Product ManagementProduct Marketing

Seven reasons of Product Failure

Statistics have shown that one of seven products fail to yield successful outcomes (Source: McKinsey Global Institute). According to the authors Crawford C Merle and R.G.Cooper respectively, new product mortality rate is around 35% whereas 48% of all products fail, which in itself are numbers one should not ignore while building products.

So why do products fail?

New product failure is an increasingly complex topic with many factors in play. Why products and services launched into the market fail to deliver the expected financial returns is still up for debate. Different schools of thought attribute different reasons to the complex high-risk strategy of product launch.

The team at Veratempo has worked on countless products over the last 15+ years and these are 7 key reasons we have seen that are responsible for product failure –

1. Product-market fit
Flawed products with compatibility issues, not enough testing, no real problem fixing are some of the problems causing a new product or service to fail. The tough path to product market fit is hard to nail and messy.

Microsoft poured $500 million into bringing Windows Vista into the market which was targeted to replace Windows XP. However, customers found the product to be flawed and not compatible which made them downgrade to Windows XP or turn to a competitor. This issue could be evaded with pre-market testing and thorough quality testing over several target markets.

2. Incorrect pricing
Companies launching new products do so with a higher cost and manufacturing price and at times expect customers to pay a price premium. It could work for some products, but for most, price is a prickly touch point. Correct pricing estimates can be achieved if there are existing products, however for new products that require an early adoption phase, a tight control of the production and testing process is required.

Apple’s Newton PDA failed miserably because the price point was too high for customers. Customers who could even afford the $700 price tag thought they could get a better bargain and value-for-money in a competitor’s similar offering.

3. Know your customer (KYC)
If a product doesn’t satisfy a specific need or a group of needs, it is doomed for failure. A bit harsh, but true for most failures. A thorough and in-depth understanding your target customer base is key and helps in providing a unique feeling to the customer.

A classic example of red-ocean thinking is when Coca-Cola launched C2, a beverage with half the calories and carbs from a regular coke was targeted to 20 to 40-year-old males. After the product failed, a post-launch research showed that the target market wanted to full taste of a Coke without the calories and carbs. A prior-to-launch research by Coca-Cola would have saved them the efforts and eased their way to launch their now-successful Coke Zero beverage.

4. Target market
The primary market size for any product is synced with financial outcomes and sales’ projections. Some companies set their limits higher than they should, making them identify several markets (primary and secondary). This works out if there are abundant resources and correct testing processes.

Another Microsoft example of product failure is the launch of Zune in 2006, Microsoft’s answer to the iPod. With fluffed up expectations, and overpromising the market, the product failed terribly. And the reason it did so was because Microsoft was chasing Apple’s iPod customer base without giving them a valid reason to switch to Zune.

5. Lack of patience
Success isn’t something that is achieved overnight. Today’s agile temperament gives way to short –term iterations which causes a lack of patience and the need for instant gratification. Taking short-cuts to experimenting and several market launches with different products at the same time shows lack of clear cut objectives and achievement of goals.

Good things come to those who wait and know how to prioritize goals.

6. Weak market launch
A poorly executed product launch is a leading factor in product failure. Launching without doing due diligence, market research and a product with technological fallacies can put the product launch into a tailspin. Inadequate preparation prior to a launch spells doom.

Inefficient communication with internal teams, market experts and testers eventually lead to an ineffective launch.

7. Delayed market entry
While patience is a virtue, delaying the launching phase by a significant amount of time will only cause product failure. Overthinking attributes, delays in product development and actual production, and a poorly outlined launch strategy can push out launches and could cause a gap to market entry allowing possible competitors to take lead. Most companies “miss the train” and aren’t able to keep up with the marketplace’s changing dynamics.

According to Gartner, 55% of product launches are executed on time.Google launched Google Lively in 2008 after investing significant time in development. The timing coincided with hard-hitting recession causing the product to fail. The company had to withdraw the product within 5 months to then focus on other goals.

On an average 48% of new products fail, and there are several factors that cause failure to achieve the desired output. Our top 7 reasons are putting forward a flawed and not-yet ready product, charging too little or too much, inadequate customer understanding, incorrect target market, looking at things from the short-term perspective, a poorly orchestrated product launch and delaying the launch process

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