Explain how to prevent new product failure.
Answers
Product failure is when a new product is launched but fails to gain sufficient sales and market sales, resulting in a net loss for a firm.
To understand product failure, it is good to look at a few examples of product failure. (Top 20 product failure here)
Some of these examples, give very simple methods to avoid product failure.
Colgate frozen foods – Lesson: Don’t mix brands
Colgate is one of the strongest brands of toothpaste. The simple logo is indelibly associated with brushing your teeth.
Needless to say, when you see the Colgate brand above a frozen meal, it creates great confusion amongst consumers. You don’t want to eat toothpaste for dinner. But, that is the sub-conscious message that stands out from this packaged meal.
Windows Vista – Make sure product works.
Windows has frequently been criticised for being poor quality and having innumerable security flaws. But, Windows XP (the precursor to Vista) was relatively good and stable. Windows Vista was supposed to be an upgrade from XP, but many found the performance was very poor and frustrating. The simple problem with Vista was that it wasn’t good enough. It hadn’t been tested adequately by average consumers in the real world.
Virgin Cola / New Coke (Coca Cola) / Crystal Pepsi – Don’t reinvent the wheel.
Virgin Cola was introduced to great fanfare as an alternative to the two main established brands. But, it never really succeeded and by 2012, the company who acquired the brand fell into administration and production stopped.
New Coke. In 1985, Coca Cola were worried about losing out to Pepsi. They changed their formula and taste, stopping the old coca-cola drink. But, it was not popular with customers, who started to boycott the new Coca-Cola upset they couldn’t get the original.
Crystal Pepsi. This was a new version of Pepsi, which was clear. However, the product didn’t do well. It was neither water nor Coke, and customers didn’t warm to the product. People expect cola to be a certain colour and radical change of a well established brand – rarely works.
General methods to avoid product failure
Testing on sample audience
If you are going to launch a new product, a company should try to test the product on a representative sample of potential customers. If the feedback is positive, the product has a good chance. If sample give negative feedback, it is possible for the company to respond to this or even pull the product.
The difficulty with sending samples is that it may not represent the real world situation. For example, if customers were sent New Coke, they may give positive feedback. But, when the product is launched for sale this initial testing may have missed the frustration that the original is no longer available.
In blind tastings Virgin cola and New Coke, may have done well compared to existing brands. But, the Coca-Cola market is not determined by blind tastings – but the strength of brand loyalty to existing labels.
In testing a product like Windows Vista. It may be tested by software engineers who know how to deal with difficulties or it may be presented in such a way that the developers help promote more positive feedback.
For companies who develop new products, there is a strong tendency to want to promote it in a good way. People who have developed a product will have a vested interest in seeing their creation do well. Therefore, in sending out samples, they may be able to present it in a more favourable light than in the market place.
Misses groundswell of opinion. Sometimes, products can be damaged by an unexpected snowballing effect of public opinion. For example, in blind tastings, people may like a product, but once released people could start facebook pages taking the mickey out of Colgate frozen meals. This negative publicity snowballs and the product becomes a laughing stock.
Unexpected changes in technology. Betamax was the first video recording device introduced in 1974. By some accounts it was better quality than VHS.
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Failure of new product
✒Product failure is when a new product is launched but fails to gain sufficient sales and market sales, resulting in a net loss for a firm. Some of these examples, give very simple methods to avoid product failure.✒
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⭕10 Reasons for Product Failure |⭕
1. Poor product quality: Obviously, a product, which is of poor quality, cannot be sold in the market.
2. Higher price: Another reason for the failure of certain products is the price factor. Higher production and distribution costs may lead to higher price. Such a product cannot be sold in a market consisting of middle and lower income buyers.
3. Poor timing: It is important that a product, to be successful, is introduced in the market at the correct time. If it is introduced at an unsuitable time it may turn out to be a failure.
Example: Publishers of textbooks usually bring out books in the beginning of the academic year.
4. Inherent defect: There may be an inherent defect in the product, which may affect its market potentialities. Such a product may not be preferred by the buyers even if the defect is rectified later.
5. Extent of competition: A monopolist may not have any difficulty in marketing his product. In the case of a market where there are a large number of sellers for a particular product, the buyer will have many alternatives. Therefore, in such a condition unless the marketer brings out the product to the satisfaction of the buyers, he cannot be successful.
6. Lack of promotional measures: Popularizing the brand, particularly, in the introduction stage of a product is essential. Such a step will ensure repeated buying and bring long-term benefits for the marketer. Failure to do so will ‘prove to be disastrous for the product.
7. Faulty distribution policy: It is important that a product reaches the right market at the right time and at the right price. The faulty distribution policy of the marketer may lead to many problems, i.e., the goods may not be available when required, may lead to higher price and so on.
8. Unavailability of spare parts: In the case of durable goods like televisions sets, Air-conditioners, etc., and also in the case of two wheeler and cars, easy availability of spare parts is an important requirement. Unavailability of spares may frustrate the buyers. Such buyers would not recommend the product to their friends and relatives.
9. Poor after-sale service: The quality of after sale service is yet another important cause. Most marketers, particularly those marketing durables, two-wheeler, etc., are courteous while making sale. When the customer requires service later and approaches the seller, the latter may show indifference.
10. Imitation products: Last, but not the least, the presence of a number of imitation products in the market makes the genuine products vulnerable. An average buyer may not be able to distinguish between the genuine product and the fake one.
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