Key Takeaways
- Marketing steps to launch a new product should balance speed, risk, and market conditions.
- Compare a gradual rollout with an all-in launch before committing significant resources.
- Pioneers can benefit from staged launches, while followers may have more reason to launch broadly.
- Use challenging test markets to assess product potential before expanding into additional markets.
What makes a product rollout successful? Research, testing, and careful planning can help businesses reduce the risks associated with launching a new product or service. One important decision is whether to introduce a product gradually or launch it broadly across multiple markets. Are you planning to introduce a new product or service? Understanding the most effective marketing steps to launch a new product can help you decide how quickly to enter the market and where to test demand first.
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Product launches can fail when businesses underestimate the importance of preparation, market research, and strategy. New product launches involve significant uncertainty, particularly when businesses have limited information about customer demand. What separates successful launches from unsuccessful ones? And how can businesses reduce the risks associated with a new product rollout?
In this article, we examine two approaches to product launches: taking a gradual approach or going all-in. Both strategies have advantages and disadvantages. The right choice depends on factors such as your position in the market, the level of uncertainty surrounding the product, and whether you are a pioneer or a competitor entering an established market.
At Taylor Wells, we believe that selecting a rollout strategy suited to your company’s characteristics, innovation, and growth can help improve your chances of success.
3 Marketing Steps to Launch a New Product
You have completed the major stages of designing, testing, and building a new product, and you’re ready to launch. You may be asking yourself: Should you introduce the product to a small group of customers first to see how they respond? Or should you make it available to everyone at once?
This is a critical decision, particularly in industries with high distribution costs and fierce competition. Here are three steps to help you decide which rollout strategy is right for your next product launch:
- Compare a gradual rollout with an all-in launch. A global launch can help you move ahead of competitors, but it can also make failure more expensive. A gradual rollout reduces the cost of failure but may give competitors an opportunity to gain market share.
- Consider your position in the market. Pioneers can benefit from launching in stages and testing their products carefully. Followers may have more reason to launch broadly because competitors have already established the market.
- Choose suitable test markets and execute carefully. Challenging markets can provide stronger indicators of whether a product can compete, while markets where failure is unlikely can help businesses determine whether a failed launch reflects the product itself or the market.
These steps help businesses balance the risks of moving too slowly with the risks of launching too broadly. They also provide a practical framework for choosing and executing a product rollout strategy.
Step 1: Compare a Gradual Rollout With an All-In Launch
You have two main rollout strategies to choose from: a gradual rollout or an all-in launch. Each approach has advantages and disadvantages, and the right choice depends on the product, market, and level of uncertainty.
An all-in global launch can increase the cost of failure.
Imagine managing time-consuming negotiations with multiple sales teams, increasing production and supply levels, and tailoring packaging for different customer segments. You may also incur upfront setup, maintenance, and distribution costs. Then you discover that the product has not generated enough demand to recover these costs. This can make a failed rollout costly and difficult to recover from.
A gradual rollout can reduce the cost of failure, but it may give competitors an opportunity to gain market share.
Market testing is important, but a rollout that is too slow can give competitors an opportunity to gain market share. Even if some customers strongly value your product, competitors may gain an advantage if they can establish themselves in the market first.
Toyota and Honda provide useful historical examples of the challenges involved in launching new hybrid technology. Toyota launched the first-generation Prius in Japan in 1997 before expanding into other markets. Honda launched the Insight across multiple markets, including the United States, in 1999.
Honda reached the North American market before Toyota, but the Prius ultimately achieved much stronger market acceptance. This illustrates that entering a market first does not necessarily guarantee long-term success.
The example also shows why businesses should avoid assuming that launch timing alone determines the outcome. Product-market fit, customer demand, competition, and execution can all influence the success of a new product.
Step 2: Consider Your Position in the Market
You now have a better understanding of the pros and cons of the two strategies. It’s time to choose which path is best. Let us first look at an example from the mobile phone industry:
Mobile phones are a massive, global industry, but their distribution is handled on a country-by-country basis. This makes the all-in approach expensive.
A 2022 study published in the Strategic Management Journal examined how handset makers sequence innovation rollouts across markets. The researchers found that firms that pioneered a feature in one market were not always the first to launch it in other markets.
Pioneers did not always maintain their lead in subsequent markets, with competitors often reaching those markets first. The study also found that firms were more likely to sequence rollouts when innovations were novel. This suggests that caution can be valuable when businesses have limited information about an untested product feature.
So, how can companies determine which approach is best for their product rollout?
Careful testing can be particularly valuable when there is limited precedent for an innovation and businesses have less information about customer demand.
Pioneers and Followers May Need Different Rollout Strategies
The study cites the first camera phone as an example of how a pioneer in one market can be pre-empted by a competitor in another. Kyocera pioneered the camera phone in Japan, while Sanyo launched a camera phone first in the United States.
In rapidly advancing technology markets, the commercial window for an innovation can be limited. The study notes that competitive pre-emption was an important concern in the fast-moving handset industry, giving firms an incentive to launch quickly when they wanted to secure an early position in other markets.
Some firms find it difficult to avoid the influence of past experience.
According to the study, firms that had recently experienced competitive pre-emption were less likely to sequence their next rollout and more likely to launch across markets simultaneously.
In contrast, firms with more experience of innovation failure were more likely to sequence subsequent rollouts.
Changing rollout strategy based on a previous failure or competitive loss may be understandable, but it is not always the best approach for the next innovation.
We advise businesses to consider the characteristics of the innovation and market before changing their rollout strategy. Past lessons may not be relevant to the circumstances at hand.
Step 3: Choose the Right Test Markets and Execute Carefully
Once you have chosen your rollout strategy, the next step is execution.
Plan Execution Around Your Rollout Strategy
If you decide to go all-in, your main challenge is organising a coordinated global release. If you choose a gradual rollout, you need to determine where and how to test the product first.
See how pricing breaks in practiceFirms can use two types of market signals to assess a product’s potential: competitive market performance and performance in favourable markets.
Identifying these signals can help firms make more informed decisions about whether to expand, adjust, or stop a rollout.
1. Test the Product in Competitive Markets
Competitive markets can provide stronger signals about whether a new product can compete against established alternatives.
The lessons from these test markets can help businesses make better decisions about where to invest innovation resources. Although launching in a highly competitive market may be more difficult in the short term, it can reveal whether customers will choose the new product when credible alternatives are available.
For instance, a company testing the potential of a new camera-phone feature could choose a market where established competitors offer similar innovations, providing a demanding test of the product’s appeal.
If a new camera phone performs well in such a competitive market, this could provide stronger evidence of its potential in other markets.
2. Test the Product in Established Markets
Markets with established categories and informed consumers can provide useful signals. A skincare company, for example, could test a new product in a market where consumers are already familiar with the category and can assess new products against established alternatives. If the product struggles despite these favourable conditions, the company can investigate whether the product itself is responsible for the weak performance.
Bonus Tip: Set the Right Price for Your New Product
1. Understand what your customers value. Research what competitors offer and how they price comparable products.
This gives you a useful benchmark for assessing your product’s position in the market.
2. Define what you want your pricing strategy to achieve. Then select a pricing strategy that supports those objectives.
Taylor Wells’ research indicates that, with the right set-up and pricing team in place, incremental earnings gains can begin in as little as 12 weeks. After six months, businesses can capture at least 1.0–2.25% more margin through better price management processes.
After 9–12 months, organisations can generate 3–7% additional margin annually as they identify more complex and previously unrealised opportunities, efficiencies, and risks.
3. Consider value-based pricing. Speak with existing customers about what they value, which alternatives they consider, and why they choose your product over competitors.
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Bottom Line: Choose the Right Product Rollout Strategy
An early mover introducing an uncertain innovation may benefit from a staged rollout. Testing the product in challenging markets can provide useful evidence about customer preferences, demand, and competitive performance before expanding further.
In comparison, a late entrant may have more information about customer demand and competitor offerings, which can make a broader rollout more appropriate.
There is no one-size-fits-all approach to launching a new product. Some degree of market uncertainty cannot be avoided, but choosing a rollout strategy suited to your firm’s characteristics, innovation, and market conditions can improve your chances of success.
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