This article was written by Ed Hatton for Entrepreneur Magazine (South African edition), as the My Mentor column published in June 2015 and is posted here by their kind permission
Does unique mean it will make millions for you?
You have created an innovation; congratulations. It may be a unique product, a brand new service, a new way of distributing things, a unique business model or a combination of these – but will it fly? Hopefully it will be a success and reward you, but just because it is unique is no guarantee of commercial success. The great innovations are generally those where potential customers immediately see the value, and perceive the value to be higher than the cost. Think of prepaid airtime which opened cell phone use to those who could not afford a contract.
Innovations which struggle to get off the ground are often those where the entrepreneur is passionate about it and believes potential customers should share his or her passion. This is a good way to learn that even great and creative products must be sold. Many wonderful innovations have never been launched or failed when they were introduced.
Preparing to launch
Ask yourself: Is this innovation is in response to a real market need, does the market recognise this need or are they not aware of it yet. If you are in the second category be prepared to spend a lot of time and money convincing people they really have this need.
There are two key requirements for a successful launch of a unique product; reasonable certainty that customers will buy at the proposed price and sufficient money to develop and market the innovation. Please do not ignore the marketing costs. Commercial failure of many innovations stemmed from entrepreneurs who spent all their money on perfecting the product and had nothing left to tell the market about it. Marketing innovations is expensive; the market must be convinced that the innovation works, is cost effective and gives advantages over old ways of doing things. Do not underestimate marketing costs.
Being reasonably certain that customers will buy at the proposed price means you have to understand the market by surveys or hard market research and understand the alternatives to your innovation. It is not smart to believe that the sheer brilliance of your innovation will attract customers and then spread like wildfire. This has happened but it is extremely rare. The world generally does not seek out new things, the saying about the better mousetrap is simply not true (see box).
Understanding the alternatives available to potential customers is absolutely vital. The additional advantages of your innovation over alternatives is what your potential customers will see as the value of your innovation. Let’s take an example: You have created a new way to provide low cost emergency lighting for use during blackouts. Customers still have the alternative of buying conventional emergency lighting or candles but the innovation will reduce the risk of a candle causing a fire and be less expensive than current systems. Are these advantages big enough to get enough people to switch?
At some point you will have to decide whether to do a test marketing exercise to make sure that consumers will buy, that there are no obstacles to using the innovation and that it can be made and sold at the calculated prices. Generally I recommend test marketing; failure to do this has proved massively costly in the past. However a test marketing exercise means that the innovation becomes public, and may attract imitators. You need to make the call.
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