There are a number of common reasons why new products fail.
1. Under-investment: Projects can be short of funds and therefore lack the investment required to establish and sustain a new product in the market place.
2. The product fails to deliver any customer benefit: this tends to happen with products that contain some technical or scientific advance. While the technology may be innovative, it may not be seen as innovative by consumers or it may not be delivering benefits deemed worth-while by the market place, therefore it fails to be adopted. Additionally, even though the product is using new technology it still has to perform to the required performance parameters. Remember, quality is defined as ‘fit for purpose’. There need to be clear definition of the market segment and how the products offering is positioned.
3. Forecasting error is a common source of failure: as the saying has it, ; forecasting is difficult, especially if you’re forecasting in the future. Amusing, but certainly true! Often, forecasting errors relate to over-optimistic forecasts of demand and/or underestimates of costs. Manager must to examine the assumptions supporting forecasts as well as the forecasting techniques employed. Also timescales for planned developments have to be realistic.
4. Internal politics, trade-offs and compromise can result in problems: a project may lack the support and commitment of staff and vested interests may comprise against its success. Equally, trade-offs and other such factors, may result in project drifting from its original target, as internal conflict distracts management from its original course of action. Internal conflict, in particular, has been the graveyard of many good product ideas.
5. Industry response is vital: for example, success may be completely dependent on retailers stocking products or on the response of competitor - what happen if they drastically cut the price of their competing product? Such factors are not in the control of the organization; however, good quality market research and competitor intelligence can lessen the negative impact of any potential reaction from external parties.
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