Some insights on new product launches from the perspective of manufacturers and reps.
Every salesman wants to be the guy with the shiny new thing. New products drive new profits, they keep customers engaged and convinced of the distributor's usefulness in the world, and they can open doors to new customers and even whole new market segments.
The process of launching a new product in the electrical market is one of those ever-changing/never-changing realities that shape the market's evolution over time. Electrical product launches may seldom come with dramatic fanfare on the level of, say, Steve Jobs' legendary shows introducing a new gadget from Apple, but in a way Jobs' presentations were only exaggerated versions of the new-product sales pitches every salesperson does every day.
Electrical manufacturers, reps and distributors all depend on new product introductions to help drive growth, so smooth and effective product launch campaigns make a difference to everyone along the channel. The ideal would be to unveil the new product at the precise moment when the customer is beginning to realize the need for it, to generate a buzz of interest beforehand and deliver satisfaction beyond the customer's expectations when the product arrives on the dock and is put into service.
Shockingly enough, sometimes it doesn't quite work out that way.
Product launches can go wrong in any number of ways that are outside the distributor's control. The best distributors can do is master the factors in their control and otherwise stay alert and use a strategy flexible enough to respond to the unexpected. Distributors can help themselves by taking ownership of the local market and taking responsibility for communications and training to bring local electricians, contractors, maintenance personnel and buying influences up-to-speed on the latest shiny new problem-solving thing.
Setting up a flawless launch is a complex process, and depends on a lot of people hitting every mark along a path that distributors may not even be aware of until it's near the end. Newcomers to the market can find it disconcerting when a manufacturer seems to have overlooked something as important as telling distributors there is a new product out there or having enough product coming off the line to satisfy initial demand. A look at what goes on in the manufacturer's world when preparing a new product for launch may dispel some of the confusion.
The process begins, naturally, with the recognition of a need in the market and an idea of how to satisfy that need. That need will define the marketing ultimately used to launch the product. For fixture manufacturer Kichler Lighting, Cleveland, which concentrates on the higher-end residential market, new products can be driven by changing fashions in home décor as much as by the need to solve practical problems. Kichler plans its new-product introductions around two annual shows aimed at lighting designers — the Dallas International Lighting Market shows in January and June. To be ready for those shows, the products have to get through design, development, production, testing and shipping.
“For a company like Kichler, that does not manufacture but works with manufacturing partners, the biggest challenge is to get the information flow between us and the factory where it needs to be,” says Jeff Dross, corporate director of education and industry trends for Kichler, who led engineering for most of the 37 years he's been with the company. “We send drawings, which someone reads and sometimes misinterprets; we discover things that can be done on paper but can't be done with metal. As far as management tasks required for a product launch, the biggest is getting the product as conceived through the manufacturing process.”
Once the production lines are ready, the product still has to get through safety testing at UL, CSA or the safety certification body most relevant to the market where the product will be sold. Manufacturers such as Kichler that have products built overseas have to factor in a month for their fixtures to ride a boat to the U.S. before they can get anything into the hands of a rep or distributor.
This means any small delay at the plant can mean huge delays in rolling the product out to the market, says Dross. “Production delays are very common in Asia, and probably in domestic plants as well, but it's exacerbated in Asia by that one-month boat ride. If you miss the boat, you've literally missed the boat. You have space allotted for that product, and if you couldn't deliver it to the dock on time, now you have to wait for the next available container space to put that product in and ship it. So a two-day delay at the plant can become a longer time delay.”
In that time, the marketing team gets involved, working up the materials and training programs that will help reps and distributors execute the launch. Catalog pages or whole catalogs must be created, specification sheets developed, with very little margin for error.
“You know if you're going to have a new product release, you need to have catalogs completed a couple of days before the sales meeting so the reps can know what's in the catalog and can sell to the distributors,” says Dross. “That's an ‘in-stone’ date. If you go to a show and you have no catalogs, a lot of people are not going to be visiting your showroom. A lot of times marketing materials can't be completed that quickly. Sometimes technical data is not ready, such as photometrics, or you have displays with actual product connected to them, and you have to wait for product. In a perfect world you would like to have all that ready, but if you don't have product to put on it, you will fall behind.”
Another important principle is that a product's long-term success is not always dependent on the launch experience. Even blockbuster products are often born ugly. When Carlon (now part of Thomas & Betts, Memphis) came up with its blue plastic electrical box in the early 1970s, it went on to become one of the most successful products in the industry, penetrating the residential market nationwide and spawning competing products from Carlon's rivals. It didn't exactly start out that way. Tom Moran, who was the product manager for the Zip Box during its debut, remembers it as a pretty rough launch.
“At the onset it was really bad,” says Moran, now owner of Midwest Plastic Fabricators, Aurora, Ohio, who has spent the rest of his career inventing and introducing new products. “We had a lot of problems getting acceptance. Installers didn't want to use it.” Manufacturing problems didn't help.
Carlon overcame its quality control problems and leveraged its position in the market for PVC conduit to encourage distributors to give the new box a try. “In that case, the solution was brute force,” Moran says. “Carlon's other product lines were dominant and were pulling things through. But it's proof that you can recover from the mistakes and the difficulties.”
So, say you do your part as a distributor, the manufacturer and reps do their part, everything goes according to plan and the market goes wild for the new widget. There's dancing in the streets … but things are about to get really hairy for your friends at the factory. Unexpectedly high sales volume may look like a champagne problem, but the penalty is actually far greater than if the manufacturer overestimates and real sales come in lower, says Dross of Kichler Lighting.
“Forecasting is always a crap shoot. You talk to the best people you can, communicate with the sharpest distributors that are willing to spend time talking to you, and you come up with an idea of what to expect. Sometimes it's perfect; sometimes it stinks,” Dross says. “The thing most distributors get upset with is when we under-forecast.”
He offers an example. “When we released a new LED landscape lighting product, we had a forecast and it was a pretty nice forecast. We released it, explained how it worked, and the popularity was overwhelming to the point where we were selling four times what I had forecast in the first couple of months. And it continued growing. If I had forecast what we're selling, they would have thought I was a loon. I could not have gotten away with implementing that forecast.”
The result, though, was delivery problems. “The factory couldn't produce faster. They couldn't ramp up until they built more tools to make more stuff,” he says. “That gets the distributors upset. They can't believe the factory can't keep up. They're asking, ‘Why can't I get delivery? Why can't I get my 12 or 24 pieces?’ because that's what he needs to satisfy his customer. What's going on in the background is everybody in the building is shoveling as fast as they can. You talk to factory. ‘What can you do?’ Then he needs to go to his suppliers and the guys who are selling him screws, his glass guy, the raw materials, and he has to find out how quickly he can get four times as much as we told him we needed. We have to think about ways to avoid that one-month shipping lag-time. We start looking at air-freight so distributors can take care of their customers.”
Dross says Kichler has gotten pretty good at forecasting its product introductions over the 70 years it's been making lighting fixtures. But sometimes a product inexplicably takes off.
Most distributors have had the exasperating experience of having a customer at the counter or on a sales call ask about a nifty new product from one of the distributor's key suppliers that the distributor knows nothing about. The good salesperson's response, “I don't know, but I'll find out,” barely disguises his frustration and the first hint of the fury that will hit the manufacturer's rep or field sales manager just as soon as the distributor can get his fingers around a phone.
The explanation is usually unsatisfying. The parent company handles the marketing, they put out a press release that hit the Internet and we've got materials on the way to your rep telling you all about it - something like that.
Avoiding this scenario is a matter of common sense, says Hank Bergson, principal of Henry Bergson Associates, Katonah, N.Y. “Manufacturers have to have a good plan, covering how much distributors need to put in stock, return provisions, how help the distributor manage stocking levels, how make sure distributor is aware of what the program is before you push it out to their customer level. It's an awful lot of common sense.”
Control of communications about new products is nonetheless a tricky matter. Manufacturers don't want word getting out too early — otherwise when the product launches it will already seem like old news, says Brad Wiandt, president of Madison Electric Products (MEP), Bedford Heights, Ohio, a manufacturer that has made an interesting niche for itself by openly courting inventors with a new product idea to pitch through what it calls the Sparks Product Innovation Center. MEP puts them through rigorous analysis, then develops, manufactures and launches the most promising products.
“Once we're far enough down the pipeline, in the early stages of the manufacturing process, the marketing team starts putting together collaterals, a product launch plan, advertising plan, developing print ads, a social media campaign, and getting the hard collateral together,” Wiandt says. “We don't notify reps until close to when it's ready to launch. Reps go out and talk and generate interest, and if it's 60 days before the launch, people can lose interest.”
Increasingly, new entrants to the electrical market may see a manufacturer's failure to use the power of social media to generate buzz around the launch as another inexplicable oversight. The emergence of social media as a means for spreading the word about new products brings some new twists to the challenge of controlling information before the launch happens. MEP has won awards for its use of social media, and considers it an indispensable part of a new product launch campaign.
“Social media such as Twitter, Facebook, YouTube, is just another tool in the marketing toolbox,” Wiandt says. “It's another way to connect with people in an authentic way. There's the question of cost. People have the idea that it's free, but it does take resources to manage it.”
Wiandt says he was hesitant when the company's new director of marketing, Rob Fisher, proposed that MEP get involved in social media. “I know the traditional boundaries in this industry. I couldn't imagine an electrician getting into it. But the fact is, the decision-makers of tomorrow are in the industry now, or will be entering soon. This is a difference in the way they operate. We use it as a support to our other ways, not the main way of communicating with the market. The old ways won't go away — I'd still rather meet with someone face-to-face — but there's a whole other generation coming up who have lived their whole lives in the palm of their hand. We're looking to open a channel of communication where we can connect with them in a personal way.”
Seasoned electrical industry veterans told us they don't quite get the fascination with social media — that it hasn't become an integral part of the way they live their lives — but all seemed willing to trust the rising stars to make the technology work for them.
“It seems to me that the younger group of people coming up in the industry now are better at marketing in general,” says Bergson. “They've figured out what they're doing, and they're doing more target marketing and more sophisticated analysis.” Having judged a recent award series on distributor promotional campaigns, he found that distributors overall were getting smarter about marketing. “They weren't doing as many superficial things. It wasn't, ‘We can deliver faster, now here's a model truck, and we had a cookout and we took everybody fishing.’ It was more about, ‘Here's how you can grow your business and we can help you do it.’”