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Accelerating New Product Launch

Companies look for New Product Introduction (NPI) to expand their current market and to gain share within existing markets they operate. Generally large companies are divided into multiple Business Groups, which are further divided into multiple Business Units. A Business Unit (BU) spends most of its' time and resources in designing, and testing a product -- ensuring a robust and unique in demand product is launched, but doesn't stay connected closely with product launch.

Big companies have 2 major types of "Go To Market" channels: direct partners and 2 tier distributors. A direct partner doesn't hold the inventory and either sells products directly to end customers or consumes products internally, whereas a 2 tier distributor hold the inventory and sell products to end customers through multiple partners. Generally BU product managers and engineers are not connected to channels, resulting in product arriving late to market and missing demand.                

Based on experience, I would highlight 3 top areas which should be monitored closely to accelerate New Product Introduction:

Forecast:  It is hard to forecast demand when product is not even available in market. Managers will be tempted to create conservative forecast to avoid excess inventory, but this approach strangles the product supply once product is released. The initial phase of product lifecycle is the most profitable period, and supply constraint can create frustration throughout the value chain. The most practical process of forecasting in such cases is to identify existing comparables of the new product and setting up calls with direct partners and distributors and get existing sales of comparables.

Pricing: 3 ways a manager can set price: pricing by markup on COGS, pricing equivalent to competitive products or pricing based on values. In most of cases, pricing the new product equivalent to competitive products is the best way. Partners, distributors and end customers are very fast to compare newly launched product to its close competitors. Unless a product is revolutionary and unique, it is seen that new product experiences low demand if priced higher than a competitor.

Impact on existing Supply Chain: Lastly product managers should pay close attention to impact on existing supply chain for new product. Though most of manufacturing is completed in China or overseas, companies are increasing integrating channels in supply chain. For example, High Tech products are prone to obsolesce and these products command premium if lead time is shorter when compared with competitors. Companies are enabling their partners and distributors so that they can configure and create multiple variations of a base model leading to a short lead time. Whenever there is an impact on supply chain, product manages should ensure than partners and distributors are trained and certified for a perfect product launch.

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