The importance of experimentation when launching new products


Innovation requires failure. Without failure, one cannot learn what the market wants and doesn’t want.


More companies are prioritising product innovation in order to avoid falling behind the competition.

Larger companies are experimenting with new products in order to gain more understanding into what the consumer wants.


Airbnb and Uber are examples of companies that have recently ran experiments to test the impact of new products/services. Uber launched Express Pool in six large markets and compared the metrics in launch cities along with others. The experiment provided Uber with a thorough analysis about whether launching the new service made good business sense. Airbnb, on the other hand used experimentation to test the impact of a new landing-page design on search-engine ranking and web traffic.


It must be noted that smaller companies should also be experimenting to test new products and innovations. A small boutique coffee shop may be debating whether to introduce a new item on the menu but are unsure how their customers will react to the item. In this case it would be most effective for the coffee shop to roll out the new product across a number of randomly selected markets, rather than rolling out the new product to a couple of strategically chosen stores and running a few focus groups.


Experimenting with new products requires a few guidelines for getting started:


1) Determine the quantifiable performance indicators that will determine whether the product is successful or not.


Decide upfront which performance indicators will determine whether the new product is a success or failure.


2) Decide which markets to roll out the product


Focus on the markets that best represent your consumer as a whole and roll out the product into these markets. These markets should provide the most accurate representation of your average consumer.


3) Tracking the impact of the product on the rest of the business


New products may seem successful but if they are cannibalising the sales of other products in the business then it may not be a good decision to launch the new product.


4) Assessment of why the product is succeeding or failing


In order to get a full picture about how well the new product is doing, businesses should assess the reasons behind either the success or failure of the product.


By Arjun Sondhi


Brand & Digital Director at BMC Global Services

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