44% of all new products that enter the market fail. Thats a daunting number for any business to consider. Yet, you dont have to be part of that statistic.
The process for development and release of both new products and services contains basic similarities across every market segment. From childrens gaming to financial investment services, three critical evaluation components are vital to the success of any new endeavor. Without them, you are headed for trouble.
The three reasons most products and services fail:
1. Failure to understand the market
2. Lack of sufficient investment into distribution and market exposure
3. Product or service is not adequately in alignment with existing brand values
The most critical and complex of these is the failure to understand the market. Entrepreneurs and corporate executives can fall prey to trusting their experience and instinct alone. Often previous success can be our greatest enemy in future product launch attempts, because over-confidence can lead to personal judgment decisions rather than audience validation and statistical analysis. For successful product launch, you must:
1. Ask the market
2. Understand the needs of the target audience
3. Gain sufficient competitive knowledge
4. Understand current trending
5. Learn from the past
Asking the market
This refers to surveys, focus groups, interviews and any form of user testing. Technology has made these processes much faster, economical and efficient than just a few short years ago. Small businesses and large businesses alike can facilitate large-scale studies quickly and get responses back in days. Typically, the more face-to-face the process, the more detail and nuance can be drawn from the study, but an effective online survey can cover an enormous range of test sampling audience and assess qualitative and quantitative content very quickly and cost effectively. The right research tool for your business depends on the product or service, and the available budget.
Understand the needs of the target audience
When you spend the time and money to go out and ask the market, it is imperative to frame the questioning in terms of the audience needs. Often businesses frame survey content in terms of preference alone. This skews the results. For example, if I was asked whether I prefer Coke or Pepsi, Id probably say Pepsi, but the truth of the matter is that I dont drink soda very often. In this example, it really doesnt matter much which brand I prefer if I am not an actual consumer of the product. I have no need for another soda option.
Gain sufficient competitive knowledge
Many a race has been lost to those who underestimated their competition. When bringing a new product or service to market, it is vital to be aware of both direct and indirect competition in the market. Referring back to the example above: if a company wanted to launch a new cola, their direct competition would be existing colas, their indirect competition could be other sodas (such as Sprite, ginger ale, rootbeer), or to take it even further, water. When evaluating competition it is important to consider price, availability, unique strengths, and any other distinguishing factor. The higher the distinguishing traits rate on the target audience needs assessment, the more critical it is to consider.
Understand current trending
Trending considers general shifts in the purchasing choices of the target audience. Again, using the cola example, years ago bottled water was very uncommon in beverage purchases and would not have been part of a competitive matrix. Over the past decade however, the popularity of bottled water has increased dramatically, and this trend has greatly impacted the soda market. Current trending is often difficult to track. It is difficult to determine if trends will continue to grow, or if they are simply a short-lived anomaly. Savvy marketers both listen to trends and impact them.
Learn from the past
If 72 percent of all new products fail, there is a lot of great information available to help make wise decisions about your new product. If something similar has been attempted before, why did it fail? By asking questions based on the concepts included here, you might be able to determine what was the missing ingredient for success, or perhaps avoid repeating history.
The other two major contributors to new product failure are less complicated than understanding the market.
Lack of sufficient investment into distribution and market exposure
Simply put, typically, it takes both time and money to get your product or service into the hands of the consumer. There are occasions where a new product or service extension is such an obvious add-on value to an existing product or service that little marketing is needed beyond a point-of-sale suggestion, but these are rare. Most new endeavors will need to invest in some form of a marketing campaign. Creative marketers can maximize opportunities and stretch budgets with innovative strategies, but lack of sufficient investment into distribution and market exposure will result in warehouses full of unsold product, or idle staff.
Product or service is not adequately in alignment with existing brand values
The higher the brand meaning of the company, the more critical this factor can be to success. Brand meaning is the level of intrinsic significance the consumer finds in the brand. Disney, Mercedes (although currently violating this rule), and Nike are brands that have high brand meaning. Disney, for example, stands for the imagination and magic of youth. A new product or service that defied these values would not only stand a high chance of failure, but could damage the brand equity across the company causing far more loss than the investment into the new product.
The summary of these critical factors takes place before extensive product development. Proper effort spent in research and brand analysis can give companies the assets they need for successful launch of a new product or service. Companies that follow these rules can keep themselves in the percent that succeed.