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Why do new product launches often rise, fall and rise again
Any manager who has ever witnessed a new product launch will recognize this familiar scene: At the national sales meeting, marketing and product people swarm around like bees on honey while a top executive makes the mother of all motivating speeches. "This is a make-or-break product for us all. A fabulous opportunity for a fine sales force. With this product you and the company share an unrepeatable opportunity to become indecently wealthy." The product enters stage right, wheeled in by professional entertainers in skimpy clothing. Now the product-marketing people make their pitch. "Folks, this new product has bells and whistles that will make it a dream to sell - customers will mortgage their children for the chance to own it." Top management is optimistic, product marketers are happy. The sales force is fired up and raring to go. The initial trajectory is encouraging, which bodes well for the future. First month's sales are a little slow but with all those bells and whistles how could this great new product fail? When customer enthusiasm doesn't translate into the expected orders, management gets worried, product managers panic and everyone points fingers. There's more than enough blame to go around and soon the sales force becomes cynical. The new product tumbles from its status as the answer to all customer ills. Before long, it's just another product. The Twist Just as everyone has written off the new product, results begin to pick up and sales figures start to look respectable. Results may not reach the enthusiastic projections of the early days, but stage a good recovery nonetheless. The first time I experienced this sequence - great promise, followed by disappointing results and, finally, by unexpected recovery - was at the Xerox Corporation. Since then, I've seen the same pattern in organizations as diverse as Kodak, Honeywell and American Express. In fact this sequence happens so often it's nearer the rule than the exception. Since I'm a research psychologist and measuring sales success is my profession, I decided to look for scientific answers to the two questions that really bothered me. Why should a good product fail to sell? After all, when it's new, a product has all the advantages: maximum competitive lead-time, greatest sales force enthusiasm and a high level of top management attention. In theory, a product has its highest chance of success when first introduced. And why should a failed product unexpectedly recover? This was an even more puzzling question. The sales force loses enthusiasm for a new product and its sales increase? You'd expect just the opposite.

The Theories First, I thought that customer resistance to innovation might be the best explanation both for the slow initial sales and for the late recovery. I soon abandoned this idea. For one thing, in any product launch there are always some customers - the early adopters - who welcome innovation and are attracted to a product's newness. As Jeffrey Hipps, SVP Marketing & Production of Sherwood America, says, "Early adopters really do want the bells and whistles."
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When Xerox launched the first of their mega-copiers, the 9200, I talked to many of their potential customers to assess their resistance. A few found the new technology threatening, but the majority of customers were actively interested in innovation. Besides, a change-resistant customer normally starts resistant but becomes less so as discussions continue. These customers were the other way around. Could the explanation be resistant salespeople? Many companies have learned the hard way that their sales force doesn't automatically welcome a product just because it's new. Dick Dryden, president of Dryden Engineering, reflects the experience of many executives when he says, "In fact, salespeople don't like new products. They are hesitant because the pioneering work needed to sell a new product uses up time and can take away from their commissions." Perhaps the reason for the slow start at Xerox was reluctance, or lack of motivation, on the part of salespeople. To test motivation, during the launch my team administered to each salesperson a confidential questionnaire that allowed us to measure enthusiasm for the new product. We were bewildered to find that there was a slight negative correlation between enthusiasm and success. The Field Test We wanted to know how salespeople were behaving face-to-face with customers. At the time I was working with Xerox as part of a massive research study of 35,000 sales calls, to find the behaviors most linked to sales success. The research, published in SPIN(r) Selling (McGrawHill, 1988), involved sitting in on real sales calls, recording both seller and customer behavior and looking for patterns of behavior associated with sales success. The Xerox part of the research had earlier tracked many of the salespeople who were now involved in selling the new 9200 copier. We sent our research team out again to follow salespeople, to analyze whether there were any differences in how they were selling this new product. Bingo. We found two major differences: 1) When selling the new product, salespeople asked customers 40 percent fewer questions. This was particularly disturbing because earlier studies had shown that the more questions salespeople asked, the more successful the call was likely to be. 2) Product details increased threefold - salespeople were dumping product details on their

customers with a vengeance. continued

Causes of New Product Failure

20 Jun 2009 2 Comments by Asif J. Mir in Causes of New Product Failure Tags: amount, area, assign, automatically, benefit, beyond, brief, careful, cause, change, channel, clear, competitive, consider, Consumer, control, cost, course, decision, department, design, develop, differene, direct, Distribution, diverse, economy, engineer, enter, estimate, example, execution, fail, failure, fault, finish, firm, follow, function, good, grade, important, improper, influence, input, international, introduce, large, list, make, management, many, market, mistake, need, new, nondelivery, organizational, paramount, perceive, Planning, point, poor, position, potential, price, Product, production, profit, promise, Quality, rapid, reaction, reason, relate, relationship, reliable, require, Research, responsibility, Sales, satisfactory, screen, segment, select, specific, successful, support, system, target, unexpected, Value, wise Many new products with satisfactory potential have failed to make the grade. Many of the reasons for new product failure relate to execution and control problems. The following is a brief list of some important causes of new product failures after they have been carefully screened, developed and marketed. 1. No competitive point of differene, unexpected reactions from competitors, or both. 2. Poor positioning. 3. Poor quality of product. 4. Nondelivery of promised benefits of product. 5. Too little marketing support. 6. Poor perceived prices/quality (value) relationship. 7. Faulty estimates of market potential and other marketing research mistakes. 8. Faulty estimates of production and marketing costs. 9. Improper channels of distribution selected. 10. Rapid change in the market (economy) after the product was introduced. Some of these problems are beyond the control of management; but it is clear that successful new product planning requires large amounts of reliable information in diverse areas. Each department assigned functional responsibility for product development automatically becomes an input to the information system needed by the new product decision maker. For example, when a firm is developing a new product, it is wise for both engineers and marketers to consider both the kind of market to be entered (e.g., consumer, organizational, international) and specific target segments. These decisions will be of paramount influence on the design and cost of the finished good, which will, of course, directly influence, price, sales, and profits. My ConsultancyAsif J. Mir - Management Consultanttransforms organizations where people have the freedom to be creative, a place that brings out the best in everybodyan open, fair place

where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight
NEW PRODUCT FAILURE In this era of tight competition from domestic and global firms the firm who don't come out with new products are putting themselves at great risk Because their existing products are prone to changing customer needs, shorter product life cycles, new technologies and increased competition. Despite years of research and huge capital being pumped in to understanding the consumer, making a launch successful is still a difficult task. The new product largely depends on the product quality and the marketing tactics of the firm, there are many occasions were the product failed miserably even after using the best technology and quality the reason is that the new product is not worth for the customers. The prime factor for the new product success is - customer value. Value is what the customer thinks is value. The major reasons for product failure are 1. Faulty product idea: The product often fail because faulty of product idea. A good idea can revolutionize the market but a bad idea may prove bitter to the firm or it may backfire Eg: Polar industries in 1991 launched "COOL CATS" fan - decorated with cartoon characters meant primarily for children. The fan was priced at premium; the idea was that children's were increasingly becoming influensors in purchase decisions and to attract the kids with the cartoon creatures and to position the product exclusively for kids. The product failed miserably inspite of its huge advertising budget because when the fan was put on it didn't have any colour effect and the customer did not justify its premium price. 2. Distribution related problems: The new product fails if the product is unable to meet the channel requirements. While developing the product the channel requirements must be given adequate consideration. Eg: when NESTLE launched its new chocolates the product and promotion was ok but the product failed in the distribution side because the company stipulated the product to be stored in refrigerators. The product faced two problems in the distribution side because it meant excluding a number of retail outlets as they didn't have this facility and secondly the chocolate was not picked by the customers as it was not seen upfront in the retail shops. Finally Nestle had to reformulate the product according to channel requirements. 3. Poor timing of launch: Too early or late entry into the market is a common cause of failure. Kinetic Merlin was launched in pune in 1991.It was a 3 in 1 set consisting of a colour television, a stereo with detachable speakers and a home computer. The product was targeted at the Indian consumers who are fond of sophisticated gadgets to immediately adopt such an innovative idea but in reality the idea was too advanced for the customers to digest at that time because they were not exposed to such type of products before. 4. Improper Positioning: Positioning means putting the product into the predetermined orbit. Improper positioning

may affect the product success. Eg: Titan Tanishq introduced their 18 carat jewellery and the product was positioned at elite segment but there was a contradiction as to why these elite segment should go in for a low carat gold because the norms for gold in India at that time was 22 carat. The product failed miserably in retrospect Titan had to introduce 22carat jewellery. Some other reasons for product failure are: * * * * * Lack of differential advantage Poor planning Technical problems in the product Competitors fighting back harder than expected Poor market research

These are some problems causing new product failure. The watchwords for new product success are RIGHT PRODUCT TO THE RIGHT CUSTOMER AT RIGHT TIME.

Product and brand failures: a marketing perspective

by Tim Berry

Overview Product and brand failures occur on an ongoing basis to varying degrees within most productbased organizations. This is the negative aspect of the development and marketing process. In most cases, this failure rate syndrome ends up being a numbers game. There must be some ratio of successful products to each one that ends up being a failure. When this does not happen, the organization is likely to fail, or at least experience financial difficulties that prohibit it from meeting profitability objectives. The primary goal is to learn from product and brand failures so that future product development, design, strategy and implementation will be more successful. Studying product failures allows those in the planning and implementation process to learn from the mistakes of other product and brand failures. Each product failure can be investigated from the perspective of what, if anything, might have been done differently to produce and market a successful product rather than one that failed. The ability to identify key signs in the product development process can be critical. If the product should make it this far, assessing risk before the product is marketed can save an organizations budget, and avoid the intangible costs of exposing their failure to the market. Defining product and brand failures A product is a failure when its presence in the market leads to:

The withdrawal of the product from the market for any reason; The inability of a product to realize the required market share to sustain its presence in the market;

The inability of a product to achieve the anticipated life cycle as defined by the organization due to any reason; or, The ultimate failure of a product to achieve profitability.

Failures are not necessarily the result of substandard engineering, design or marketing. Based on critics definitions, there are hundreds of bad movies that have reached cult status and financial success while many good movies have been box office bombs. Other premier products fail because of competitive actions. Sonys Beta format was a clearly superior product to VHS, but their decision to not enable the format to be standardized negatively impacted distribution and availability, which resulted in a product failure. The Tucker was a superior vehicle compared to what was on the market at the time. This failure was due to General Motors burying the fledgling organization in the courts to eliminate a future competitor with a welldesigned product posing a potential threat to their market share. Apple has experienced a series of product failures, with consistent repetition as they continue to fight for market share. Product failures are not necessarily financial failures, although bankruptcy may be the final result. Many financially successful products were later found to pose health and safety risks. These products were financial and market share successes:

Asbestos-based building materials now recognized as a carcinogenic Insulation, floor tile and popcorn ceiling materials produced by a number of manufacturers. Baby formula that provided insufficient nutrients for infants resulting in retardationNestles. The diet medication cocktail of Pondimin and Redux called Fen Phen that resulted in heart value complicationsAmerican Home Products (http://www.settlementdietdrugs.com/).

What successful products may be next? Frequent and high dosages of Advil are suspected to correlate with liver damage. Extended use of electric blankets are suspected by some to increase the chance of cancer. The over-the-counter availability and high use of Sudafed is feared by some physicians and is currently under review by the U.S. Food and Drug Administration. Product failures and the product life cycle Most products experience some form of the product life cycle where they create that familiaror a variantform of the product life cycle based on time and sales volume or revenue. Most products experience the recognized life cycle stages including:
1. 2. 3. 4. Introduction Growth Maturity (or saturation) Decline

In some cases, product categories seem to be continuously in demand, while other products never find their niche. These products lack the recognized product life cycle curve.

Article continues below advertisement

Failure, fad, fashion or style? It is important to distinguish a product failure from a product fad, style or a fashion cycle. The most radical product life cycle is that of a fad. Fads have a naturally short life cycle and in fact, are often predicted to experience rapid gain and rapid loss over a short period of timea few years, months, or even weeks with online fads. One music critic expected The Bay City Rollers to rival the Beatles. Do you know who they are? And the pet rock lasted longer than it should have, making millions for its founders. A fashion is what describes the accepted emulation of trends in several areas, such as clothing and home furnishings. The product life cycle of a style also appears in clothing as well as art, architecture, cars and other esthetic-based products. The end of these product life cycles does not denote failures, but marks the conclusion of an expected cycle that will be replaced and repeated by variations of other products that meet the same needs and perform the same functions. The benefits of studying failures Gaining a better understanding of product failures is important to help prevent future failures. Studying the history of product failures may generate some insight into the reason for those failures and create a list of factors that may increase the opportunity for success, but there are no guarantees. Examples of product failures The following is an abbreviated list of product failures that may provide insight that will help to identify product and brand success factors: Automotive and transportation

Cadillac Cimarron Pontiac Fiero Chevrolet Corvair Ford Edsel The DeLorean Crosley The Tucker The Gremlin, the Javelin and a complete line of other models by American Motors GMs passenger diesel engine Mazdas Wankel rotary engine Firestone 500 tire Goodyear tires used on the Ford Explorer Concordesupersonic airliner

Computer industry

IBMs PCjrintroduced in March 1985 Apples Newton Apples Lisa Colecos Adam Percons Pocketreaderhand held scanner, now operating under the company name PSC Bumble Bees software version of the book What Color is Your Parachute

Entertainment

Quadraphonic audio equipment World Football League Womens National Basketball Association World League of American Football United States Football League He and She, Berrengers, every spinoff done by the former cast of Seinfeld, and dozens of other television shows each year. Of Gods and Generals, Heavens Gate, Water World, The Postman and other movieswith a disproportionately high number produced by Kevin Costner.

Food and beverage

Burger Kings veal parmesan Burger Kings pita salad McRiband still being tested and tried Nestles New Cookerybut a successor, Lean Cuisine, is a big hit Gerbers Singlesdinners in jars, for adultsearly 70s Chelseababy beer

Photographic and video

Polaroid instant home movies SX-70 (Polaroid instant camera) RCA Computers (Spectra-70) Video-disc players DIVX variant on DVD

U.S. currency

Susan B. Anthony Dollar coinniche in San Francisco, Las Vegas Two-dollar bill Twenty-cent piece

Other products

DuPonts CORFAM synthetic leather Mattels Aquarius Timexs Sinclair Clairols Touch of Yogurt Shampoo (1979) Sparq portable mass storage Rely tampons Relax-a-cizorvibrating chair Louisiana World Expositionand its gondola

Common reasons for product failures In addition to a faulty concept or product design, some of the most common reasons for product failures typically fall into one or more of these categories:

High level executive push of an idea that does not fit the targeted market. Overestimated market size. Incorrectly positioned product. Ineffective promotion, including packaging message, which may have used misleading or confusing marketing message about the product, its features, or its use. Not understanding the target market segment and the branding process that would provide the most value for that segment. Incorrectly pricedtoo high and too low. Excessive research and/or product development costs. Underestimating or not correctly understanding competitive activity or retaliatory response. Poor timing of distribution. Misleading market research that did not accurately reflect the actual consumers behavior for the targeted segment. Conducted marketing research and ignored those findings. Key channel partners were not involved, informed, or both. Lower than anticipated margins.

Using these potential causes of a product or brand failure may help to avoid committing those same errors. Learning from these lessons can be beneficial to avoid some of these pitfalls and increase the chance for success when you launch that next product or brand.
Read more: http://articles.mplans.com/product-and-brand-failures-a-marketingperspective/#ixzz1jjBkd1J1

As partners in a firm that specializes in product launches, we regularly get calls from entrepreneurs and brand managers seeking help with their revolutionary products. After listening politely, we ask about the research supporting their claims. The classic response? We havent done the research yet, but we know anecdotally that it works and is totally safe. Weve been fielding these calls for so long that we can often tell from one conversation whether the launch will succeed.

Can You Hear Me Now? One of Our Biggest Misses Most wont. According to a leading market research firm, about 75% of consumer packaged goods and retail products fail to earn even $7.5 million during their first year. This is in part because of the intransigence of consumer shopping habits. The consultant Jack Trout has found that American families, on average, repeatedly buy the same 150 items, which constitute as much as 85% of their household needs; its hard to get something new on the radar. Even P&G routinely whiffs with product rollouts. Less than 3% of new consumer packaged goods exceed first-year sales of $50 millionconsidered the benchmark of a highly successful launch. And products that start out strong may have trouble sustaining success: We looked at more than 70 top products in the Most Memorable New Product Launch survey (which we help conduct) for the years 2002 through 2008. A dozen of them are already off the market. Remember Any of These Short-lived Successes? Numerous factors can cause new products to fail. (See the sidebar 40 Ways to Crash a Product Launch.) The biggest problem weve encountered is lack of preparation: Companies are so focused on designing and manufacturing new products that they postpone the hard work of getting ready to market them until too late in the game. Here are five other frequent, and frequently fatal, flaws. 40 Ways to Crash a Product Launch Flaw 1: The company cant support fast growth. The Lesson: Have a plan to ramp up quickly if the product takes off. Mosquito Magnet In 2000 we worked with American Biophysics on the launch of its Mosquito Magnet, which uses carbon dioxide to lure mosquitoes into a trap. The timing was perfect: The West Nile virus scare had elevated mosquitoes from irritating nuisances to life-threatening disease carriers. Mosquito Magnet quickly became one of the top-selling products in the Frontgate catalog and at Home Depot. But American Biophysics proved more adept at killing mosquitoes than at running a fast-growing consumer products company. When it expanded manufacturing from its lowvolume Rhode Island facility to a mass-production plant in China, quality dropped. Consumers became angry, and a product that was saving lives almost went off the market. American Biophysics, which had once had $70 million in annual revenue, was sold to Woodstream for the bargain-basement price of $6 million. Mosquito Magnet is making money for Woodstream today, but the shareholders who originally funded the device have little to show for its belated success. Flaw 2: The product falls short of claims and gets bashed. The Lesson: Delay your launch until the product is really ready.

Microsoft Windows Vista In 2007, when Microsoft launched Windows Vista, the media and the public had high expectations. So did the company, which allotted $500 million for marketing and predicted that 50% of users would run the premium edition within two years. But the software had so many compatibility and performance problems that even Microsofts most loyal customers revolted. Vista flopped, and Apple lampooned it in an ad campaign (Im a Mac), causing many consumers to believe that Vista had even more problems than it did.