The PDMA Handbook of New Product Development

32.5. Assessment Methodologies

In this section, we outline some of the ways to measure postlaunch performance, whether the product is being test marketed or has been launched nationally.

32.5.1. Sales

Obviously, the first measure everyone will be interested in is the product's initial sales level. Increasingly, such information is available quickly, even within a matter of a week or so, via improvements in information technology. However, while actual sales is an important metric, it can frequently be misleading. Factory shipments may be a poor indicator of actual consumer takeaway, due to pipeline inventory. Initial consumer sales will reflect primarily early consumer trial of the new product (if it is a packaged good); these can be artificially hyped by short-term consumer or trade promotions and thus make things appear rosier than they really are.

For most packaged goods, the sales velocity inevitably peaks in the first couple of months and then falls off (see Figure 32.3) as trial flattens. Many companies read sales the first month or so and then extrapolate them erroneously, assuming that they can but only grow in subsequent months. Understanding the month-by-month sales growth and decline curves is essential to projecting sales accurately.

For nonpackaged goods or services, reading early sales as a means to gauge future success can be equally or even more treacherous. The initial sales will probably come from "early adopters" or innovators, whose reaction to the product ...