Sunday, November 8, 2009

Reasons for the failure of new product

An Organized New-Product Development Process is Critical Identifying and developing new-product ideas and effective strategies to go with them is often the key to a firm’s success and survival. New-product development demands effort, time and talent-and still the risks and costs of failure are high.

A new product may fail for many reasons. Most often, companies fail to offer a unique benefit or underestimate the competition. Specific reasons are: • A high-level executive pushes a favorite idea thru’ in spite of negative market research findings. • The idea is good but the market size is over-estimated. • The product is not well designed. • The product is incorrectly positioned in the market, not advertised effectively or over-priced. • Development costs are higher than expected. • Competitors fight back harder than expected.

Several other factors hinder new-product development • Shortage of important ideas in certain areas. • Fragmented markets • Social and governmental constraints. • Costliness of the development process. • Capital shortages • Faster required development time • Shorter product life cycle.