New Product Development
Working for over 20 years within sales and business development, the majority of my work has been for multinational companies, both in manufacturing services and also in sales of new products into retail. From a young age my background has been primarily in engineering, working as a ‘time-served’ toolmaker, R&D engineer with Lucas & British Aerospace and in business development within the manufacturing services industry for quite a diverse group of respected global OEMs.
As a shareholder in a new business development company in previous years supporting clients with new products and breaking them into retail or new markets, I have seen many successful products but also those which have failed.
It’s quite common to come across clients who have a sales strategy that isn’t quite suited to their particular product or niche. There’s a misconception that establishing a deal with a large distributor or retail company is the holy grail of product success and is often a default route of new product developers who haven’t thoroughly researched the alternatives.
If you were to ask most new product developers which retailers they would like to see selling their products, the answers would most likely be Asda, B&Q etc. All the big names. What they don’t realise is that the margins and profit per unit are normally extremely low with these types of companies, even fractions of a penny in some cases. The high volume low price mentality is their core business but this doesn’t always suit new product developers who simply don’t have the resources to fund a venture into this market. This being said, many people will associate China with high volume production so this is possibly why there are so many start-up companies aiming for this route as they often see it as the only option.
What we offer however is low to medium volume production, the type of work which the large moulding organisations are not interested in. This enables alternative platforms from which to launch new products making the smaller and more accessible niche outlets much more favourable as the volumes are lower and margins are generally higher. However I’ve never come across any product that sells itself which many think to be the case with their own product due to a kind of bias and passion for their own conception.
Success comes from finding the decision makers, getting past the decision maker’s gate keeper and solidifying a mutually beneficial business relationship. All these are skills within themselves and what we find is that with most people they are normally designers or engineers so their sales background isn’t strong. However without sales = no product.
For me the golden rules are first of all to research your market, get buying from your target customers even before you start manufacturing or laying down tools. Get prototypes made, don’t layout £100,000.00 worth of tools to then hear that there’s no market for your product or a potential share of the market is taken up due to similar products or established and ‘sealed deals’ with distributors.
Always go the prototyping route, visit the buyers with good show models. However, have your manufacturing strategy ready to go because most buyers, if they like it, will want them immediately so a manufacturing strategy/ route to production is essential beforehand.
When up against competitor products, your product either performs better or the price should be low. There must be an advantage for the buyer. If your buyer is selling 20,000 competitor products per month why should they take your product on to replace this when they’re already working with a selling product?
This doesn’t mean a dead end however, they may be having delivery issues with their current supplier or quality issues for example. But what’s to say they’re not going to have the same problems with you?
Understanding the development process is also essential for first time developers. You’re always going to hit problems, all projects have their own unique challenges and you need to build that time into your project to counter these inevitable issues.
Considering all factors which could affect cost and lead time must also be covered. What’s your shipping strategy, air or sea? What’s the initial volume required for launching your product?
Depending on the complexity of your product, you may need to spend time overseas, or at least factor that in to the budget – working with a global supply chain at a distance can be very difficult hence our own staff in the far east. European / western payment terms with China don’t exist, all payment are up front with a ‘no pay no way’ attitude to business. These are all factors we considered when we formed this company. We created global to make doing business in China easier for our customers.
We live in an age where anyone can go on Alibaba.com and find a supplier, or more likely an agent acting as a supplier. I cannot stress enough how you should never place any product in China unless you’ve visited the factory, to do so can be suicide.
Understanding the environment and culture overseas is an absolute must. It’s quite normal for example for Chinese suppliers quote a low price on your first project as a kind of breakthrough marketing technique. Once you’ve spent time and developed a proven route to manufacture, they can then hit you hard the second time round with a much higher price when they know you are in a position where re-establishing a different supply route would be both costly and impact on lead times.