The BrandNew Guru Speaks

The Top 10 Reasons New Products Fail

Introducing new products successfully requires: a) a defined process that is followed almost slavishly, b) sufficient expertise and resources and c) patience.

Who wants to do any of that?

Talking about process, expertise and patience is boring to everyone except engineers (and people who introduce new products successfully.)

So, with apologies to David Letterman, let’s show what happens when you try to introduce new products any other way. Here are the top 10 reasons new products fail.

Reason 10. “Let’s put on a show.”
See if this sounds familiar. Someone comes up with an idea, and it is implemented by an ad hoc team.

The whole (lack of) process is like what Judy Garland and Mickey Rooney used to do in all those Andy Hardy movies where they staged a complete Broadway show in about five minutes in the barn behind the house.

Unfortunately, what works in “reel” life is far less likely to work in real life.

And without denigrating the Judy Garlands and Mickey Rooneys in your organization, the idea that anybody’s judgment about what could be a winning new product—versus having firm criteria to determine what the marketplace wants—doesn’t make a lot of sense.
Save this approach for summer stock.

9. Science run-a-muck.
The problem here is that companies use their R+D capabilities to come up with unique products, instead of making their customer needs the starting point. In other words they begin with what they are good at manufacturing, as opposed to what the customer wants and then figuring how to manufacture it.

We’re not demeaning R&D. But what we’re saying is what should drive the innovation process is fulfilling what customers say is an unmet need, not what we can come up in the lab. Having R&D shape the portfolio of new product investment is misguided.

8. The Lemming Effect.
“The competition just introduced an X, so we need an X, too.” That’s just silly. If all you’re offering is a me-too product you can only gain market share by cutting price, and who wants to go that route? You need to find a gap in the competition’s offerings, one that meets a customer need, and go after it. Read the book Blue Ocean Strategy for more on this philosophy.

7. The blind leading the blind.
This is trend-hopping. There are practitioners out there who preach that all you have to do is just identify a trend and hop on the train. The problem is, more often than not, you’ll get a bad seat—the trend will be almost over by the time you get your product or service out there and you will get little return on your investment. You don’t want to open another high-end steakhouse, or start another poker television show right now. If you are not extremely early, it is not worth the risk.

6. The market is too small.
For a new product to succeed you need enough people to buy it. That sounds ridiculously obvious, doesn’t it? But you would be amazed at the number of companies that design a product for too small a market.

There are roughly 105 million households in America, and I don’t know of any product that is used in every one. So by definition, you’re going after some subset. And as the new product idea move through their development process, the target market narrows.

Let’s use an example. Suppose I say that the target for my new product is households that have over $55,000 in annual income. Well, that’s only 50% of households. So I just went from having the potential of selling my product to 105 million homes to 52.5 million.

But it’s really just for adults in America, and not really for older people. So, I only want to sell to those 18 to 65. That costs me another third of the market. And this new product will only appeal to those with an active lifestyle. Being generous we could say that one-third of the remaining 70 million homes qualify. So now my potential market is 23.3 million homes.

Now of those 23.3 million households, I might get 50% to try it. So now I am down to 11.66 million households. And of those who tried it, only 50% said they would buy it again. So now I am down to a potential market of about 5.8 million households who will be regular customers and it turns out that number isn’t big enough to pay for the development of the product, the advertising, and so on. But instead of recognizing this, we change the definition of the market and say: It’s for everyone 18 and over. And then we wonder why a product that was actually designed for a narrow target didn’t sell well.

5. The unknown buyer.
This is where companies imagine a potential customer who is just about impossible to find. They’ll say their product is for people who are insecure about the way they take care of their house, who have three or more kids and a need for status in the community. There’s no way to identify those people in the market, to buy media against them, to send direct mail to them, to know which stores they prefer. You’ll never know how to reach them.

4. Dartboard product design.
There is almost never sufficient thought given to what the total package should look like.

Let’s say we’re introducing a new paper towel. There are four variables that could affect how well it sells: price; packaging, size and product characteristics. And each one of them has four options. So there’s 256 different ways I could execute that product.

The predominant technique used to choose among them is what we refer to as dartboard. People sit around a conference table with some pizza and soft drinks and say “let’s go with 500 sheets, super-high absorbency, and middle-of-the-road packaging. They make a judgment just about at random. What’s the probability they’ve chosen right? By definition, it is one out of 256. Maybe they have some expertise and that helps a bit; it increases their odds to 1:128. This is not the best way of introducing new products. There are scientific ways of determining the right one by asking consumers directly which they prefer.

3. Wishful thinking.
This is where companies create a product with absolutely no real clue about whether there is a market. During the Internet era, for example, every company said if “we could just get half the households in America to try what we have,” we’d have a business worth $3 billion. They had no reason to believe half of America would be interested.

2. Build it and they will come.
Of course the model you should be following in developing a new product is to find a market—a product or service customers say they are willing to pay for—and then set out to develop it.

But the sad fact is this not what happens. It really is like the scene in A Field of Dreams where the Kevin Costner character stood in that field in Iowa and God whispered to him, “build it and they will come.” The belief is that if I build this product right, people will buy it. That approach is pure marketing arrogance, because the notion that you can build something without talking to anybody, because you know your business best, is just misguided and invariably leads to new product failures.

New products aren’t bloodhounds that go find markets. They need to be addressing an unmet need.

1. Ready, fire, aim.
I think Tom Peters and Bob Waterman perpetrated one of the biggest crimes ever against corporate America when they told us: Do a little homework, get the product in the marketplace and make corrections based on market feedback, a concept they called ready, fire, aim.

There is a large body of literature that being a second mover can be even more powerful than being first to market.

You don’t have to be first. Speed is a killer concept in the negative sense. It kills new products.

You don’t want to make your mistakes in public. To launch a product before it is ready with a $40 million campaign is just idiocy. The problem is it isn’t seen as idiocy. It’s seen as one of the costs of doing business. And that’s what’s sad. People who do this should not be seen as bold. They should be seen as bad marketers.

I know it isn’t sexy, but I do know this to be true: Introducing new products successfully requires: a) a defined process that is followed almost slavishly, b) sufficient expertise and resources and c) patience.