6. Are You Market Ready?

 

Once the right kinds of target customers are identified through market research, run through these checklists before product launch, to maximize market potential.

    Complete Actions from Market Plan
    Product Testing and Validation
    Product Promotion
    Advertising
    Buy Recycled Specifications and Directories
    Manufacturing & Operations Readiness
    Delivery and Delivery Scheduling
    Repeat Customers
    Continuing vs. One-Time Sale
    Distribution Channels
    Hit the Easiest Market Segment First

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Complete Actions From Market Plan

Ensure all the action plans developed in the marketing plan are completed. Focus areas include:

Are all product claims (product benefits and features) substantiated and backed up with objective data?

Product Promotion

Are all the important benefits and features clearly stated in the promotional/sales literature and/or website? Consider the following product and/or service features related to recycled content, if applicable.

Advertising

Buy Recycled Specifications and Directories

Manufacturing & Operations Readiness

Although this document is not intended to be a manufacturing related guide, consider the following issues with respect to product-readiness.

What financial risks does the company absorb if the schedule is thrown off, inventory is returned, or sales are slow?

How will it affect company morale if the effort to sell to certain potential customer(s) greatly increases the workload and work schedules?

Is the raw material inventory and/or receipts of raw materials enough to satisfy the production capacity required?

Will the current manufacturing system hold up for quality control, 24-hour production, retooling and change outs, etc.?

What if orders double or triple?

Delivery and Delivery Scheduling

Can shipping methods and scheduling of shipments attract more customers?

A target customer will choose the supplier who can provide the adequate product in time, and at an acceptable price. An example might be a processor of raw material, where the company can deliver custom grades overnight if necessary, or add an unusual color pigment, or work with an industrial manufacturer to adapt a process to be able to use a recycled feedstock.

Distributors often expect the seller to support sales efforts by attending in-house product introductions, store demonstrations, staff training, etc. They might want to be able to order directly on-line or have drop shipment capability throughout the U.S. or internationally. Sometimes a company launching a new product or service has to do whatever it takes to get the initial order(s). This builds customer loyalty and increases likelihood of continuing business.

It is much more expensive and time-consuming to find new customers than to sell to existing ones.

Sometimes a new potential product seems like a solution for an existing need or problem. If it solves the problem for the foreseeable future, the customer may not buy again. In this case, maintenance programs or upgrades help to get continuing sales. Having the capability to re-tool and offer upgrades, or customizing to provide exactly what a customer wants is important.

Continuing vs. One-Time Sale

If the product is a one-time only sale, is the demand and market large enough to sell once to each customer and still maintain growth? If validation of one-time-sale growth potential is necessary, talk more with suppliers or retailers of similar products. If indications show a sufficient and growing market for such products, then the product might still be worth investing in. A well-trained sales staff that is adept at generating new leads may be necessary. Continuing and consistent marketing and promotion are essential. Additional market share might be gained by building alliances with companies that already have such marketing channels in place.

Again, maintenance, training and servicing, as well as product upgrades are sales opportunities. Investing in research and development for the next 'upgrade' for this product gives added market potential.

Distribution Channels

Building a distribution channel from scratch is expensive and time consuming. The right channel(s) more quickly and effectively achieve market penetration, while minimizing labor & capital resources.

What did the market research reveal about the best or most common mode of product distribution? E.g., through a distributor, hiring and training a direct sales force, focusing on direct sale to end users, or bundling with another product? Here is a quick run down on selecting the optimal channels for different product types:

• Product Bundling

Raw Materials

In the case of a recycled feedstock as a raw material, the likely target customer is an industrial manufacturer who would be willing to test, reformulate, and retool (if necessary), to use the recycled feedstock. Depending on the process and the end product, either a percentage of recycled feedstock can be used in a formulation, or when technically feasible, 100% recycled-content feedstocks are used. To get this type of customer, the recycled-content feedstock must have some benefit; e.g., more efficient production, better product performance or aesthetics, more flexible delivery, or lower cost.

Customization of a blend, output or any other specification for a customer, that the competition cannot provide at a certain quality level, or timeframe, the customer will listen. Can they charge for product design services using the raw material to custom create a new product? These extra services will add value to the sale of the raw material to manufacturers.

Industrial Use Product

If the product has an industrial use, the target market would use or specify the product for a building, manufacturing process, or to organizations or government. Direct sales or a broker ("middle salesperson" or industrial distributor) is the best channel. The sales force or broker can bid on solicitations to supply the product and seek out new leads.

An industrial distributor already has relationships with the target markets. They resell to industrial users, retailers or other wholesalers and make the direct sales effort on the company's behalf. This avenue results in less profit on sales, but expenses are saved on direct sales (and related training and overhead); a potential best strategy for small companies. Necessary supporting information and materials for such a distributor includes: product samples, test data, pricing on volume discounts, special packaging or shipping systems, and training information for the distributors' sales force. Customer support is still required.

Consumer Use Products

Consumer products are sold by retail, mail order, or on-line. Most big retail stores buy from large distributors. In this case, sell to the appropriate distributor who resells to the target retailers. The distributor and/or retailer may request test data, samples, in-store testing programs, brochures, training literature and support. They may also specify or request special discount pricing, upscale packaging, extensive freight or shipping requirements, high volume shipments, consumer advertising, point of purchase displays, and in-store demonstrations. Depending on requirements from the distributor/retailer, the above can become cumulatively expensive and hard to sustain.

Bundling With Other Products

The advantage of combining a product with another established product is that the distribution channels are in place. This kind of arrangement is effective if the bundled product adds value or functionality to the established product.

Such a strategic alliance can be set up using licensing agreements where the company only supplies the finished product and the alliance partner packages it and markets it. Royalties on sales are received, however, the bundled products might not carry both/all company names.

The main benefit for the established company is that bundling may open up markets for their product that they could not have reached without packaging the two together. Examples include:
- selling the right to use a recycled paper absorption ingredient to be used in another company's blend for cat litter;
- licensing a recycled-content feedstock that reinforces concrete, to a manufacturer of concrete forms
- licensing the right to use a proprietary process for creating recycled plastic and glass blends to a manufacturer of containers
- selling erosion control matting to a distributor of erosion control chemicals for resale as a 'total solution' product.

Hit the Easiest Market Segment First

Prioritize the target customer list. As a team, develop the criteria to decide if a target is worth investigating. Base the criteria on the market research findings, and consider the following four criteria a well. If any targets meet the following criteria - these are likely the top priorities.

· Minimal education required on the value of the product and how to use it.
· Assurance that they will use the product.
· The product can be sold as is, without upgrades or improvements
· The current product solves the right problem or need, for a customer that can afford to buy it at the offered price.

When the top market segments are prioritized, review each individual target customer in the top market segments against the following:
o How much effort and expense will be required to set up, market to, and educate this potential target customer to get them to buy?
o What costs (labor, materials, time) are associated if a purchase order is accepted from this potential customer? (Is the amount acceptable?)
o How much capital will be tied up in manufacturing the product before seeing a payment from this customer?

Confirming Sales

Before scheduling production runs, it is wise to validate sales orders and ensure the company has the ability to supply. A sales lead becomes a customer when the potential customer has:

A prospect customer prioritization list follows:

Spend about 70% of sales time with prospects who are ready to sign a purchase order for a product.

Spend about 25% of sales time with prospects who have asked for information, had several phone calls discussing specifications, pricing, delivery schedules or custom ordering.

Spend about 5% of sales time with sales leads that have asked for information. Follow up periodically, on a scheduled basis if possible.