Why great new products fail
By Nils Randrup
The most frustrating thing is to having developed a seemingly great innovative product, which has a large market potential, and then seeing it fail when it is launched. The most frustrating thing I’ve ever personally been involved in was just that. DUNI – a large international company in the tabletop business with HQ in Sweden - developed a new napkin type called the “Snapkin” which was better than the traditional roll of paper towels which most people have in the kitchen, but cheaper than the nice high end paper napkins, and it came in a stylish little ice-blue box. So it created a new sub-category of paper towels with huge potential. The test marketing of the product went great. Of the consumers who were given the product over 90% said that they would certainly buy it when it came on the market. However, when it was launched the product failed, meaning that the sales did not take off and after 16 month the product was discontinued and the remaining stock sold off for almost nothing. How could a product with that high acceptance rate and buying intention score in the consumer test fail? When talking to people in other industries and colleagues in academia and from other consulting companies, we soon understood that quite a number of companies have had similar experiences and were also perplexed about the experience like Schneider Associates who have just shared their experiences[i] and frustration with similar un-successful launches of good products.
Based on our meta research consisting of our experiences and the research and experiences of others (e.g. see Schneider Ass. comment about the same issue in Harvard Business Review, Why Most Product Launches Fail, April 2011), we come to the conclusion that there seems to be typical 6 traps which can explain most of the failure problems with launching a seemingly great new product:
1. Category launch trap
· The product defines a new category and requires but does not get it
· If consumers can’t quickly grasp how to use the new product, they don’t make the final buying decision and put it in their basket.
2. Timing trap
· The product is revolutionary but there is no market for it. Customers are not ready to buy (yet) typically because of lack of vision/knowledge (inertia), infrastructural demands or fit with current behavior/systems, high risk assessments for the changeover to the new product etc.
· The product must pass the consumer test, and it must be clear who will buy the product and at what price.
3. Expectations trap
· The product does not deliver on some of the important claims about it benefit and ease of use and gets thumbs down by the pioneers or initial users
· The product launch must not be pushed too much forward before the product can deliver on the most important benefits
4. Desk top trap
· The product makes sense to the managers and product development people. The competitive advantage of the product, and the business case looks good on paper, but it fails the consumer test because the difference does not sway real customers to select the new product over other alternatives or competitive products.
· The product must go thru and be successful in a real customer test situation where the customer can choose between different alternatives.
5. Agility trap
· The product quickly takes off but because of too conservative budgeting and sales forecasting, the company cannot support the fast growth (e.g. companies run out of products, lead-time explodes on product delivery and installation services, rushed products get quality problems, and customer service crash because of too high volume of incoming calls)
· Companies must have a scenario plan for at least 2-3 scenarios with different levels of sales takeoff profiles, and must be agile enough andready to gear up (or gear down) when needed.
6. Knowledge trap
· The product is launched but hardly anyone in the target group has noticed or can remember seeing the product in the stores.
· Companies must invest sufficient funds to support the launch with a more aggressive communication campaign which is sufficient enough to secure a high initial awareness level.
The bottom line
Great new products do fail sometimes, most often because most customers do not initially by a product from a new product category, there are contextual problems which makes the timing not right, new product does deliver on initial customer expectations, product is a desktop development project, the setup producing and delivering the product is not agile enough to solve practical problems, or knowledge about the product in the right target groups are lacking.