Should You Launch a Product Line?

Mar 28, 2011

Gene Lynch is in the process of launching a line of racing-oriented suspension systems for hot rods from The Rodworks, the restoration shop he founded in 1992. Lynch believes the line will fill a niche in the industry and give his shop more name recognition.

“The main thing is establishing your name, getting it recognized by your products, like any other company out there,” the owner of the Fenton, Missouri, shop said.

“You think of Heidts, you know what they do, you think of TCI, you know what they do, their names are all known because of their products,” he said.

Building name recognition is just one benefit to a shop that launches its own product line.

“[It’s] a way to build exclusivity, [and] a unique market niche,” said Alex Bitterman, associate professor at the  School of Design & Department of Architecture at the Rochester Institute of Technology in Rochester, New York.

“The retailer would then have incredible control over how the brand is articulated and how it’s translated into a particular product line,” he said. “The benefits are many in that it drives business, it drives customers into the store, there’s exclusivity and there is great control over what is being offered through that retailer.”

Consulting With Customers

A new product line needs to benefit more than the just the shop that created it.

“It is always great -¦ to provide some new product in the marketplace,” said Drew Stevens, president of Stevens Consulting Group, a Eureka, Missouri-based consultancy that teaches companies how to build better customer relationships. “There [are] two things that the business owner really needs to have in front of them-number one, is there a need, and, number two, does the demographic really want it. It’s really a simple want-or-need kind of question.”

A focus group can help a shop owner determine if there’s interest in and demand for their product.

“I would suggest they formulate a focus group and get some initial feedback as to whether or not the demographic is going to be interested in this particular product,” Stevens said. “There could be a lot of time and a lot of energy wasted [launching the product] and people may simply say no, and a focus group is a good way to [avoid] that.”

A focus group can be comprised of your best clients. Stevens suggests asking three questions to gauge their interest in your product idea.

“It’s as simple as saying, ‘Here’s an idea for a product, would you be interested in making a purchase?'” Stevens said. “Second question is, ‘If there is a competitive product out there, but here are three variables that make this even better than what’s available today. What would you pay for something of this nature?’

“The follow-up is, ‘If you’re willing to pay for this, do you believe that others would be willing to pay for [it]?'” he said.

Having a prototype ready to present to your focus group can be helpful.

“If it’s affordable, a prototype is not a bad thing [to have],” Stevens said. “People are visual and some will want to see what that particular product is, what it does, how it’s going to function, those sorts of things.”

You don’t have to have a prototype ready to present to your focus group, but visuals can help, according to Stevens.

“If you don’t have [a prototype], then you can draw it out,” he said. “But, clearly, the opportunity to show them some sort of a visual is certainly better than not having anything at all.”

Satisfying the Market

In addition to consulting with customers, it’s also important for shop owners to ask themselves some tough questions when preparing to launch a product line.

“The primary question[s] that should be asked [are], ‘What is our main mission strategy? Why are we here? How does this fit or mesh with that strategy?'” said Bitterman with the Rochester Institute of Technology.

“If it doesn’t, then there’s a whole host [of questions] that come up, ‘Why are we doing this? What do we hope to gain? Is this something that we’re really sticking our neck out onto the line that’s going to put us way out in left field to the point where we’re doing something that isn’t our core mission?'” Bitterman added.

In some cases, moving away from the company’s original strategy to launch a product line can be wise, both for the benefit of the product line and for the future of the shop. Shop owners and consultants, such as marketing experts, can work together to determine if this is a smart move to make.

“Good leadership has at least an innate sense of that,” Bitterman said. “That’s something consultants can help with or help refine because those missions don’t typically stay stagnant. They typically change over time based on the needs of the market [and] the company.”

The product should also meet the needs, possibly as-yet-unmet, of the market.

“Try to think of something that’s different, something unique,” suggested Lynch of The Rodworks. “In this market it’s kind of hard; 25 years ago there wasn’t as much available so it was fairly easy for all of these companies that are big names now. For us guys that [have started creating product lines] within the last 10 years, it’s pretty tough to come up with a new product line that somebody hasn’t seen before.”

Tough but not impossible, according to Lynch.

“Try to build something with a lot of quality, a good part, and then something different, unique,” he said. “If you go out there and you build a Mustang II suspension, we’ve already got 30 people out there building those, [so] unless there’s something unique about it that changes yours from theirs, people aren’t going to want to buy it.”

Bringing in Sales

Shops that have created products that fit into an untapped niche have seen their sales improve.

Port City Machine, an engine shop that sells its own line of engine parts, is one such shop.

“We started making parts and then we started doing them for other engine builders and then it got to the point where [people would ask], ‘Why don’t you make some for me the next time you make them?’ and just kind of went from there,” Skip Ohnmacht, the owner of the Oswego, New York-based shop said. “It’s nothing intentional that we set up with a game plan, it just kind of fell into place [and] it’s [been] a good fill-in for general work that we do, kind of like an add-on, additional sales.”

Having a product line can also build customer loyalty.

“What you’re doing is you’re coming up with a nice way for you to remain closer to your particular client base,” said Stevens of the Stevens Consulting Group. “What’s helpful is that clients are able to come automatically to you, so what’s happening is you’re building a better client loyalty because you have a particular product that those clients want.”

“Rather than going to other vendors, they’re buying it from you, they’re supporting your shop,” added Stevens. “They understand that you’re the one that developed this and you’re the one that can fix it if it needs to be fixed.”

Maintaining or Sharing Control

Having total control over a product you carry is another plus for shop owners starting their own lines.

“It’s a product that you control,” said Lynch of The Rodworks. “You can control the profit margin, you can control the quality, and you can control who sells it.”

To have the greatest amount of control, some shops, such as The Rodworks, may choose to manufacture their parts in-house. Others decide to have an outside company handle the manufacturing and instead focus on product development, marketing and sales.

“We used to custom-make [parts] as we needed them and then it got to the point where you’re spending a lot of time, pulling off jobs and doing [the parts] one-off,” said Port City Machine’s Ohnmacht. “We decided just to outsource it and have somebody make them for us, and we’ll just stock them and we order them in batches as we need them. It took too much time [because] we aren’t set up to do production runs for machining.”

Having a product line can take away focus from a shop’s main business-”restoring cars, building engines or selling parts. Shop owners have to find a way to balance the responsibilities of running the various aspects of their business while introducing a product line to ensure all-around success.

“If [the product line] takes off, I’ll bring in some other people to start making that stuff,” said Lynch, who plans to have his suspension line out next year. “I’ve got some part-time people sometimes come in here and help me [now] but they’re not full-time people, [so] if it takes off, I’ll hire some people to help me take care of it and handle the other things.”

By talking with customers and having conversations internally, shops can determine if launching a product line is a smart move. If that determination is made, the only thing left to do is start.

“Just do a good market analysis and try it, you’ll never know unless you try it,” said Ohnmacht. “If you’re thinking it might work, don’t talk yourself out of it, just try it. If it doesn’t work, try something else. It’s better to have tried and failed than to not try at all and always wonder.”