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Launching A Startup

Category: Case Studies
By JL Abbott

JL Abbott works with a lot of start-ups and product launches, we regularly get calls from entrepreneurs and brand managers seeking help with their “revolutionary” products. After listening politely, I ask about the research supporting their claims. The classic response? “We haven’t done the research yet, but we know anecdotally that it works and is totally safe.” I’ve been fielding these calls for so long that I can often tell from one conversation whether the launch will succeed.

         start-up-idea
 
According to a leading market research firm, about 75% of consumer packaged goods and retail products fail to earn even $7.5 million during their first year. This is in part because of the intransigence of consumer shopping habits. Consultant Jack Trout has found that American families, on average, repeatedly buy the same 150 items, which constitute as much as 85% of their household needs; it’s hard to get something new on the radar.
 
Even P&G routinely whiffs with product rollouts. Less than 3% of new consumer packaged goods exceed first-year sales of $50 million—considered the benchmark of a highly successful launch. And products that start out strong may have trouble sustaining success: We looked at more than 70 top products in the Most Memorable New Product Launch survey for the years 2010 through 2014. A dozen of them are already off the market.
 
Remember Any of These Short-lived Successes?
Each year the Most Memorable New Product Launch survey names the best launches. But even brands that make the top 10 aren’t guaranteed longevity. These products, launched “successfully” and disappeared within two years.
Pepsi Edge
Dr Pepper Berries & Cream
Saran Disposable Cutting Sheets
M&M’s Mega Chocolate Candies
Oral-B Brush-Ups
Colgate Simply White
Coca-Cola C2
Hershey’s Swoops
Pepsi Blue
 
Numerous factors can cause new products to fail. The biggest problem we’ve encountered is lack of preparation: Companies are so focused on designing and manufacturing new products that they postpone the hard work of getting ready to market them until too late in the game. Here are five other frequent, and frequently fatal, flaws.
 
40 Ways to Crash a Product Launch
If your company is guilty of any of these, think about how to turn them around.
 
Pre-Launch Phase
1. No market research on the product or the market has been done.
2. Most of the budget was used to create the product; little is left for launching, marketing, and selling it.
3. The product is interesting but lacks a precise market.
4. The product’s key differentiators and advantages are not easily articulated.
5. The product defines a new category, so consumers or customers will need considerable education before it can be sold.
6. The sales force doesn’t believe in the product and isn’t committed to selling it.
7. Because the target audience is unclear, the marketing campaign is unfocused.
8. Distribution takes longer than expected and lags behind the launch.
9. Sales channels are not educated about the product and thus slow to put it on shelves.
10. The product lacks formal independent testing to support claims.
11. The marketing campaign is developed in-house by the manufacturer and lacks objectivity.
12. The product is untested by consumers; only the company can assert its benefits.
13. The website is the primary place to order, but the product description is unclear and the site isn’t fully functional.
 
Launch Phase
14. The product is launched too hastily and doesn’t work reliably.
15. The launch is aimed at the wrong target audience.
16. Supplies of the product are insufficient to satisfy orders.
17. The product is launched too late for its key selling season.
18. The product doesn’t fit into any key selling season.
19. The manufacturer’s claims can’t be backed up.
20. A governing body (the FTC, the FDA) pulls the product, citing false claims.
21. The product is given a limited “trial at retail” but without public relations, marketing, or promotion to “turn” it.
22. The product is launched without influencers to promote its efficacy.
23. The launch budget is insufficient to “pull” the product off the shelf.
24. The product has no trained spokesperson to educate the media.
25. Management launches the marketing campaign before distribution is complete.
26. Management has promised the board and stockholders an instant hit without considering how much time is needed to educate consumers about the product.
27. The ad campaign is untested and ineffective.
28. The launch campaign depends solely on PR to sell the product.
29. The company spends the entire marketing/advertising budget at launch, so no funds are left to sustain the campaign.
30. Company executives underestimate the value of Twitter and Facebook.
31. Retailers are given no incentives to feature the product.
32. All marketing dollars go to advertising and public relations, none to social media.
33. Line extensions aren’t test-marketed as thoroughly as the original product, so they fail.
34. The product is launched to capitalize on a fad that soon fizzles.
35. The product design is unique but confuses consumers, who don’t understand how the product works.
36. The spokesperson is a bad fit with the product, creating a discordant message.
37. The product is priced too high for mass adoption.
38. Consumers are unclear about what demographic the product is geared toward.
39. The product is manufactured offshore; quality control issues result in negative consumer feedback and product returns.
40. The ad campaign is launched before the sales force is fully briefed, so customers know more than salespeople about the product.
 
Flaw 1: The Company can’t support fast growth.
 
The Lesson: Have a plan to ramp up quickly if the product takes off.
 
Mosquito Magnet mosquito-magnet
In 2000 we worked with American Biophysics on the launch of its Mosquito Magnet, which uses carbon dioxide to lure mosquitoes into a trap. The timing was perfect: The West Nile virus scare had elevated mosquitoes from irritating nuisances to life-threatening disease carriers.
 
Mosquito Magnet quickly became one of the top-selling products in the Frontgate catalog and at Home Depot. But American Biophysics proved more adept at killing mosquitoes than at running a fast-growing consumer products company. When it expanded manufacturing from its low-volume Rhode Island facility to a mass-production plant in China, quality dropped. Consumers became angry, and a product that was saving lives almost went off the market. American Biophysics, which had once had $70 million in annual revenue, was sold to Woodstream for the bargain-basement price of $6 million. Mosquito Magnet is making money for Woodstream today, but the shareholders who originally funded the device have little to show for its belated success.
 
Flaw 2: The product falls short of claims and gets bashed.
 
The Lesson: Delay your launch until the product is really ready.
 
Microsoft Windows Vista windows-vista-logo
 
In 2007, when Microsoft launched Windows Vista, the media and the public had high expectations. So did the company, which allotted $500 million for marketing and predicted that 50% of users would run the premium edition within two years. But the software had so many compatibility and performance problems that even Microsoft’s most loyal customers revolted. Vista flopped, and Apple lampooned it in an ad campaign (“I’m a Mac”), causing many consumers to believe that Vista had even more problems than it did.
If Vista were launched today, the outcome might be even worse, owing to the rising popularity of Twitter and YouTube and the prevalence of Facebook “hate” pages. As social media and user-generated reviews proliferate, the power of negative feedback will only increase—making it even more imperative that products be ready before they hit the market.
 
Flaw 3: The new item exists in “product limbo.”
 
The Lesson: Test the product to make sure its differences will sway buyers.
 
Coca-Cola C2coca-cola
For its biggest launch since Diet Coke, Coca-Cola identified a new market: 20- to 40-year-old men who liked the taste of Coke (but not its calories and carbs) and liked the no-calorie aspect of Diet Coke (but not its taste or feminine image). C2, which had half the calories and carbs and all the taste of original Coke, was introduced in 2004 with a $50 million advertising campaign.
 
However, the budget couldn’t overcome the fact that C2’s benefits weren’t distinctive enough. Men rejected the hybrid drink; they wanted full flavor with no calories or carbs, not half the calories and carbs. And the low-carb trend turned out to be short-lived. (Positioning a product to leverage a fad is a common mistake.)
 
Why didn’t these issues come up before the launch? Sometimes market research is skewed by asking the wrong questions or rendered useless by failing to look objectively at the results. New products can take on a life of their own within an organization, becoming so hyped that there’s no turning back. Coca-Cola’s management ultimately deemed C2 a failure.
 
Worldwide case volume for all three drinks grew by only 2% in 2004 (and growth in North America was flat), suggesting that C2’s few sales came mostly at the expense of Coke and Diet Coke. The company learned from its mistake, though: A year later it launched Coke Zero, a no-calorie, full-flavor product that can be found on shelves—and in men’s hands—today.
Flaw 4: The product defines a new category and requires substantial consumer education—but doesn’t get it.
 
The Lesson: If consumers can’t quickly grasp how to use your product, it’s toast.
 
Febreze Scentstoriesfebreze
In 2004 P&G launched a scent “player” that looked like a CD player and emitted scents (contained on $5.99 discs with names like “Relaxing in the Hammock”) every 30 minutes. The company hired the singer Shania Twain for its launch commercials. This confused consumers, many of whom thought the device involved both music and scents, and the ambiguity caused Scentstories to fail.
 
When a product is truly revolutionary, celebrity spokespeople may do more harm than good. A strong educational campaign may be a better way to go. The product’s features provide the messages to build brand voice, aided by research and development teams, outside experts, and consumers who’ve tested and love the product.
 
Flaw 5: The product is revolutionary, but there’s no market for it.
 
The Lesson: Don’t gloss over the basic questions “Who will buy this and at what price?”
 
Segwaysegway
The buzz spiraled out of control when news of a secret new product code-named Ginger and created by the renowned inventor Dean Kamen leaked to the press nearly 12 months before the product’s release. Kamen, it was said, was coming up with nothing less than an alternative to the automobile.
 
When investors and the public learned that the invention was actually a technologically advanced motorized scooter, they were dumbfounded. Ads showing riders who looked like circus performers perching on weird-looking chariots didn’t help, nor did the price tag—$5,000. Instead of selling 10,000 machines a week, as Kamen had predicted, the Segway sold about 24,000 in its first five years. Now it sells for far less to police forces, urban tour guides, and warehouse companies, not the general public. If there was ever a product to disprove the axiom “If you build it, they will come,” it’s the Segway. 
 
Some of these problems are more fixable than others. Flaws 1 and 2 are largely matters of timing: If the launches of Mosquito Magnet and Microsoft Vista had been postponed, the manufacturing and quality problems might have been resolved. Even though companies may be wedded to long-established or seasonal launch dates, they would do well to delay if waiting might increase the odds of success.
 
Flaws 3, 4, and 5 are trickier, because they relate more directly to the product itself. Managers must learn to engage the brand team and marketing, sales, advertising, public relations, and web professionals early on, thus gaining valuable feedback that can help steer a launch or, if necessary, abort it. Hearing opposing opinions can be painful—but not as painful as launching a product that’s not right for the market or has no market at all.


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