Just as it is useful to analyse new product success, is also off value to look critically at failure. The most common definition of a product or service failure is one that fails to meet its objectives.
Below are four reasons why products fail :
1. Sales fell below expectation.
2. Profit margin fell below expectation.
3. Development costs exceeded expectations.
4. Investment exceeded expectations.
Of the four, failure to meet sales objectives was the most cited of the general reasons, followed by failure to meet profit objectives, high development costs, and higher investment required that anticipated.
Looking past the general reasons, the study detailed those factors most likely to contribute to new product failure.
The factors are :
1. Competition was tougher than anticipated.
2. Market size was less than estimated.
3. Product price was too high.
4. Product had design or technical Problems.
5. Marketing efforts were misdirected in terms of target market or buying influences.
6. Product had no competitive advantages.
7. Product do not meet consumer specifications.
8. Insufficient marketing efforts.
The previously mentioned study of new Australia business products found somewhat similar reasons for explaining product failures.
These factors were :
1. Market was too competitive.
2. Insufficient market information prior to the launch
3. Product was not new or different to the market
4. Product offered no real benefits over competing products
5. Inadequate sales efforts
6. Inadequate promotion and advertising.
In his discussion of the reason why new products fail, cutler 2001 advances the following factors :
a. A high level executive pushes a favourite idea through in spite of negative market research findings.
b. The idea is good but the market size is overestimated.
c. The product is not well designed.
d. The product is incorrectly positioned in the market not advertised effectively or overpriced.
e. Development costs are higher than expected.
f. Competitors fight back than expected.
Product failure has become a recurring phenomenon. Since so many products fail, companies are usually anxious to learn how to improve their odds of new product success or to avoid product failure. One way they can achieve this is to identify successful new products and find out what they have in common. Another way is to study new product failures to see what lessons can be learned. Various studies as the ones mentioned above suggest that new products success depends on developing a unique superior product, one with higher quality, new features, and higher value in use. Another success factor is a well-defined product concept prior to development, in which the company carefully defines and assesses the target market, the product requirements, and the benefits before proceeding. Other success factors which have also been put forward recommends senior management commitment, relentless and innovation, and a smoothly functioning new product development process.
Ultimately, to create successful new product, a company must understand its consumers markets, and computers and develop products that deliver superior value to customers. The company must also embark on new product planning and in setting up a systematic new product development process for finding and growing new products.
