Controllable factors for new product failure

There are multiple reasons why new products will fail to be successful in the marketplace. There is a separate article that outlines the numerous reasons for new product failure, along with some discussion. However, the purpose of this article is to discuss the degree to which each of these factors are controllable prior to be the new product development or launch itself.

In this section, we will rate the degree of control over the factor prior to development and launch of the new product. In other words, could a professional company predict the likelihood of poor outcome for each of these reasons prior to deciding to green light the project and bring the product to market?

Controllable (predictable) or unforeseen?

No product point-of-difference

This factor is highly controllable. A company should do competitive research prior to developing any new product. As part of the research, they should identify potential product features and benefits that they could develop and bring to market. Therefore, in the rare exception of a company deliberately wanting to be a me-too brand, there is no real excuse for this being delivered from a professional company.

Limited retailer support

This is relatively controllable as well. For an established company with established retailer connections, they should be able to identify through their sales contacts and relationships the degree of interest in the new product prior to even developing it.

However, the company is looking to enter a new product category or new retail channels, they may not have the same access to the decision makers from the retailing sector – so then in their case, this factor would be less controllable.

Poor product design

This is relatively uncontrollable and certainly unforeseen. This is where the design of product makes sense in a report, the when it gets down to physically constructing the manufacturing system or developing the IT program or the sales process in a service firm – it is quite possible that product design is difficult to execute or some poor decisions are made or other priorities come into play, such as time and money.

While this may sound strange, one only has to consider the new product process of the Apple iPhone, as documented in the Steve Jobs biography. This was described as a quite haphazard process that took many turns and twists and in reality would have easily been a “lemon” in other circumstances.

Established customer loyalty in the market

Generally the degree of customer loyalty should be quite predictable as well. This could be easily identified through some basic market research and/or analysis of industry sales data. Therefore, the degree of switching behavior of the target market should not come as any real surprise to a professional company.

Weak launch or poorly executed launch

The overall execution of a new product launch is generally hard to predict and is less controllable as a result. Sometimes campaigns were quite magically, yet at other times similar campaigns fail to get the same amount of traction. A simple way of thinking about this is the range of results that some TV commercials deliver for example – some commercials become quite viral and generate millions of views, whereas others (from the same company) generate very low interest.

The same concept applies for product launches, where the degree of impact in the marketplace can vary – particularly where the company is reliant upon the “big idea” rather than promotional spending muscle.

Adverse media attention

This is fairly hard to predict and needs to be based on prior media reaction to the brand and to the company. As with the new product launch discussed above, sometimes media attention is quite positive and possibly unexpected, whereas in other occasions unexpected negative publicity is generated.

Aggressive competitor actions

The reaction of competition should be relatively predictable. Over time, a company should get a good sense of is competitor strategies, their current direction, and how they react to certain situations. Therefore, as part of a new product launch plan a company should factor in how the range of competitors will react and also build in a counter strategy to block or minimize these predicted actions

Poor pricing or cost structure

Certainly the current reference price range for similar product should be known. Therefore, without unexpected variations in the underlying cost structure of the product, price and unit margin should be very predictable.

Pricing and costs only become more unforeseen if significant challenges occur in the development and testing phases of the new product process. An example here would be the need to redesign the product differently or to use different ingredients or materials in the production system.

Weak supporting brand equity

Clearly the importance of brand equity in the purchase decision should be known prior to development and launch of any new products. In some product categories, having supportive brand equity forms a key part of the purchase evaluation for the consumer – but in other cases/industries, brand equity is less important to consumer. Therefore, a professional company should be aware of these factors prior to launching a new product.

Small target market

The identification and measurement of the proposed target market should be done and the financial forecasts for the new product should be based upon the size of the target market – making this risk factor highly controllable and predictable.

Some companies fall into the trap of having both a primary and a secondary target market. And in their financial forecasts, they rely upon a secondary target market to also buy the product in large numbers, which is usually unlikely to be the case.

No clear market need or perceived product benefits

This is a harder one to predict – as it normally relates to new-to-the-world products. Companies that bring these types of products to market usually hopeful that a market need will emerge as consumers change their lifestyles and practices.

An interesting example here is the microwave oven that was first commercialized in the mid-1960s in the USA. It took many years for this product to become adopted by the market in sufficient numbers. Clearly, in the 1960s this product had very few perceived product benefits for the average household.

Poor internal marketing

These days most service firms recognize importance of internal marketing. Service firms rely on direct contact staff in most cases to interact with customers and complete the sales process.

Poor internal marketing usually occurs in organizations who perceive that staff are not that important or driven by sales targets or incentives.

Existing product cannibalization

This is always a risk in a very similar product line extension. Some companies, such as 3M, deliberately seek product cannibalization as a form of competitive defense. However, this should be generally predictable for the launch company, as they should have previous situations to compare to an should know how close the new product is (in design and features) in comparison to the existing product range.

Weak sales for size of company

This is a mid-range controllable and predictable factor. Some large companies will have clear guidelines for the degree of sales and profitability expected from any new product, whereas other companies may be less committal about financial contribution.

Unfortunately, even large companies in mature markets for example, will struggle to constantly introduce new products and achieve significant financial success and grow market share. Therefore, over time, they may become more willing to take the risk with a new product that may only generate moderate levels of sales.

Insufficient time for success

The time taken for the market to adopt a new-to-the-world product is hard to predict and is less controllable. Clearly the option available to the company, in this case, is to try and be patient and not over invest in the short-term. This is often difficult trade-off, particularly if the company has invested significant amounts in the development process and is looking to recruit this investment in a short period time.