New product failure


It is found that new products suffer from a high attrition rate.

1. Many new product ideas do not reach the market at all. Considerable time, money, and effort are thus wasted in new product venture.

2. Even those new products, which manage to reach the market after years of preparation and work, often fail.

3. Even with successful new products, in many cases, the success is short-lived; they die out after the initial boom.

Why do New Products Fail?

Faulty Product Idea

Faulty product idea is often a major cause of failure of new product ventures. According to a study done by Wharton business School, 23% of product failures can be attributed to bad product ideas.

Distribution-Related Problems

Distribution also can cause new product failure. Some points below show some instances where distribution related problems have played havoc with new products.

Nestle Chocolates

When Nestle launched its new chocolates, the product was ok; the promotion too was ok. In fact, the promotion won several awards. But, the new product encountered difficulties on the distribution side.

The company insisted that at the retail outlets, its chocolates should be stored inside refrigerators: otherwise they would melt. The stipulation resulted in two difficulties at the retail level: First, it meant excluding a majority of the available outlets, as they did not have refrigerators. Second, chocolates being an impulse buy, the pro-ducts are not picked up, if they are not visible upfront in the retail shops.

Nestle eventually had to reformulate its product in line with channel requirements.

Pepsi’s Ruffles

Pepsi had problems with its Ruffles chips.

The company decided that the same distribution system (Pepsi) could be used both for the soft drink and the chips. The rationale was that both products were breakable and fragile.

But, in actual practice, the two differed in distribution characteristics; the chips got crushed while being transported along with the sturdier bottles. Eventually, Pepsi had to drop the combination arrangement and go in for an independent distribution system for Ruffles.