New product failure in the market
PRODUCTS: In this era of tight competition from domestic and global
firms those who don't come out with new products are putting themselves
at great risk because their existing products are prone to changing
customer needs, shorter product life cycles, new technologies and
increased competition.
Despite years of research and huge capital being pumped into
understanding the consumer, making a launch successful is still a
difficult task. The new product largely depends on the product quality
and the marketing tactics of the firm, there are many occasions where
the product failed miserably even after using the best technology and
quality the reason is that the new product is not worth for the
customers.
The prime factor for new product success is - customer value. Value
is what the customer thinks is value. The major reasons for product
failure are:
Faulty product idea
The products often fail because faulty of product idea. A good idea
can revolutionise the market but a bad idea may prove bitter to the firm
or it may backfire. E.g.: Polar industries in 1991 launched "Cool Cats"
fan - decorated with cartoon characters meant primarily for children.
The fan was priced at premium; the idea was that children were
increasingly becoming influencers in purchase decisions and to attract
the kids with the cartoon creatures and to position the product
exclusively for kids.
The product failed miserably in spite of its huge advertising budget
because when the fan was put on it didn't have any colour effect and the
customer did not justify its premium price.
Distribution related problems
The new product fails if the product is unable to meet the channel
requirements. While developing the product the channel requirements must
be given adequate consideration. E.g.: when Nestle launched its new
chocolates the product and promotion was ok but the product failed in
the distribution side because the company stipulated the product to be
stored in refrigerators.
The product faced two problems in the distribution side because it
meant excluding a number of retail outlets as they didn't have this
facility and secondly the chocolate was not picked by the customers as
it was not seen upfront in the retail shops. Finally Nestle had to
reformulate the product according to channel requirements.
Poor timing of launch
Too early or late entry into the market is a common cause of failure.
Kinetic Merlin was launched in India in 1991. It was a 3 in 1 set
consisting of a colour television, a stereo with detachable speakers and
a home computer.
The product was targeted at the Indian consumers who are fond of
sophisticated gadgets to immediately adopt such an innovative idea but
in reality the idea was too advanced for the customers to digest at that
time because they were not exposed to such type of products before.
Improper positioning
Positioning means putting the product into the predetermined orbit.
Improper positioning may affect the product success.
E.g.: Titan Tanishq introduced their 18 carat jewellery and the
product was positioned at elite segment but there was a contradiction as
to why these elite segment should go in for a low carat gold because the
norms for gold in India at that time was 22 carat.
The product failed miserably . Titan had to introduce 22 carat
jewellery.
Some other reasons for product failure are:
* Lack of differential advantage
* Poor planning
* Technical problems in the product
* Competitors fighting back harder than expected
* Poor market research
These are some problems causing new product failure. The watchwords
for new product success are right product to the right customer at right
time.
Pratheeba Thambiah - Faculty of Commerce and Management, Eastern
University. |