Why New Products Fail?
• Depending on study, up to 80% of new
products fail. Reasons can suggest
ways of proving problems.
• Too small a target market – must be
large enough to be profitable
• Poor product quality/performance –
product has to work adequately, meet
customer needs
– Problem of tradeoffs. Company may
mismanage a tradeoff in benefits.
MacLean Deluxe
• Insignificant point of difference –
product is not a great improvement on
competitive offerings
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Why New Products Fail?
(cont’d)
• No protocol – clear statement of target
market, its needs, what product would
do
• Poor positioning – diet beer vs. light
beer
• Inadequate budget – biggest reason
small companies fail is inadequate
capital
• Inadequate competitive analysis –
reaction of current incumbents,
products from new entrants
• Blinders (=“Vision”?)– company may
have preconception that is never
questioned. (Especially for high-tech)
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Why New Products Fail?
(cont’d)
• No Access to Market – especially
difficult for smaller companies in
competitive industries.
• Bad timing – “Better never than late.”
relative to competitors, First-movers
may have advantage. Relative to
customer trends, may not want to be
early; too much education required.
• Poor execution of marketing mix –
wrong price, wrong distribution, wrong
ad campaign. “Bad advertising kills a
good product”
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Taxonomy of Types of Innovation
Market
Familiar with Product class
Product
Modifications
Examples:
• Extra-strength pain killer
•Unscented TIDE
•Downsized
Technology
Known
Routine
Innovations
Developing
Examples:
•Digital audio tapes
•Fuel injected engines
•Product “Alpha”
Unfamiliar with product class
Market
Modification
Examples:
• “Personal copier”
•Food processors for
home use
Radical
Innovation
Examples:
•Genetically
engineered cancer
“cures”
•Integrated office
systems
•Product “Beta”
Note:
Shaded cells indicate the domain of technological innovation
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A New Product Introduction Model (Robert Cooper)
The model is a series of moves and is set up as a stepwise
process to move a new product from the idea stage to
market launch
The seven stage game plan
Features of the model:
• The game plan is incremental
• The plan is designed to manage risk: each step is
progressively more expensive than the one that
precedes it, but the various activities are deliberately
designed to drive uncertainty down as one moves from
left to right-through the model
• Each stage is separated from the one before it by an
evaluation or a bail-out point.
Note: The strategy formulation is not presented here
because it is “macro” in nature, dealing with the firm’s
entire new product program.
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Success Factors
1.
2.
3.
4.
5.
A unique superior product. “Superiority” should be
defined from the customer’s viewpoint, not the eye of
R&D or design departments. Superiority is derived
from design, features, attributes, specification and
even positioning.
A strong market orientation must prevail throughout
the entire new product project.
Pre-development activities – the homework – are
vital. These activities include: preliminary market and
technical studies, market research, business analysis,
etc.
Sharp and early product definition.
Including target market definition, concept and
benefits, positioning strategy, product failures,
attributes (prioritized among “must have” and “would
like to have”)
This definition is developed with inputs and a signed
agreement obtained from functional areas involved
(Marketing, R&D, Manufacturing). The definition also
serves as a communication tool to all functional areas.
Companies that follow a new product game plan
incorporate discipline into a process that often is ad
hoc and seriously deficient.
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The Seven-Stage Game Plan
Idea
Preliminary Assessment
Concept
Development
Testing
Trial
Launch
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Phases in the Life of a Product (Cont)
Evaluation of a development product should be based on
three primary measures:
A.
B.
C.
Resource Utilization (including materials, capital
equipment, and people’s time.)
Design Quality (where the quality of design
captures the extent to which it meets the needs of
the target market, as well as its actual performance,
aesthetics, and cost.
Development Cycle Time
Quality of design and the achievement of the best
performance possible for each new product is
particularly relevant for the high tech firm.
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