Using Existing Sales Channels to Launch a New Product Line
A manufacturing division of a larger public company designed a new line of graphic components for PCs. They did this with the support of the CEO of the parent company, who was very clear about the strategic importance of the company expanding into new product areas. The larger company had established sales channels, including extensive distribution. Piggybacking on the existing resources was an attractive way to keep down costs of launching the new product line. However, there was historical evidence to suggest that the new product line might get lost in the presence of the older, established products. Additionally, the new product line was more technically-oriented and had a somewhat different value proposition than the company’s established products.
The CEO of the parent company wanted to “leverage” the existing sales channel, using the current sales and marketing staff to bring the new product line to market. The division that developed the new product line was concerned that the new product line might not get the required attention from the current sales and marketing staff and that it would be better if they controlled the launch into the channel to give it the attention and support it required.
Divisional management reluctantly agreed to use the existing distribution channels and marketing and sales resources to launch the product line.
The new product line never gained traction in the market. The marketing staff tried to “force fit” the new product line into their traditional marketing approaches. The sales team was under considerable short-term pressure to meet their revenue numbers. Both the marketing and sales groups saw this new product line as a distraction and didn’t give it much attention. It was difficult to determine how much of the failure of this product line was attributable to a bad product, a bad market, or poor marketing and sales execution. As long as the corporate sales and marketing team met their overall numbers, no one in those organizations was held accountable for the launch failure of this new product line.
The Lesson Management should recognize that when it is launching a new, strategic product line it actually may be launching a new business, one that must have its own support system. Often there are inherent conflicts between new and old lines of business, conflicts that should be avoided when possible. Additional resource investment may be required to allow this independence, and the costs of doing so should be identified when making the business case for the new product line.