New product pioneer need not necessarily become the market leader


A pioneer need not necessarily command a high market share and become the market leader. This is because technology breakthrough alone is not enough for market leadership. As mentioned earlier, big resources and marketing clout are required to take full advantage of the new product. When a product is first launched, its price is usually high; its applications are limited and its quality is not necessarily the best.

The personal computer is an example. Micro Instrumentation and Elementary Systems pioneered the PC in the 1970s. In the launching years, its prices were high, quality low and application limited. Thereafter the software firms which developed spreadsheets and word processors, enlarging the application scope of the product. The market leadership, however, went to latecomers such as Apple Computers and IBM, who invested heavily to turn the PC into a mass product.

The same thing happened in the case of the video recorder (VCR); America’s Ampex, which pioneered the technology in 1956, charged about $ 50,000 for its early models and sold only a few units. It made little effort to cut costs and expand the market. Japan’s Sony, JVC, and Matsushita, on the contrary saw the potential of the product for mass sales and set out to make a video recorder that would just cost $500 though it took them years to achieve the goal, the world market for VCRs finally came to them.

The Critical success Factors

Finally, what are the critical factors in new product success?

It is seen that high success rate in new products is correlated to the presence of three critical factors:

v A unique and superior product idea that yields a real benefit to the consumer.

v Strong technical / production expertise.

v A strong market orientation on the part of the company. Often, this turns out to be a particularly important dimension.

Conditions for New product success

The question is how to avert such failures and ensure new product success. 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. Before a firm proceeds with a new product idea, it should find answers to some basic considerations such as:

1. Whether the proposed product is close to the existing business of the company or it constitutes an entirely new line of business.

2. In the latter case, the company’s capability to handle the new business.

3. Newness of the proposed product whether it is radically new for the market or it is similar in some way to already existing products.

4. If it is a radically new product, the length of time it will take to get established. The firm’s ability to sustain the long pioneering stage.

5. If it is ‘me-too’ product, firm’s capability and ability to make a living in a market already dominated by early entrants. Current level of demand and the market share the firm can hope to get from the new product.

Last but most relevant is whether the product likely to invite retaliation from a strong competitor who is already in the same line or in a related line of business. The firm should have sufficient resources after launching the new product to overcome competition which is posed by the strong competitor.

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