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Why New Products & Services Fail


Posted Date: 24-Mar-2010  Last Updated:   Category: General    
Author: Member Level: Gold    Points: 25


In this resource I have discussed the most common ways that companies follow before launching any desired product. And I also discussed why some of the products fail in the market after taking the all necessary precautions.



Process for Launching a New Product

The possible reason for introduction of a new product is to provide a feature that was not available in the previous product. It might take time for a product to establish itself or be able to spread across the target. Frequent introduction of new products could destabilize the consumer confusing him or the consumer might be tempted to wait for a new product before buying the product slowing the pace at which a product would be accepted in the market Frequent launch of new products might require a more forceful advertisement. A possible way of advertising products with related functionalities but added features could be leveraged to market the new products onto the old ones.

Huge advancements in technology and limited infrastructure of the company might make introduction of the new products, frequently, difficult. It might take time to acquire the required infrastructure.As the whole process of introducing can require special attention to details and could be very cumbersome, the process of researching newer products should need to be pipelined right after the previous product. This might tire out the system fast.

Why New Products & Services Fail

Fewer than 10% of all new products/services produce enough return on the company's investment to survive past the third year. List of reasons new products and services fail.Frequent introduction of new products may lead to lesser emphases being paid to market research. Such products are not consumer oriented. When going for marketing research for new products, a company may adopt certain approaches which may not be in line with the product being launched, thus giving results which are not accurate and thus such a product is deemed to be a failure once it enters the market.

A company may go for new products from time to time, but if promotion of such products isn’t done on an equivalent scale, such products may not do well in the market because of low degree of awareness of such products in the market. For example: Certain movies bomb at the box-office due to poor promotion strategies like Shivam Nair’s ‘Ahista-Ahista’

The markets that usually experience frequent technological changes need frequent new product introduction. Some examples are: Mobile phones, PC games, Cars, and computer related applications. We also need to consider the numerous fashions and fads that the markets are going through. In today’s world, due to fickleness of consumer taste and choice, frequent product introduction has become necessary; else the firm can be wiped out completely. For example: Onida, Being the market leader in TV in 1990s, it lost out completely due to being unmindful of consumers changing choices and competition. Then, there are intangible benefits that consumers seek from new products even though the new products neither offer anything new nor improved.

So, we can say that frequent product introductions are necessary if they are done with proper research; targeting and proper segmentation. Proper timing also plays a major role in making new product introductions a success

A new product has to be complemented with improved distribution channel also, if that isn’t done, then the new product may not sustain in the market. For Example: Lipton tried to enter fruit-juice market but failed miserably because of poor distribution.

A new product brings with itself totally a new set of expectations because of the way it is projected in the market. But when the end user actually uses the product, it may not cater as equivalently as projected. This may be due to the fact that a company may launch a new product which is not exactly different as projected. This causes a feeling of ‘cognitive-dissonance’ in the customers. For Example: Apple i-phone failed because of the initial hype created by the company to which the actual product couldn’t live up to.

The new launched product may be too complex for the customers to use. They might need some more time to get acquainted with such type of products. For Example: Many new Sony Ericsson Phones come with new features which are not needed by a basic user.

Some unforeseen events might take place which may hinder the sales of the newly launched product. This may be due to the short-sightedness on the part of the firm. Example: When Maggi launched so called New Maggi noodles, it wasn’t accepted in the market where customers were more used to the traditional taste of the Maggi they were having since a long time, this resulted in Maggi switching back to its old taste of noodles.

A product may be launched without taking into account all the facets of the market. This results in the failure of the product because market is not ready for such a revolution. For example: Many Cell-Phones launched by various companies in the Indian market have a differentiating factor of being 3G enabled, but what is the use of such phones for customers who have to pay a premium to buy them when India still hasn’t upgraded from 2.5G to 3G.

Support for the new product is necessary simultaneously with its launch. For example: Many companies come up with newer Gadgets without taking into account the unavailability of service and maintenance facilities for the same.


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