NEW PRODUCT FAILURE

By
Nadia Farook
Jyothi K.R
Jayasree S
S2 MBA
Insitute of Management in Kerala
Thiruvananthapuram
E-mail: nadia.farook@rediffmail.com
 

NEW PRODUCT FAILURE

In this era of tight competition from domestic and global firms the firm 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 in to 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 were 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 the new product success is - customer value. Value is what the customer thinks is value. The major reasons for product failure are

1. Faulty product idea:

The product often fail because faulty of product idea. A good idea can revolutionize the market but a bad idea may prove bitter to the firm or it may backfire Eg: 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's were increasingly becoming influensors in purchase decisions and to attract the kids with the cartoon creatures and to position the product exclusively for kids. The product failed miserably inspite 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.

2. 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. Eg: 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.

3. Poor timing of launch:

Too early or late entry into the market is a common cause of failure. Kinetic Merlin was launched in pune 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.

4. Improper Positioning:

Positioning means putting the product into the predetermined orbit. Improper positioning may affect the product success. Eg: 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 in retrospect 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.
 

Nadia Farook
Jyothi K.R
Jayasree S
S2 MBA
Insitute of Management in Kerala
Thiruvananthapuram
E-mail: nadia.farook@rediffmail.com
 

Source : E-mail June 3, 2005

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