Analysis shows that several new products fail not because they are defective, but because the company in question is not properly equipped to handle them. The question is how to avert such failures and ensure new product success?
Before a firm proceeds with a new product idea, it should find answers to basic questions such as:
1. Is the proposed product close to the existing business of the company? Close to the knittings? or does it constitute an entirely new line of business?
2. In the latter case, can the company handle the new business?
3. How new is the proposed product? Is it radically new for the market? Or is it similar in some way to already existing products?
4. If it is a radically new product, how long will it take to get established? Can the firm sustain the long pioneering stage?
5. If it is a ‘me-too’ product, can it make a living in a market already dominated by early entrants? What is the current level of demand and what is the market share the firm can hope to get?
6. Is the product likely to invite retaliation from a strong competitor, who is already in the same line or in a related line of business? What are the resources of the firm as compared to those of the dominant competitors?
To go for intrinsically New products. Or Just Improved Products?
To be a Pioneer, or a Follower?
There are companies who cannot handle products that are entirely new. They can succeed only when they remain ‘close to their knittings’. Such companies should propose only such new products that can fit their existing market/customers. The products must be capable of being marketed by channels with which they are familiar. And they should be able to tap them with marketing organization and strategy with which they are familiar.
Against this, there are others who believe in reaping big profits by entering totally new business /products. They can enter totally marketing territories, establish new channels and win new customers for new products.
There must be a good match between the skills of the firm and the demands of the proposed new products. Identifying one’s strengths and weakness vis-à-vis the demands of the proposed product will help avoid a lot of problem subsequently.
New product-success is decided by market need plus corporate competence. If the organization has the competence to fill a given market need, it becomes an ideal condition for success.
Most companies find it safer to watch a pioneer from a distance for a considerable length of time waiting of the products idea to get established and only then they enter the market with similar products. So, the awareness on the part of a firm that it cannot be a market pioneer, but can only be a follower, or the confidence on the part of a firm that it can be a pioneer are important guiding factors in proceeding with a new product idea.
A New Product Succeeds only when there is a Net Benefit to User:
Newness is not an end in itself. The brilliant technology or lever engineering is not what finally matters. The product’s uniqueness and innovativeness must yield a net benefit to the customer. That is what makes an innovation tick in the market.
As mentioned earlier, newness has different connotations. In all cases, the common ingredient for the success of the new product is that the product’s uniqueness and innovativeness should yield a new/improved solution to the problem of the customers. Ultimately, the user must gain something out of the whole exercise.
Firm must be prepared for Retaliation by Competitors:
Similarly, the firm must analyze and project the possibility of retaliation from a strong competitor. If a medium sized firm with moderate resources, is planning to introduce a new product, it should check whether it is gong to provoke a mighty competitor. The firm must have knowledge about the resource and management style of such competitors.