Product Failures: The Underlying Whys
Successfully commercializing New-to-market or New-to-Firm product and service offerings are crucial to the CI business model and core to offer. The size and nature of our business model and those of our clients does not allow for the expected 86% failure rate of new product offerings. Mitigating the risk of failure is crucial. This discussion is intended to be an introduction or summary of a much larger project related to continuing to develop the awareness and understanding of what New-to-market and New-to-Firm products and services mean to our existing and prospective client base.
There are two underlying causes for product failure: improper market analysis and/or a poor product. Based on the presentation from an InventVermont conference in June 2009, 55% of product failures can be oriented around misunderstood or bad market analysis. “The problem that companies face is that market research is very expensive, and it’s not a science. If you don’t ask the right questions, you don’t get the right answers to help in the development of the product.” Bob McMath, founder of NewProductWorks. Market analysis broadly defines some specific reasons for product failure: biased market analysis, a lack of an effective marketing effort, ignoring the market research, and poor timing of a product release.
It is key to use market research to determine your product development, rather than justify your product development with market research. Bad market research may be done as an effort to green light a project, or consumer responses indicate a behavior they wish they would enact, but will fail to do so. Asking the right question is a cornerstone to product success. In many new product releases you are entering the part of the consumer or buyer’s mind in the realm of things they didn’t know they didn’t know. Discovering what the consumer will do in this undiscovered environment is much of the challenge.
Sometimes, even when good market research is done, it may not be used. The project champion may ignore the research because he/she does not agree with it, or is so blinded by their own goal they refuse to learn from and act on it.
The right timing is an element of product success that can be the most subjective. Some of the factors affecting when the right time is are consumer expectations, the available technology, proper marketing and sales follow through, and the business model and structure of the company developing the new product. Consumer expectations are perhaps the most important of these, because it is the only thing that you cannot change before you release your product. Your product may change the consumer’s expectations but only through widespread use and only after your product has succeeded.
A poor product and the underlying reasons for its poorness comprise of the rest of the statistically significant causes for product failure. A mismatch of the product that market research proved a desire for and what the product actually is, the defects of the product, higher than anticipated costs, poor timing, and technical or production problems are all manifestations of poor products. A poor product is a product that fails to meet consumer expectations, or cannot provide value to the consumer at a profit to the firm or product developer. The simple litmus test for a product is if anyone describes the product as, “It’s a good product but…[any reason].”
Product defects exist when the desired goal or functionality of the product and the technology of the product are not in sync. Sometimes this is because of a failure to utilize the right technology or it’s a failure to properly develop the needed technology.
Higher than anticipated costs come when someone evaluates the scope of the project without properly anticipating the development challenges. These challenges can and many times do have underlying political implications. Working within a firm to develop a product will always contain political challenges. Properly identifying the stakeholders and possible gatekeepers to the success of a project may be one of the most important aspects to product development.
Poor timing falls into the category of both inadequate market analysis and poor products. A poor product can be an indication of poor timing, simply because the technology available was not advanced enough for consumer expectations to be met. The early touch screen laptop/tablets are a good example of this.
Technical or production problems are an excellent indicator that the technology behind the product was not where it needed to be, that the product was a poor product. In many cases these can be indicators of poor timing as well. These problems also indicate the firm was not ready for success, or prepared to handle quick growth and success.
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