Why do products fail? - Marketing Strategy

It is reasonable to suggest that an understanding of the pitfalls of product development can help us avoid them. When addressing this question, managers need to consider the nature and background to NPD, as some types of development activity are inherently more risky than others. Additionally, the organization’s attitude to risk and investment has a bearing on the situation. Common reasons for failure can be summarized as follows:

  • Under-investment :where the project is short of funds and lacks the investment required to establish/sustain it in the market place.
  • The product fails to deliver any customer benefit. This can happen with technical or scientific advance. While the technology may be innovative, it must be perceived as innovative by the market place, otherwise it is unlikely to be adopted. Additionally, the product must perform to the required performance parameters. Remember, quality is defined as ‘fit for purpose’.There needs to be a clear definition of market segment and how the product offering is positioned.
  • Forecasting error is a common source of failure.It was once said, forecasting is difficult, especially if you’re forecasting the future’. This is certainly true! Often, forecasting errors relate to over-optimistic forecasts of demand and/or underestimates of costs. Managers need to examine the assumptions supporting forecasts as well as the forecasting techniques used. Also, timescales for planned development have to be realistic.
  • Internal politics :trade-offs and compromise can result in problems. The project may lack the support and commitment of staff and vested interests may conspire against its success. Equally,trade-offs, and other such factors, may result in the project drifting from its original target, as internal conflict distracts management. Internal conflict has been the graveyard of many good product ideas.
  • Industry response is vital. For example, success may be completely dependent on retailers stocking products or on the response of competitors – what happens if they drastically cut price? Such factors careless controllable, but good quality market research and competitor intelligence can lessen the negative effects.

Strategic direction of NPD

Strategic direction of NPD

While some factors are unpredictable, and projects are a ‘hostage to fortune’, most issues are simply a matter of management and marketing. Applying a sound, structured approach to NPD and having effective project management should move the odds in your favour. Products need a product champion – a leader/manager who gets things done. In turn, this leader needs the support of the organization.

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