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

Familiar with Product class Market

Unfamiliar with product class

Known Product Market

Modifications Modification
Examples: Examples:
• Extra-strength pain killer • “Personal copier”
•Unscented TIDE •Food processors for home
•Downsized use
Technology

Developing Routine Innovations Radical Innovation

Examples: Examples:
•Digital audio tapes •Genetically
•Fuel injected engines engineered cancer “cures”
•Product “Alpha” •Integrated office systems
•Product “Beta”

Note:
Shaded cells indicate the domain of technological innov
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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. 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.
2. A strong market orientation must prevail
throughout the entire new product project.
3. Pre-development activities – the homework – are
vital. These activities include: preliminary
market and technical studies, market research,
business analysis, etc.
4. 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.
5. 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. Resource Utilization (including materials,

capital equipment, and people’s time.)
B. 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.
C. 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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