The goods and services that vary considerably in terms of their attributes or intended usage in contrast with the goods manufactured previously by the same firm are termed as ‘new products’. It is a difficult task to define a new product. It involves novel ideas and offerings which are entirely different and new for the customers. Moreover, the relative view is considered highly useful in defining a new product, as the potential consumers who will be using the product for the first time, may identify opportunities or problems for consideration. The concept of a new product is highly multi-dimensional, which has capabilities of satisfying the wants of desirous and interested stockholders. It also provides strategic competitive advantage to significant number of interested consumers. This also leads to significant opportunity for a firm to create value in the competitive market. There are various perspectives from which a new product could be defined.
After product planning, the next step is product development. The process of identifying the probability of producing a product is called product development. Under this process, the feasibility and profitability of producing a new product is assessed before making a final decision. New product development involves all the phases and functions in launching a new product or sewice. The process starts with emergence of a new idea and ends with the commercialisation of new product in the market. New product development encompasses competitive pressure, cost challenges and increased consumer expectations which helps the firm to develop an enhanced and better-quality product for the market. Through acquisition or development, a firm can introduce new products in the market. The following are three forms of acquisition:
- By buying other companies,
- By acquiring patents from other companies, or
- By purchasing license or franchise from another company.
Why New Products Fail: Failure of New Products
Every organisation has to significantly devote time, money, skills and energy to innovate and develop a new product. Irrespective of the efforts put by the organisation, the new product may experience failures. A product failure crucially affects the organisation in terms of time, money, brand image and motivation level of employees. Therefore, it is very important to determine the reason behind the failure of a product. Some of the reasons are as follows:
Over-estimation of Market Size: A product will not be able to perform in the market, if the market size is over-estimated. This may lead to less revenue generation than the desired level, even if the quality of the product is good.
Under-estimation of Market Competition: When a marketer fails to estimate the actual competition level and competitors’ strengths, then the product may have to deal with severe competition in the market. This often leads to failure of new products.
Inadequate Market Research: If a marketer is unable to study the market and makes erroneous predictions about the customers’ needs and wants, then this may fail to satisfy the potential customers.
Lack of Uniqueness: If a product is incompetent in comparison with the competitor’s product, then customers have no reason to purchase a new product.
Poor product Design: A poorly designed product may cause inconvenience to customerS in using the product. This is one of the major reasons of customers’ to dislike about a product.
Lack of Superiority: It is essential for a product to prove itself superior in contrast to other similar products available in the market. Sale of new products cannot be made on the basis of superfluous claims made by the marketers. Hence, leading to the failure of new products.
Incorrect STP Approach: A product may fail to capture the market, when a marketer incorrectly segments the market, targets the target audience and positions the new product.
Technical Issues: While using a new product, if a customer faces any technical issues, then he may discontinue purchasing the same product again.
High Production Costs: When the price of a product is high compared to the other products in the market, then this may lead to product failure. This occurs, when the actual production cost exceeds the expected production cost.
Wrong Entry Timing: If a new product enters the market at the wrong time by making hasty decisions or by entering late in the market, then also the product may fail to establish its position in the market.
Ineffective promotion: Ineffective utilisation of promotional tools lead to new product failure. The customers remain unaware of the product’s attributes and functions, due to which customers do not purchase the product.