The governments and people have begun to realise that for achieving the goal of economic development, it is essential to increase, both qualitatively and quantitatively, entrepreneurial activities in a country.
Noted Austrian-born American economist Joseph Schumpeter in 1934 visualised the entrepreneur playing a key role in bringing out innovations into the marketplace.
The entrepreneur senses an opportunity which others do not see or care about.
He looks for an unfulfilled need in the marketplace, brings out an innovative product or service idea with the potential to fulfil that need and then brings together the manpower, material and capital needed to respond to the opportunity he sees.
However, in spite of his best intentions, an entrepreneur commits the following common mistakes in new product development:
1. No market research:
We all are aware that market research reduces uncertainty in decision-making with respect to introducing new products in the marketplace.
It is all the more important for a start-up to introduce a new product in the market that becomes an instant hit, as the start-ups are ill-equipped to handle product failures due to lack of adequate funding and R&D capabilities.
2. Hasty commercialisation:
It is always advisable to carry out thorough test marketing for a new product before launching it nationally.
The customer feedback received during test marketing helps the company fine-tune the marketing mix comprising product, pricing, distribution and promotion.
Only after the initial customer feedbacks are incorporated in the marketing mix of the product, the product is ready for a wider launch.
Start-ups, in their enthusiasm to become successful fast, ignore this vital step and indulge in hasty commercialization.
By the time they realise that there was a marketing mix issue, it is often too late and the adverse impact is too huge for a start-up to absorb.
3. Focus on products, not benefits:
A vast majority of start-ups come into being solely on the strength of a solid product/ service idea of the entrepreneur.
However, instead of being blinded by the product, the entrepreneur should focus on the benefit that the product offers.
When a carpenter is buying a drilling machine, he, in fact, is buying millions of holes.
When a lady buys a lipstick, she, in fact, is buying hope. An entrepreneur must focus on the benefits the product offers to the user, rather than the product itself.
4. Lack of communication:
Integrated marketing communication is a critical aspect of a product and its success in the marketplace.
If the entrepreneur has identified an unmet need in the marketplace and has developed the product as a solution to that need, it must be able to communicate to the market that a product is available to fulfil the unmet need.
If the start-up fails to communicate the same to the market, the product is bound to fail.
5. Availability of a product:
As establishing a wide distribution network involves a lot of time, money and efforts, a start-up lacks a good distribution network.
As a result, it becomes difficult for the product to reach the marketplace, even when there is a need.
This way, even when there is a market available for the product, the start-up is not in a position to cater to the demand as it is not able to make the product available to the market.
6. Pricing too high or low:
Pricing is like a double-edged sword for a start-up business. When the price is too high, the start-up out prices itself in the marketplace and the higher price adversely affects the demand.
When the price is too low, the start-up loses valuable margins, so crucial for a start-up business to achieve financial sustainability. A low price also conveys a low-quality image for the product.
[Prof. Dr Shesadev Nayak is the Dean at Bhubaneswar based Interscience Institute of Management & Technology ( IIMT ) and adjunct professor with KIIT School of Management, KIIT University. He can be reached at firstname.lastname@example.org]