New Product Failures
Innovation vs New Product (NP)
Innovation drives New Product introduction into markets. Innovation represent a total package of features, forms and functions which marketing program converts into benefits for satisfying the needs and wants of the customer.
Continuous innovations represent minor modifications to existing products, whereas, discontinuous innovations help introduce new products that may change the market and consumer lifestyles and in some cases, rendering existing technologies obsolete.
New Product (NP)
Any product that users consider as a new addition to the current market offerings qualifies as a new product with newness implying change and absence of consumer experience.
Organizations need to replace existing products by NP’s to be competitive in the market. NP’s help in garnering higher margins and hence have a big role to play in growth and survival of an Organization.
New Product could be made available by:
- Reduction in Cost
- Product Improvements to improve form or function.
- Line Extensions which are copies of existing product with unique features.
- Market Extensions, which are original products, positioned differently in new markets.
- New Category products which are new to the company but not new to the customers.
- New-to-the world products which are technological innovations that create new market that did not exist earlier.
New Product Development (NPD) Process Involves
- Idea generation
- Idea screening
- Concept development and testing
- Marketing strategy development
- Business Analysis
- Product development
- Market testing
- Commercialization
The seeds of failure are sown at the initial stages of development. Using a stage gate method, the NPD process could be developed to reduce failures. Faster feedback and prompt corrective actions could improve success rate.
An NP is declared a failure When
- It is withdrawn from the market for any reason.
2. The required market share in a desired time period is not realized.
3. The anticipated life cycle as defined by the organization is not achieved.
4. The desired profitability is not realized.
Why New Products Fail?
Reasons could be any one or more than one of the following:
- The product was not new to the customer /market.
- The product offered no tangible benefit.
- The product was not positioned properly.
- Poor support from channel partners.
- High forecast variance.
- Strong competitors’ response.
- Change in customers preferences Environmental constraints.
- Poor after sales service.
- Inadequate return on investment
- Lack of coordination among various departments
- Poor diffusion of innovation
- Conflict of personalities at higher echelons.
- NP not meeting the claims made or creating a new category product necessitating customer education.
- Lack of product distinctiveness.
- High research and/or product development costs and ignoring marketing research findings.
- Consumers not being informed of the applications, and new technologies not addressing market opportunity correctly.
Examples of New Product Failures
Global Products
- Ford Edsel
- Betamax
- Laser Disc
Indian Products
- Tata Nano (Failures due to wrong positioning)
- Tata Estate (Failures due to wrong positioning)
- Bajaj Geared Scooter (Failures due to new technology)
- 2- Stroke Bikes (Failures due to new technology)