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Fewer
than 10% of all new products/services produce enough return on the company's
investment to survive past the third year. Why? Here's our Top 10 list of
reasons new products and services fail:
- Marketers assess the marketing climate
inadequately.
- The wrong group is targeted.
- A weak positioning strategy is used.
- A less-than-optimal "configuration" of
product or service attributes and benefits is selected.
- A questionable pricing strategy is implemented.
- The advertising campaign generates an insufficient
level of new product/new service awareness.
- Cannibalization depresses corporate profits.
- Over-optimism about the marketing plan
leads to a forecast that cannot be sustained in the real world.
- The marketing plan for the new product
or service is not well implemented in the real world.
- The marketer believes that the new product
and its marketing plan has died and cannot be revived, when, in fact
there is the potential for resurrection.
What can marketers do to improve the likelihood of new product success in
an age of promotion and unprecedented competitive response? Testing the
product before launch is one solution.
Typically, if a company decides to do a test market before launching the
product, managers run a test market. Traditional test markets are fraught
with problems, starting with how companies select them—often because
they are easy to manage rather than because they represent the actual markets
a company wants to reach. Traditional test markets are expensive and competitors
can steal ideas and sabotage results.
A well-done simulated test market, on the other hand, reduces the risks
of launching a flop by collecting data a company needs to forecast the likelihood
of success, more securely and more efficiently than a traditional test market.
For details on these reasons for new product
failures, see our book, Simulated Test Marketing: Technology for Launching
Successful New Products (Free Press, 1994)
This list of 10
reasons why new products and services fail is one of the many Copernican
intellectual properties
that differentiate our work.
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