Launching a new product can bring many benefits to a business. It can be an opportunity to increase revenue, acquire new customers, and gain market share. A successful launch of a new product also demonstrates innovation and creativity — both within the organization and to the world at large.
In terms of revenue growth, launching a new product can open up the potential for increased sales due to its unique features and capabilities. Furthermore, when launching a new product, businesses often experience an uptick in customer acquisition as people are attracted to the novelty and freshness it brings to the market.
The success of a new product launch also has implications beyond just financial benefit… It reinforces a culture of innovation within the organization which is essential in today's competitive hiring landscape. Moreover, introducing something new can attract media attention and capture more consumer interest in all of the company's offerings.
At Apollo 21, we talk a lot about establishing a “we live here too” attitude in the market. Launching new products is one of the fastest ways to demonstrate this mentality by showing customers (both new and existing) that you understand their needs and demonstrating to potential applicants the value of working for your company.
Yet a product will never make it to market if the internal stakeholders and decision makers aren’t on the same page. Building a strong business case is an essential part of getting the approvals and resources necessary to develop a new product.
This post will provide an overview of:
- How to build such a case
- The benefits of building a business case
- Return on Investment (ROI) considerations
- Strategies for building support for the new product
- Successful execution throughout the process.
Establishing the Business Case for Launching a New Product
When launching a new product, it is essential to establish a business case that outlines all of the costs and potential returns associated with the product launch. Doing so will ensure that all stakeholders are aware of the risks and rewards of launching the product and can make an informed decision on whether or not to pursue it.
Our advice is to think about how each of these costs or investments will impact your business case in your specific business. What money and resources do you need to build the product and market it? What are the expected outcomes? What assurances do you have that you can reach those outcomes?
A good business case puts hard numbers in front of not just the business but also the team launching the product. A new product that generates new revenue, improves NPS, or delivers internal cost savings is a lot easier to “sell” internally than one with nebulous or hard to define potential outcomes.
All too often, we see organizations stuck in the mud when it comes to gaining executive support and sponsorship for a new product. Once our team digs in to identify the underlying cause of friction, we find that clearly communicating WHY this new product is a good idea along with the benefit it will provide to stakeholders, customers, and the business can move conversations and approvals along quickly.
Calculating Start-up Costs
One of the most important steps in establishing the business case for launching a new product is calculating start-up costs. This includes factoring in all of the resources, materials, personnel, and other costs associated with producing and distributing the product. It is important to be thorough in this step as even small miscalculations could lead to major losses down the line.
Calculating Return on Investment (ROI)
Once start-up costs are taken into account, teams should also calculate potential returns on investment (ROI). This involves considering factors such as sales forecasts, customer acquisition rates, market saturation, competitive advantages, and more. By understanding these elements in depth, teams can make an informed decision on whether or not launching the new product will be worth their time and resources.
To aid in the processes of defining costs and calculating potential ROI, we’ve put together a business model template that’s available for anyone to use. A carefully defined financial model isn’t difficult to put together, but it can help to clearly demonstrate the potential costs and return on investment when considering the launch of a new product. Get started with a model using our template by making a copy of the document available here.
Determining Target Markets
An important part of building a business case for launching a new product is determining target markets for the product. This includes researching potential customers’ needs and desires to understand what kind of features and capabilities they would be looking for in this type of offering. Additionally, teams should also consider any existing competition when exploring target markets as there may already be established solutions that could impact overall ROI potentials.
Analyzing Customer Needs & Desires
In order to effectively serve certain target markets with a new product offering, teams must first understand customer needs and desires related to the jobs to be done — i.e. the tasks that you’re helping your customer achieve more easily using your product. It is important to conduct surveys or interviews with customers to gain insights into their current behaviors and preferences when it comes to buying similar products or services. Compiling this information will help inform how best to tailor the new offering so that it meets customer expectations while still maintaining potential ROI projections.
Identifying Competitive Advantages
Finally, one essential component in establishing a business case for launching a new product is identifying any competitive advantages that it holds over existing offerings on the market today. This includes unique features or capabilities not offered by competitors as well as any cost savings associated with production or distribution methods used by your organization.
Detailing the Benefits
By introducing a unique and innovative solution, businesses can increase their market share and gain competitive advantages over rivals. Additionally, a new product offering can lead to cost savings in production or distribution processes, as well as improved customer experience with the brand.
It’s also important to bear in mind that a new product doesn’t have to be consumer-facing. Many of the engagements we take on at Apollo 21 are focused on streamlining internal processes with a goal of generating greater operational efficiencies. The cost-savings potential of these efforts often outweighs the build costs by a wide margin. In these cases, the “consumer” or the end-user is an internal stakeholder instead of a public customer.
Now consider the emerging role of artificial intelligence and machine learning in businesses and it’s easy to see how internal projects are getting more and more attention. We’ve been integrating AI into digital products for years, so we are excited to see more and more organizations adopting this type of technology inside the building to drive process and workflow efficiencies and make it easier for internal teams to understand and derive insights from the massive amounts of data that’s accessible and accumulated through today’s technologies.
Exploring the impact on customers, partners, and stakeholders
The impact of a new product on customers, partners, and stakeholders can be far-reaching and profound. Customers are likely to experience improved features and capabilities that increase their satisfaction with your brand. For example, a new product could offer intuitive navigation options or new functionality that helps them achieve goals or tackle tasks faster and more efficiently. This could lead to repeat purchases or even increased loyalty over time.
Partnerships between businesses in the same industry sector may also be facilitated by the launch of a new product. These mutually beneficial relationships can help both parties gain access to new markets or resources that weren't previously available before. Additionally, joint ventures will often result in cost savings for both parties involved due to economies of scale and shared resources.
Furthermore, stakeholders should also benefit from the addition of a new product to an established business's portfolio. Launching a new offering can help attract potential investors and demonstrate an organization's commitment to staying competitive in an industry sector. It can lead to increased visibility for the brand as well as improved stakeholder perceptions regarding the overall financial health of the business and prospects for growth.
A Deeper Dive into ROI
Once the business case for launching a new product is established, it’s important to dive deeper into ROI considerations. Forecasting expenses associated with launching a new product and analyzing potential ROI will help teams better understand the full picture of what they are getting into financially.
Forecasting expenses
When forecasting expenses associated with launching a new product, it is important to consider all relevant factors that could have an impact on the cost of production. This includes costs for materials, labor, and equipment, as well as any taxes or fees that are related to the product launch. Additionally, other expenses such as marketing and advertising should be taken into account. These costs can vary depending on the size and complexity of the product being launched.
For instance, larger products with multiple components may require more resources in terms of materials and labor to produce, resulting in higher overall costs. In addition to material and labor-related expenses, there may also be other non-material costs associated with launching a new product such as research and development (R&D) expenses, software licensing fees, or patent filing fees.
Furthermore, organizations should ensure that they are able to cover all potential costs associated with launching a new product over time. This could include additional resources such as engineering personnel or additional software licenses if necessary.
Taking these factors into consideration when estimating expenses can help teams better understand their total cost of launching a new product and determine if it is feasible within their budget and timeline.
Analyzing ROI potentials
Analyzing the ROI potential of a new product requires teams to carefully consider a wide range of factors. Estimating the projected sales for the new offering will give organizations an idea of what their return could be and help them determine how feasible the venture is from a financial standpoint. Additionally, it's important to assess the long-term viability of the product in terms of its ability to remain competitive in its industry sector.
Organizations can also leverage industry data and analytics tools such as market sizing methods and customer segmentation analysis to better understand customer behavior and anticipate future market needs. This information can help inform decisions when developing pricing models, promotional strategies, and other tactics related to launching a new product.
By factoring all these elements into their calculations, organizations can build a more complete picture of what kind of ROI they can expect from launching a new product. A comprehensive assessment will give stakeholders greater confidence in investing resources into a project and provide assurance that their efforts are likely to yield positive returns on investments made over time. All of this can be accomplished by building out the financial model template linked above.
Building Support for the New Product
Building support for the new product is also key in ensuring success at the time of launch. Creating an effective sales pitch and developing marketing strategies and promotional materials can help ensure that the product is well received once it goes to market.
Creating an Effective Sales Pitch
A successful sales pitch should focus on what the product will help customers do or achieve as well as what makes the product distinct from existing offerings in the marketplace. It should emphasize why this product is necessary and how it can solve customer issues or problems quickly and easily. Remember, customers are buying a solution to a pain point, not a list of features.
When the Apollo 21 team thinks about crafting a sales pitch, we consider how to reduce the key value proposition to a short, clear, easily communicated story or sentence. For example, our recent launch of Meeting Cost Calculator is offered as a way to put a tangible price on the time that teams and organizations are spending during meetings. From there, HR directors and managers can arrive at a number of benefits including improved productivity and better capital allocation. However, all of that stems from the key value proposition: putting a price on how much every meeting costs your business.
Developing Marketing Strategies
An effective marketing strategy will involve both online and offline tactics tailored to reach target audiences associated with the product. This could include crafting social media campaigns, developing email newsletters, creating content marketing pieces, attending industry events, or leveraging influencers to promote their new product.
It is important that teams have a clear understanding of who they are targeting with their new offering and then tailor their approaches, channels, and messaging accordingly.
Ensuring Successful Execution
The success of any new product launch relies heavily on proper execution. Teams should coordinate between different departments, manage timelines and milestones, and ensure that they have all the necessary resources in place to launch their product successfully. By taking these steps into consideration when launching a new digital product, organizations can increase their chances of success significantly.
Coordinating with Different Departments
Each department should have an understanding of what their roles and responsibilities will be throughout the process from ideation all the way through launch (and extending to feedback and product iteration). For example, marketing may be responsible for developing promotional materials such as brochures or flyers while engineering is responsible for building out any infrastructure needed for the product’s launch.
Having clarity at each step of the way ensures that all teams are working together in unison towards a common goal – launching a successful product.
Managing Timelines and Milestones
Once teams have effectively coordinated with different departments within their organization, they must also manage timelines and milestones to ensure that things stay on track prior to launch day. This could include mapping out critical tasks such as budgeting, testing phases, feature development cycles, design iterations etc., and pairing them with corresponding deadlines.
A clearly defined timeline helps teams stay organized throughout the process and ensure that they do not miss any key steps along the way.
Make the Case for Your Next Great Idea
By carefully planning ahead and factoring in all elements associated with launching a new product offering, organizations can build a strong business case for introducing it into the market to secure executive sponsorship for their project.
Launching a new product is no small feat and requires careful planning. The steps above offer the guidelines and best practices for building your business case and getting your next great idea off the ground and out the door.
As one of the few venture studios that sees software development and digital products as a means to great business outcomes, Apollo 21 is steadfast that every new project should have a compelling business case. Otherwise, a possible, even likely outcome is wasted time, energy, and capital. The good news is that a strong business case is not as complicated as you may thinking. Follow the guidelines above to build the business case you need to get your next product off the ground. And if you still need a hand, you know where to find the Apollo 21 team.
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