Over the last couple months, I have had conversations with people who are still active in advertising and several recently retired marketers. To a person, they all commented on how difficult it will be for small players to introduce new products into the marketplace in the years ahead.
In general, I tend to agree although a careful and thorough reader of the business press often sees somewhat breathless stories of bootstrap entrepreneurs who, against all odds, have succeeded in our current world.
Let us take a minute and get back to basics. Here are a few questions every fledgling entrepreneur needs to ask about his/her new product or service:
1) Does it fill a niche? Serve a genuine need? Solve a problem for consumers? Many fine products are launched but too few want them or see a need for them.
2) How are you going to price it? This is the downfall of many newbies. They come in so high that it does not get enough trial or they come in so low that it cannot pay out for them.
3) Distribution—where it will be sold? Can you get it on the shelf or at Amazon? Does the distribution fit the likely target?
4) Market Research—have you been thorough and paid enough for it to have a viable go to market strategy?
5) Coming out of Market Research, have you defined your target market? Do you have the resources to reach them?
6) Supply chain issues?
7) Financial backing? How long can you lose money before the turnaround?
Yes, a relative handful of new products and services seem to upset all precedent, break all the rules, go viral and are significant successes. This can especially be true in fashion fads. Yet, most of the time, new products fail even with clever marketers with deep pockets calling the shots.
In today’s world, my acquaintances seem to feel that things will get tougher for the under-capitalized newcomers.
The big and experienced guns have a treasure trove of customer data—known under the umbrella of “Big Data.” So many have a very good idea of whom they can appeal to with a new offering among their existing base and have a fairly tight profile on whom new prospects might be. They do not rely on “gut feel” as they can afford the best information available.
I have always not been a fan of the hundred plus year refrain of “the rich get rich and the poor get poorer” in market economies but the way of the world in our digital age seems to favor the big and established firms more so than in the past. Legacy media is so fragmented that a newcomer will find response to it tepid and their effort ruinously expensive. It may take several years to develop solid database management and by then, the entrepreneur may likely be bankrupt.
So, the opinion of my vest pocket group of panel members and largely to me as well is that the big will get bigger as new products are launched. Also, those who buck the odds and succeed will likely get swallowed up by one of the giants in the category. Jeff Bezos has said more than once that some small player will take him and Amazon down someday. Perhaps. More likely he will buy the clever newcomers out and invite the clever players to work under his big tent.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.
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