4 Lessons to be Learned from New Product Failures
Continuing from last weeks blog on new product failures, today's blog will highlight 4 products that failed miserably. First, some stats on the new product market -- an ugly truth: approximately 75% of newly-introduced consumer packaged goods and retail products will fail to earn even a measly $7.5 million during their first year on the market. And for those of you associated with New Product Research who weren't absolutely mortified by that initial statistic here's another: less than 3% of new consumer packaged goods will have more than $50 million in first-year sales. That means that a stunning 97% of newly-introduced products fail to meet the benchmark of a successful product launch. These statistics are, to put it mildly, "dispiriting."
While the numbers mentioned above may make it seem like introducing a new product is the most foolhardy thing a business could do, all they should really do is remind you that introducing a new product is a significant risk. But you can mitigate the risk entailed with it if you know why certain products fail when they meet the market.
Here are a few of the reasons why most of the clever new products you think up will end up being dismal failures. Enjoy!
1. For one thing, it's hard to make consumers care about a new product. You shouldn't overestimate the adventurism of the American consumer. Jack Trout, the owner of Trout and Partners, a consulting firm, found that American families typically buy the same 150 items repeatedly. These repeat purchases fulfill around 85% of their household's needs. Getting the average American consumer to consider buying items other than the 150 they are, by habit and routine, programmed to purchase is going to be an enormous challenge. It's one that a lot of businesses ignore.
Think of the Segway, a product that was supposed to be an "alternative to the automobile." Guess what: consumers didn't want an alternative to a product they thought was perfectly fine in the first place.
2. A lot of businesses don't do enough new product marketing research before they develop and release a product. This means that they often end up figuring out a response to a demand that doesn't exist or a response that doesn’t actually solve the problem that does exist. A classic example of this was C2, a product that Coke's marketers thought would appeal to 20- to 40-year-old men who liked the taste of Coke but wanted a beverage with half the calories and carbs of the original. C2 failed and subsequent new product research discovered the reason why: that target group wanted a product that tasted like coke but which didn't have any carbs or calories.
3. Similarly, a lot of businesses don't really know their customers. At some point, someone in McDonalds's new product research department thought it would be a really great idea to release something called the "McLobster." This item cost more than most of the options on McDonalds's menu and was swiftly rejected by its customers. The lesson to be learned from this debacle is that McDonalds forgot its consumers wanted burgers and fries. They didn't go to McDonalds to get their lobster roll fix.
4. Sometimes you introduce a great product but do it at the wrong time; external factors can doom even the most promising of products. This happens most often with products that have been in development for a long time and have represented big costs to their developers. The Ford Edsel is a classic example. While by no means a perfect vehicle, it was introduced just as a recession was taking hold, in 1957. As a result, it sold poorly and was quickly forgotten.
What should be clear is that, while introducing a new product is risky, those risks can be alleviated if you do thorough new product marketing research.
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