Continuous product development is a critical part of business sustenance strategy. It is more like birthing a new generation to lead the path into the future.
Service businesses must continuously prospect for new clients despite the size of current customer base. As well, manufacturing firms need to ensure they maintain an expanding production-line that incorporates occasional launch of new products in a bid to excite their markets.
Sadly, however, new products keep failing at an alarming rate. A study conducted a long time ago put new product failure rate at an estimated 80%.
Here are the shocking facts. A couple of decades before now, the Coca Cola Co.’s attempt to replace the Classic Coke with a slightly improved brand tagged ‘New Coke’ was a disaster. Zap Mail by FEDEX was pulled off the market when it didn’t live up to market expectations. These and more related cases of failure have discouraged businesses from introducing new products.
In the interim most businesses have shifted focus to acquiring successful new startups, buying licenses to produce and market successful products and services in a new region, or extending and improving current product lines to nudge the consumers out of boredom.
The discouraging rate of new product failure calls for questioning: Why do new products fail and how can businesses increase the odds of success?
- Over-estimated market size – Although an idea may be good, the market size may be too small to yield adequate returns that would cover the cost of research, product development, promotion and distribution in the long term. Shoprite, a South African retail store that operates in Nigeria, may have been tricked into believing that the attractive 200 million population in Nigeria would transform into a huge return on investment. Whereas, the shrinking middle-class in the country are exhibiting lesser buying power, in contrast to what is obtainable in South Africa, most Nigerians visiting the sprawling retail store brand do so to take advantage of the fine ambience to take nice pictures after buying a bottle of cola and pies. It does mean that population size isn’t enough nudge when introducing products. The culture of the people andthe current economy realities must be put into consideration when considering where to invest.
- Faulty functional design – Sometimes the actual product may not have been designed to meet the desire for convenience or usability. The Hummer car brand didn’t sustain its ‘hit’ status for long in Nigeria. In the long term,the gas-guzzling heavy-body car didn’t fit the wallet of most Nigerians who, from observation, are often triggered to hysteria when the government increases pump price of petrol. Conversely, Toyota car brands has proved hugely successful in this part of the world because it saves consumers money at the pump. Likewise, Apple Inc. became the first private business to reach the $2 trillion valuation a few days ago. Despite the high price of the brand products, artistically and functionally it has always lived up to the taste of its upscale consumers who want class and flexibility – and this is it, an Apple iPhone can help you do just about anything.
- Incorrect Positioning – What product makers say about their products goes a long way. Smirnoff didn’t make impressive sales until it was positioned as an alcoholic product that hides the smell of alcohol (“it takes the breath away”). It means it was the alcoholic brand consumers should buy if they don’t want anyone to perceive that they have been drinking.
- High price – Consumers don’t pay for products they pay for value or solutions. Therefore, when the value or solutions delivered by a product is perceived to be higher than the cost of the product or service, consumers would feel cheated and subsequently shun the product. The Hummer brand delivered on protection at the cost of economy. In a tight economy where the upscale and middle class are pressed for cash, for many people, it is easy to trade off the heavy armoured-body for more affordable SUV-brand that offers some level of safety during crash in addition to reducing the cost of gas.
- Poor advertisement – Most products are not reaching targets. Despite the advantages of deploying product communications via social media some businesses are not leveraging the platforms to attract sufficient eyeballs. Yes, it is true that a good product would sell itself but manufacturers should still make the effort to get the words out. Small businesses suffer this restraint in Nigeria. No product can live up to its potential without engaging in any of public relations, digital or influencer marketing, or general advertising.
- Fierce compensation – In some cases new products fail because larger competitors fight back harder than expected. Etisalat should tell the story of frontal attacks by MTN Nigeria. DSTV wasn’t nice to the folded HITV. Microsoft attempted to buy Facebook off the market at inception.
- Selfishness instead of dependence on market research – It is possible to have brilliant executives push ideas for execution without carrying out proper market research. The market is continuously influx and consumers are daily getting transformed by activities within the social space and unfolding events in the economy. Personal conviction may not be good enough when executing certain product development strategies. Hence, it is ideal for businesses to conduct market research and analyze data for trends that would help develop a more robust product concept in executing impeccable product launch strategy.