Creating a new product is a game that involves a lot of risk.
However, remaining innovative and paying attention to current market trends means keeping customers happy by releasing new products. There will always be risk involved in business, and it’s possible you can spend all this time working on a new product only for it to fail.
You may think it’s safest to just stick with the products that you know work, but not taking this chance is still a risk in itself. Consumers have a short attention span, they crave novelty, and if your business can’t satisfy them then they may turn to your competitors. So what’s the solution to this problem?
While not a surefire solution, the most common resource businesses turn to in order to minimize risk of failure when creating a new product is to forecast that product. Forecasting is when a business attempts to predict the amount of success that a new product will have within a specific period of time once it’s put on the market.
There are numerous factors that go into conducting a successful forecast for your product, including product awareness, price, distribution, and competition. In this article we will break forecasting down into digestible pieces so that you can determine if it’s best for your business and, if so, how to do it.
Why Forecast For a Product?
Obviously, mitigating risk and therefore limiting potential loss is a great reason to consider forecasting your product, but this isn’t the only reason to invest in forecasting. There are arguably two main reasons to forecast.
The first is that it gives you the ability to identify whether or not you’re going to achieve your predetermined sales target. The second, and potentially most important, reason is that a successful forecast allows you to determine if your product won’t perform as anticipated. This gives you the opportunity to do a bit of damage control and begin troubleshooting so that you can fix these issues, or in the worst cases just ditch the product before more damage is done.
Essentially, taking the time to forecast a new product gives your organization a window into the future. Having this perspective means that you can predict potential issues, thus allowing you to make better decisions to avoid these issues, and then judge the impact of these decisions.
Things to Consider When Forecasting
There are many variables at play when forecasting a product, which is why careful research about your organization and your product should be done before beginning. That being said, we’ve already covered exactly why engaging in product forecasting can prove beneficial for your company.
So despite the potential headache, taking the time to forecast a new product is always the best move. In the list below you’ll see a few helpful tips to consider when you begin forecasting. Use them along your journey to make sure you stay on track when preparing for a new product.
Creating the proper forecast while accounting for as many variables as your analysts can think of can be tricky. However with the proper guidance, and the aid of these tips above, you’ll be able to create a forecast that works for you.
Forecast Your Product For Future Success
There are many great reasons to create a proper forecast or series of forecasts for your new product. While taking the time to create a forecast is valuable, you cannot forget that as a business you should be willing to cut your losses even after all the research and preparation that a forecast requires. The fact of the matter is that most new products fail, even after careful planning. This is just the name of the game.
However, to prevent losing more money than the product is worth and risking greater damage to your organization, you have to be ready to leave and start over on a new product if the situation requires it. With this in mind, do the research, plan, communicate across the organization, and prepare for a successful product launch. There’s no reason your organization can’t beat the odds.