New Products - The Secret Of Success Or Failure

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)

* Doesn't 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.