Meaning, Definition and Failure of New Product
Table of Contents:-
New Product Meaning
New products are goods and services that differ significantly in their features or intended uses from products previously produced by the company. Defining a new product is not an easy task for an organisation. In an absolute sense, it is something new which has not existed earlier. When considered in a relative sense, it is something new which has not been experienced before and is perceived as new. In defining new products, the relative view is regarded as more useful because whether or not something is absolutely new, the interested individuals who have not yet experienced it may represent opportunities or problems for consideration.
Thus, a new product is a multi-dimensional concept that needs satisfying capabilities for the stockholders interested in it and which has not been experienced by a significant number of them; but is capable of offering a strong strategic competitive advantage. It means a major opportunity for an organisation to create value. Although there are numerous perspectives from which one could define a new product, the following definitions are worth to be noted.
New Product Definition
According to Musselman and Jackson, “A product is said to be a new product when it serves an entirely new function or makes a major improvement in a present function.”
According to Stanton, new products are those which are really innovative and truly unique replacements for existing products that are significantly different from the existing goods and include initiative products that are new to a company but not new to the market. If the shoppers perceive that a given item is significantly different from competitive goods being replaced with some new features, like appearance or performance, then it is a new product.
According to Kotler, new product mean original products, improved products, modified products and new brands which are developed by the firm through its own research and development efforts and includes those products which the consumers see as new. A new product is thus perceived differently by different people. It is a need-satisfying concept with benefits for buyers bundle of need-satisfying features; for marketers, a way to add value; for intermediaries, an opportunity to design; for R&D and to assemble and process for the production department.
Product development is the following step to product planning. Product development is the procedure of finding out the possibility of producing a product. It includes the decision as to whether it would be feasible to produce the product and whether it would be profitable for the company not to do so.
According to Limpson and Darling, “Product development involves the adding, dropping, and modification of item specifications in the product line for a given period of time, usually one year”.
New Product Development describes all the phases and tasks in launching a new product or service in the market from the emergence of the idea to its commercialisation. NDP refers to competitive pressures, cost challenges, and increased customer expectations that are driving companies to improve the way they develop and introduce products to the market. A company can add new products through development or acquisition.
The acquisition route can take three forms.
1) The company can buy other companies,
2) It can obtain patents from other companies, or
3) It can buy a franchise or license from another company.
Reasons for the Failure of New Products
Organizations invest enough time, money, energy and skill to develop a new product. Despite all these efforts, the new products may experience failure in many cases. A failure brings loss to the company in terms of money, time, motivation and image. So it is important to find out the possible reasons for the failure of new products.
Several reasons may cause the failure of new products, some of which are:
1) Over-Estimation of Market Size: If the market of the product is over-estimated, a new product, despite being good in quality, cannot generate the desired level of revenue and may fail.
2) Under-Estimation of Competition: If the marketer fails to anticipate the competitor’s strength and reaction, the new product has to face stiff competition, for which they are not prepared. It may cause the failure of the new products.
3) Poor Market Research: Seeds of failure may lie in their origin. If the market is not studied properly, and the marketer makes wrong predictions about customers’ needs, the product, despite being perfect, may fail to satisfy customers.
4) Lack of Uniqueness: If the new product is incapable of providing meaningful differences in comparison with competitors’ offerings, customers find no reason to accept it.
5) Poor Design: When the new product is designed poorly and is inconvenient to use, the product may fail.
6) Lack of Superiority: A new product is bound to justify its existence by providing something better, in the true sense, than what competitors provide. Only superfluous claims made by marketers cannot create sales of the new offerings.
7) Wrong STP Approach: When the marketer fails to segment the market properly, target the right group and position the new product rightly, it fails to get a toe-hold in the market, and experiences failure.
8) Technical Problem: If the new product suffers from any technical problem, observed by the customer during its use, it fails.
9) Huge Cost of Production: When the actual cost of production exceeds the expected cost of production to a large extent, the company has to set a high price for the product, which may also result in product failure.
10) Wrong Entry Timing: If the management takes a hasty decision to enter the market or gets late in entering the market, the product may fail.
11) Poor Promotion: When the marketer is incapable of utilising its promotional tools properly to make customers aware of the new product and motivated to purchase the product, the product may fail to perform its desired functions.