New Products – The Secret Of Success Or Failure
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New Products – the secret of success or failure?
New products are those which a company builds through its own Research and Development efforts. They may be original products, line extensions or even improvements or modifications to an existing product.
Companies need to manage new products in the face of changing tastes, technologies and competition. Because all products decline in popularity and sales companies must find new products to replace aging ones.
One recent study estimated that new consumer packaged goods fail at a rate of 80%. Many of these new products fail not because of technical shortcomings but because they have no market. Product failure rates are dropping however this can be attributed to companies playing it safe and launching less truly unique products.
The new-product development process:
Why do new products succeed?
A superior product has been developed
The product concept is well defined
Support from Senior Management
The company understands the market, consumers and competitors
Researchers have identified successful products and found out what they have in common
Structured new-product development process in place
An effective organisational structure for planning and launching new products has been established
New products developed with features that are unique and the customer can easily recognize
Consistent commitment of resources to new product development
Goals or objectives for the total new product development strategy
Technology or new product strategy firmly linked to business strategy.
Sufficient funds spent on marketing the product
Why do new products fail?
Overestimation of market size
Poorly designed products
Poorly positioned in the market
Higher than expected set-up costs
Not enough money spent on researching customer acceptance
Expense of producing and marketing new products with no guarantee of success
Competitors reaction was a perceived cause of failure in 17% of failed product cases (Cooper, 1996)
Doesnt offer something that is very different
Lack of common sense
Lack of commitment
Insufficient company resources
Not enough adequate market research in the market segment that the new product is aimed at
Many manufacturers now develop new products by revising their existing offerings eg. Apple iPod and Sony Playstation. While this seems to be a successful way of increasing profits, it can result in manufacturers missing new trends.