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Manufacturers Speak Up on New Product Launches

By Bridget McCrea

tED magazine continues to update you on stories relating to new product launches. On January 24, 2014, www.tedmag.com posted the story  How Good (or Bad) are Manufacturers’ New Product Launch Efforts?where a number of electrical distributors anonymously voiced their opinions about their suppliers’ new product launches. Here, three manufacturers give their points of view on new products launches and explore the role that distributors could be playing in making these campaigns more successful. They also discuss the challenges that manufacturers are facing in their quest for innovation in today’s marketplace and offer up some tips to distributors that want to improve their own efforts to support new product launches.

You need to know these two points:

  1. We are allowing the distributors and manufacturers to speak anonymously so they do not damage the relationships they have built over an extended period of time. tED magazine is verifying the comments and making sure they are helpful and relevant, while also from reputable sources.
  2. tED magazine will be hosting a panel discussion on this topic at this year’s NAED National Meeting in San Francisco.  We are still in the process of setting the panel, but we can pass along that the event will happen on Monday, April 28 from 10AM-11:30AM.  It will happen at the end of the Speaker Series that begins at 8am Monday morning.  You can find more  information on events at the NAED National Meeting by visiting www.naed.org.

Electrical Manufacturer #1:
“When it comes to distributors’ attitudes toward new product launches, there are two schools of thought. Many times, they get involved in the process once an end user comes in and says, ‘Hey, I saw a flyer about a new product from this manufacturer and I want to buy one.’ Once this happens a few times, the distributor begins to buy the product and might even start to stock it. Other times – particularly with products that aren’t earth shattering – distributors just say, ‘No, I don’t want the risk involved with stocking those new items.’ And even if the new product we developed may be better or more useful to the end user than what we offered before, those walls tend to remain up. Distributors want to see that they can sell it; they want a guaranteed sale. This is a mindset that’s developed over the last 20 years or so that I’ve been in the business and, as a result, it’s gotten much harder to make new products work in the marketplace. Part of the problem is that distributors are leery about putting too much time and energy into a new product when the supplier could be belly up in two years. At that point, the distributor would have to switch out its inventory and start again. Ultimately, the best distributors are the ones that do quarterly and/or biannual inventory examinations to figure out what’s selling, what’s not selling, what needs to be changed out, and what needs to be brought in. The problem is that most companies are running so lean today that they don’t always have the impetus to move forward with stocking and selling new items. In reality, the basic premise of distribution is the same:  keep the good stuff and move out the bad stuff. From the manufacturer’s perspective, we are always more willing to take back $3,000 in obsolete items in return for bringing in six new products. That’s a win for us.”

Electrical Manufacturer #2:
“Well, from a manufacturing standpoint, we know that distributors get inundated with opportunities, new products, and new promotions. We try to come at the product launch issue from that point of understanding when we get ready to introduce a new item or line. Having said that, many distributors do try to take on too much and try to be everything to everyone in an attempt to gain market share and stand out from their competitors. The problem is that you can’t be too successful in any specialization area if you are going to be a Jack-of-all-trades, so to speak. Because we don’t use a limited distribution setup, we’re basically trying to sell to the masses – a difficult proposition at times. What we generally find is that the most successful distributors pick their partners and participate in new product launches by helping us put effective marketing and sales plans in place. Simply putting out a counter display or sending out direct mail doesn’t cut it. At the same time, the distributor that wants the new product information in advance, in order to start pre-selling the product and raising awareness of it, often challenges us. We’re usually rushing around trying to get everything in place and can’t always take the time out to manage those requests. However, once we’re ready to sit down with key distributors and get commitments from them, we want to be able to put together a full sales plan for those new items, discuss inventory commitments, and help promote the goods to their customer bases. We then support those efforts with sales training (for the distributors’ inside and outside salespeople), back-and-forth communications, and other efforts. In the end, for distributors, a successful product launch is really about circling the wagons, evaluating what’s coming down the pike at you, and selecting the few items that you can really get behind.”

Electrical Manufacturer #3:
“Nothing happens until someone spends money to promote and support a new product. So why should distributors extend their resources to cultivate and build business when the new product in question doesn’t give them a competitive advantage in the marketplace? That’s the real question here because without that advantage there is no incentive to devote additional resources to new product launches. One way distributors can better leverage these new developments is by talking first to their customers bases – namely, the electrical contractors who are actually using the products. What do they want? What are they lacking? What new product options have they learned about from magazines, trade shows, etc.? A short conversation with a customer can be extremely revealing and help distributors better position their new product support efforts. Everyone is waiting on the manufacturer to initiate the introduction of new products and I think that manufacturers have been jaded by this circular discussion of new products being promoted. To some degree, this issue also comes back to a manufacturer’s distribution policies, and the fact that when a distributor lacks an advantage in the marketplace it will simply try to sell everything to everyone. There is no incentive for them to really invest in promoting the new products. As a result, the distributors become risk averse. The good news is that when all of the pieces of the puzzle come together – the manufacturer’s innovation, the distributor’s support, and the end user’s input and feedback – customers get the innovation that they need and deserve.”

McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at bridgetmc@earthlink.net or visit her website at www.expertghostwriter.net.

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