Wednesday, May 9, 2007

The Great Sales v Marketing Divide - New Product Launches

Saw this great post from Sales Machine. It reminds me of a discussion that often takes place at home. I studied Marketing as an Economics Major at an institution where the leading marketing academic was an aging hippy who wore sandals, a pony tail and had never left the hallowed halls of Tas Uni.

Having now worked in sales for over 15 years I have a firm opinion on the value and function of the marketing team. My wife has a Masters in Marketing from one of the world's leading marketing faculties. You can guess how the debate often goes...

I'm not as "assertive " as Geoffrey, but I am continually amazed at the level of disfunction that occurs between sales and marketing.

The one area that is most disappointing is new product launches. Disappointing because this is one area where marketing and management should be working together well.

Let's look at new product launches in the wholesale/retail world. Ask yourself if scenario sounds familiar?

  • You have a meticulous and structured market research function that has discovered either new consumers that you haven’t met or existing consumers demands you haven’t met.

  • You have identified the specific needs of those consumers

  • You have designed a product to address those unmet needs

  • You have a well funded marketing budget for a coordinated product launch

  • You launch the product

  • You measure the results

…..and within 3 years the product is withdrawn.

By the time you have finished reading this post, another new product will have been launched somewhere on the planet.

In 2006, according to Mintel’s Global New Products Database, 105,000 food and drink products were launched – one every 5 minutes. An increase of 8% from the previous year!

In the time it takes you to say “This product will not be one of the 80% that fail to make it past 3 years” US marketers collectively will have spent $40,000 on NPD advertising alone.

Now consider this….

A survey by Schneider & Associates in 2002 found that 33% of people surveyed could not recall the name of a single product launched that year. The same survey the following year found that 50% could not recall a single product launched that year. Disappointing considering that they had another 33,681 products to choose from. More disappointing for the marketers who had upped their advertising spend by $16 billion at the same time.

The lack of “impression” is not limited to new products only. Paco Underhill, in his pioneering book, Why We Buy suggests that upwards of 60% of customers with purchasing intentions have no brand in mind when they enter store.

Don’t get us wrong, marketing is good. But it seems to me that if you’re going to do one thing right, then it absolutely has to be your distribution and merchandising. Certainly, while marketing and advertising itself can create a fair multiple on sales, augmenting it with strong creative POP display in multiple locations can quadruple that same multiplier.

With the right mix, you maximise impulse and product recall. With the wrong mix, the product will quickly become a collector’s edition.

Is there a silver bullet to successful launches? I don’t know that there is, but my experience suggests that there are certain elements to a successful execution.

In my next post I'll look at some of the common problems we see in New Product Launches.

Jason Wenn

1 comment:

Geoffrey said...

Just a quick point. Advertising on the web, and measuring impact by clickthroughs (leading either to purchase or lead generation) is different from other types of advertising because it's completely quantifiable. Ad firms are often aghast at the numbers, because they seem incredibly small compared to the pretend numbers that they stick on print ads and TV ads. But web ads are are a real BS filter.