to the first customers.
- Track your key metrics and grow your business.
Cost efficiency is the act of saving money by changing a product or process to work in a better way. This is done to improve the organization's bottom line by decreasing procurement costs and improving efficiencies across the board.What does cost-effective product mean? ›
: producing good results without costing a lot of money.What is an example of cost-effectiveness in business? ›
Example of Cost-Effective
The addition of a product feature to a product design is cost-effective if the result is an increase in sales that exceeds the cost of the feature.
- Planning the budget properly. One method of cost control that most businesses use when starting a new project is budget management. ...
- Monitoring all expenses using checkpoints. ...
- Using change control systems. ...
- Having time management. ...
- Tracking earned value.
Which tool of marketing has zero cost? ›
Some ideas for free marketing include guest blogging, link building, creating social media groups built around your industry or brand, commenting on other blogs, and creating your own blog.What is reducing cost method? ›
Cost reduction is the process of decreasing a company's expenses to maximize profits. It involves identifying and removing expenditures that do not provide added value to customers while also optimizing processes to improve efficiency. Cost reduction typically focuses on generating short-term savings.How do you solve less cost of sales? ›
The cost of sales is calculated as beginning inventory + purchases - ending inventory. The cost of sales does not include any general and administrative expenses. It also does not include any costs of the sales and marketing department.What are the three main methods of promotional pricing? ›
The most common promotional pricing types include BOGOF (buy one get one free), seasonal sales promotions, discounts, and flash sales. Based on specific pricing objectives and business strategy, you can also consider multi-buys, loyalty programs, conditional sales, free shipping, or gifts.What is effective promotional tool? ›
The four main tools of promotion are advertising, sales promotion, public relation and direct marketing.Why is promotional pricing effective? ›
Promotional pricing can help with customer acquisition by encouraging cost-conscious shoppers to buy. It can increase revenue, build customer loyalty, and improve short-term cash flow. A promotional pricing strategy works best in the short-term.What is a cost promotion? ›
What Is a Promotion Expense? A promotion expense is a cost companies incur to market their products or services to consumers. Promotion expenses range from giveaways, free samples, or other promotional gimmicks in order to help boost sales and revenue.What are the 4 types of promotion? ›
The promotions mix is often divided into four categories: advertising, digital selling, sales promotion and public relations. Each of these promotion methods has their own role in generating revenue for a company.What is advertising as a tool of marketing? ›
Advertising is a marketing tool that lets you communicate with potential customers about your products or services through paid channels. The goal of advertising for a small business may be to build brand awareness, improve your image, boost engagement, generate leads, or convert potential leads into sales.How is pricing strategy important? ›
The importance of pricing
Pricing is important since it defines the value that your product are worth for you to make and for your customers to use. It is the tangible price point to let customers know whether it is worth their time and investment.
Which pricing strategy is best and why? ›
Cost-plus approach is one of the best pricing strategies for retail companies. Based on the products that are offered, they can charge different markups. However, this is not ideal for example software service companies and music producers as the product price is significantly higher than the product cost.What is competitive pricing strategy? ›
Competitive pricing is a marketing strategy whereby businesses set prices based on their competitors' prices. Also known as competitor-based pricing, this strategy can be used in online and offline markets and is often used to attract more customers and increase market share.What is cost in pricing strategy? ›
Cost-based pricing is a pricing method that is based on the cost of production, manufacturing, and distribution of a product. Essentially, the price of a product is determined by adding a percentage of the manufacturing costs to the selling price to make a profit.What is a marketing cost example? ›
Examples of costs that are classified as marketing expenses are: Advertising. Agency fees. Customer surveys.What is cost based pricing? ›
In a nutshell, cost based pricing is a pricing strategy in which a company adds a markup to the price of a product over the cost of production and manufacturing. The strategy often involves adding a fixed percentage added on top of production costs for one unit.What are promotional methods? ›
The main methods of promotion are: Advertising. Public relations & sponsorship. Personal selling. Direct marketing.What is a popular method of promotion? ›
Advertising, public relations and direct selling are three proven methods of effective promotion, though social media marketing has become a powerful tool for driving sales at less cost than traditional methods.What are the three keys to promotion? ›
How FC Barcelona Manager Xavi Hernandez Measures Up Against Ronald Koeman After 67 Games
- Keep your word - do what you say you'll do. ...
- Do it when you say you will do it. ...
- Underpromise, but overdeliver - deliver work on the previously agreed on terms.