More than half of new products fail. And that includes products from respected consumer companies who are viewed as marketing experts with a lot of experience introducing new products. With all the time, money and effort companies invest into new product ventures, you’d think more companies would take the same level of devotion to making the launch successful.
So often, I see building materials companies making the same mistakes when introducing new products to people like architects, builders and contractors. Despite their successes in bringing other products to market, Georgia-Pacific has made a couple of these mistakes with their recent release of Forcefield®. I’ll cover a more extensive list of common mistakes later in this post, but for now I’ll discuss two of these from the ForceField effort.
What Is Georgia-Pacific Doing Wrong?
To begin, I don’t believe Georgia-Pacific is going to fail with ForceField®. The interest created in the product category is just to great. (Huber is to thank for that.) Furthermore, Georgia-Pacific has the money to stick with this as long as it takes. All the same, I believe it is going to take ForceField longer to gain traction than it should.
Georgia-Pacific is also making it more difficult for themselves to be the market leader. If another aggressive entrant got into this category with residential experience, such as James Hardie, GP might always be a distant third.
As with many new building products, the problem with the ForceField launch is with the sales and marketing strategy, not the product.
Strategy Can’t Be Underestimated
GP is using the wrong strategy – going after house wrap. This will fail as it will create more sales for Huber than it will for GP. When you have a small market share, you go after the leader to gain share within the category. It is the job of the category leader, not the new entrant, to grow the market by attacking house wrap.
Even with Huber’s success, ZIP System® type products are still a small share of the overall market for wraps and sheathings. Every time GP gets a builder to consider upgrading, the builder is not only going to consider GP or Huber, but he’s also going to consider some of the other sheet, board and fluid applied solutions. If I were Huber, I would send GP a bottle of champagne as a thank you for helping grow their ZIP System sales.
I assume that GP has features which they believe make ForceField better than ZIP System. It’s with this in mind that their strategy should be to pursue the builders who have already switched to the ZIP System and show them why ForceField is better.
They should also identify the pain points that some builders may be experiencing in dealing with Huber. No matter how good a job Huber does, there are always some customers who don’t like something about their current supplier.
Understand the Differences Between Markets
The second mistake GP made is in not understanding the builder market. GP is a leader in commercial construction. As companies who are successful in commercial or residential try to move to the other, they usually underestimate how difficult it will be. The commercial and residential markets are very different. You can’t use the same sales force, sales leaders or marketing people. You need to have a team that is experienced in the new market.
An Ineffective Rebate Program
An example that shows how GP doesn’t understand the builder market is this rebate program. Yes, builders use rebates. But rebates are more effective in keeping business than gaining business.
Builders also don’t have the time to keep track of rebate details and send in the required information. Builders and experienced manufacturers rely on experts like Builder Partnerships to manage their rebate programs.
Finally, a $1.00 a sheet rebate is not going to get a builder’s attention. The cost and hassle of even a simple change like switching from ZIP System costs a builder a lot more than $1.00 a sheet. Builders need a compelling reason to switch. $1.00 a sheet is not compelling.
GP is a successful company who is also a smart marketer. Their long-term success with DenGlass® in the commercial market is an example. Their latest DenGlass marketing campaign is outstanding. This shows how even the best building materials companies can fumble a new product introduction.
Why Most New Building Product Introductions Fail
Launching products is not easy. There are a number of ways to get it wrong. The following are the most common mistakes I see building material companies make when introducing new products. Have you seen any examples of these?
- Underestimating how hard it is to get the building product customer to change. New product launches must overcome a prevalent “If it ain’t broke, don’t fix it” attitude more than rely on a “Let’s do things better” attitude.
- Not realizing how the customer associates change with risk more than they associate it with benefit.
- Assuming that the new product is a good solution for everyone, everywhere. You need to focus your new product to a situation where it is clearly a better solution. Gain success where it is most likely to succeed and then expand the target customer base.
- Not assigning the “A” team. Many companies see the new product as a side project rather than the future of their company. They keep their best players on their biggest product. They assign less experienced people which is like sending an inexperienced poker player to Las Vegas when you have a Poker Champion on your team.
- Comparing new product team’s success to the sales and profits of their biggest products. The new product team needs recognition. They are working harder than most others and sometimes failing on their way to success. Even the smallest success needs to be recognized.
- Assuming the product’s promised benefits alone are the reason a customer will buy the product. Sales and marketing strategy is a vital part of a product’s survival. Manufacturers of great products can fall into thinking that their product is the “obvious” choice. There are many great products, invented by very smart, inventor-engineer types who just won’t listen to sales and marketing people. Most of these product introductions fail or the company remains small.
- Being in too much of a hurry to launch the product and assume success. This happens when companies don’t spend enough, or even any time, discussing the product with customers to gauge reactions. Questions like, “If you could get a product that did this, would you be interested in it?” “What would be your biggest concerns using this product?” and “Can you see anyone else who needs this product?” can provide invaluable information when creating your strategy.
- Proceeding based on expensive quantitative research and skipping the actual customer interviews. Companies will say, “The research shows that 72% of customers would buy this product, so let’s proceed.” They launch only to hear those same people tell them, “I don’t want that product now” or “You didn’t tell me these other issues when you asked if I would buy it.”
- Assuming success and going all the way in, the first time. It is much better to assume that some or all of your sales and marketing program won’t work and be prepared to modify it on the fly. Listening to the sales team and making calls with them can redirect your launch to success.
- Not being patient with the messy new-product-introduction process. This process takes time, requires enough money and views failures along the way as lessons on how to be successful.
- Not appreciating how different a new market is or how to act like a small guy when you are used to being the leader.
- And more…These are just the most common mistakes I see building products companies make. There are still other strategic and tactical pitfalls to product launch success.
The Future for ForceField®
As I wrote earlier, I predict ForceField won’t fail. Still, a different approach would build more momentum, larger gains and better support further growth. With all the time, money and effort invested in product launches, the details can’t be overlooked. Keep this in mind as your company brings new product to market.