New Product Development

2. Reducing the Risks

Identify major risks early on, so you can decide if the overall risk is worth the potential reward.

2.1 Analyse all the market risks. For example:

• Establish the likely volume of sales, and the marketing and sales cost of achieving each sale.
• Is your target market growing or shrinking? Are there any foreseeable changes in your market that could affect the success of your product launch - such as new product safety legislation.
• Are there any competing products already in the market that may block your route to entry? What are the strengths and weaknesses of the product? Can you offer something different and unique?

2.2 Analyse the technical risks.

• For example, do you need in invest in new equipment or technology make the production of the new product possible?

2.3 It is extremely helpful to have a working prototype to test out. But this need not be an expensive process.

• For mechanical devices you may need both a 'works-like model' and a 'looks-like model'. If you are improving on an existing product, you may only need to model the new features.
• Start with a simple prototype such as a drawing. Good feedback at this stage can save time and money.

2.4 Avoid being the pioneer, who has to learn everything the hard way. Look for evidence of what others have achieved before you.

• Look at recent developments in related products. Visit trade shows to get a preview of forthcoming products and trends before they hit the market.

2.5 Work out how to reduce each risk to an acceptable level.

• For example, can your new design be patented or protected in some other way?