Why new products fail?

The often asked question is that why new products or brands of established companies do not get the same success as these companies achieved in the past. The new brand or product is launched and then after sometime either it is withdrawn or the company stops investing in the same and leave it to die on its own.

There can be a lot of reasons and many of them are known to all of us. But, here I write from personal experiences. Please corroborate with your own experiences in your specific industry or company.

Peer pressure to diversify. This is the biggest factor which is making the companies launch new products or enter into segments which are unknown to them. When they see their rivals doing something, they also feel that they should not get left out and hence try to hop on the same bus. This many times happen without the required conviction or the required market research. Thus, ending up in early setbacks.

People who are used to success are manning the new venture. The new products or brands that get launched are mostly manned by the same set of people who are at present running its successful range of products. Due to the habit of working in a certain way and becoming used to getting most of the market calls right, makes them a bit over confident. Very less amount of effort goes into trying new ways to market or sell the new product.

The organizational back up is not planned or missing. There is lack of Plan B in almost all cases. Once the new product is decided and the marketing and sales plan made, there is almost no thought given to the fact that if it is not ‘first time right’ then what! As soon as the first obstacle is encountered, everybody becomes flustered and start blaming each other for that. The blame game is more often the end game for the new product.

Looking for earnings too early. The management who is hugely successful in running the existing venture when going in for the new product wants to earn profits from the very beginning. This makes them chase some very high goals which might not work out in the beginning. The lack of profits as per plan becomes the biggest axe that falls on the new venture/product.

It is not a seller’s world anymore. The hugely popular companies in India are from the era of early 60s or 70s when they were able to establish their products in a seller’s market. Today also when they launch a new product they believe that its past success would ensure future success as well. Many times it is seen that the new product or brand is launched in a glitzy fashion, in a larger than life event, in some posh locale abroad but there is hardly anything done beyond that to promote the product off takes or to induce trials by the prospects. The company fails to understand that each new offering is like a new baby which needs to be nurtured with equal time, effort and money.

The existing channel may not be hungry enough. In a bid to quickly capture the market and to get immediate returns, many times the same channel through which the company is operating its other products is used to push the new product as well. But, the channel always assesses the pros and cons and in most cases is better judge of the situation than the company. The channel would always ask why should I invest more capital and risk more credit in the market; I am already operating at a certain size and I am happy with what I am doing. What is the need to take a chance? I would wait and if this product gets demanded by the customers then only I would invest in the same. Heard about the chicken and egg story!

Thus, we see that we need a thorough study before entering any segment. The manpower has to be entrepreneurial in their thought with organizational back up. The profits would come but in a reasonable amount of time. Past successes mean nothing and we need to induce the trials among the customers before the channel starts dealing in the new product or we might even need to create a separate channel. (Please refer to an earlier article on #exclusive channel #exclusive dealer).