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Why New Products Fail?
New products fail at a rate of 90-95%. New products generally fail for two reasons:
- Costs for producing a product are much higher than expected at commencement.
- There is a myth that new products will be “safe” for a while and this concept is false.
A product is a tool for solving a problem. The core product needs to have benefit to the customer in order to be a viable product. If a core product is introduced that does not provide benefit, the producer of the product will experience immediate failure.
Aspects of the formal product will also lead to failure of a new product.
A formal product includes the brand identity, packaging, features, styling, and quality of the core product. Missing marketing opportunities in any of the formal product areas will lead to increased chances that a new product will fail.
The 4 P’s of marketing are product, price, place, and promotion. When launching a new product, all four dimensions need to be fully considered for success.
Under product, the classification, life cycle, and mix of the product need to accurately reflect the demand for the product. Under price, demand, cost, competition, strategy, and profitability all need consideration when launching a new product in a new environment. With promotion, one must decide what type of publicity, sales promotions, and advertising will be used to let the customers know about the new product. Finally, the place or location where the product will be offered will make or break a new product.
Options for distribution channeling are wholesaling or retailing. Of the 4 P’s, price plays the biggest role in whether a new product will fail or succeed. What the market or customer is willing to pay for a product is essential knowledge for determining a balance between supply and demand. Often, costs for producing a product are much higher than anticipated, therefore reducing any profits a new product might generate; rendering failure.