This document discusses reasons why new products fail and provides a framework to increase success rates. It defines new products and outlines the new product development process. Common reasons for failure include the product not being new to customers, lacking benefits, poor positioning, and inadequate return on investment. The proposed OEEM framework emphasizes organizational excellence, execution skills, consideration of external factors, and effective marketing mix strategy to reduce failure rates.

1. New Product DevelopmentWhy do New Products fail?
By Gopaldas Pawan Kumar
BE, MBA, MSc (EBM),Warwick

2. Innovation vis-à-vis New Product(NP)
• Innovation drives NP introduction into markets.
• Innovation represent a total package of features,
forms and functions which marketing program
converts into benefits for satisfying the needs
and wants of the customer.
• Continuous innovations represent minor
modifications to existing products, whereas,
discontinuous innovations help introduce new
products that may change the market and
consumer lifestyles and in some cases, rendering
existing technologies obsolete. - Kahn ( 2008)

3. What is a Product ?
 Anything that can be offered to a market to
satisfy a want or need which may include
physical goods, services, experiences, events,
persons, places, properties, organizations,
information and ideas.
-Kotler et al (2013)

4. New Product (NP)
 Any product that users consider as a new addition
to the current market offerings qualifies as a new
product with newness implying change and
absence of consumer experience- Pessemier (1986)
Organizations need to replace existing products
by NP’s to be competitive in the market. NP’s help
in garnering higher margins and hence have a big
role to play in growth and survival of an
Organization.

5. New Product
could be made available by
• Reduction in Cost.
• Product Improvements to improve form or function
• Line Extensions which are copies of existing
product with unique features.
• Market Extensions which are original products
positioned differently in new markets.
• New Category products which are new to the
company but not new to the customers.
• New-to-the world products which are technological
innovations that create new market that did not
exist earlier.

6. New Product
Classification
New Product
are copies of
existing
product with
unique
features
Cost
Improvement
Product
Improvements
By Cost
Optimization
Figure-1
original
products
positioned
differently in
new markets
Line Extension
Market
Extension
To improve form
and functions.
New Category
Products
new to the
company but
not new to the
customers
New-to –theWorld
Products
technological
innovations that create
new market that did
not exist earlier.

7. New Product Development(NPD) Process
Involves
1. Idea generation.
2. Idea screening.
3. Concept development and testing.
4. Marketing strategy development.
5. Business Analysis.
6. Product development.
7. Market testing
8. Commercialization.
The seeds of failure are sown at the initial stages
of development . Using a stage gate method, the
NPD process could be developed to reduce
failures. Faster feedback and prompt corrective
actions could improve success rate.

8. NPD Decision Process
Figure- 2
Source: Kotler et al , “Marketing Management” , Dorling Kindersley (I) Pvt Ltd.,2013

9. An NP is declared a failure
When
1. It is withdrawn from the market for any reason.
2. The required market share in a desired time
period is not realized.
3. The anticipated life cycle as defined by the
organization is not achieved and
4. The desired profitability is not realized.
-Berry (2013)

10. Why New Products Fail?
Reasons could be any one or more than one of the following
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
The product was not new to the customer /market.
The product offered no tangible benefit.
The product was not positioned properly.
Poor support from channel partners.
High forecast variance .
Strong competitors’ response .
Change in customers preferences
Environmental constraints.
Poor after sales service.
Inadequate return on investment .
Lack of coordination among various departments .
Poor diffusion of innovation .
Conflict of personalities at higher echelons.
Urban & Hauser(1993)

11. Other Reasons
1. NP not meeting the claims made or creating a
new category product necessitating customer
education (Schneider and Hall , 2011).
2. Lack of product distinctiveness, (Wheelwright and
Sasser ,1989)
3. High research and/or product development costs
and ignoring marketing research findings (Berry
2013),
4. Consumers not being informed of the applications,
and new technologies not addressing market
opportunity correctly ( Moote ,2012)

12. Examples of New Product Failures
Ford Edsel
Betamax
Global Products
Indian Products
Tata Nano
Tata Estate
Laser Disc
(Failures due to wrong positioning)
Bajaj Geared Scooter
Figure -3
2- Stroke Bikes
(Failures due to new technology)

13. The OEEM Framework
In order to increase the rate of success of NP’s ,
the author proposes a framework called OEEM,
which is an acronym for
1. Organizational Excellence.
2. Execution Skills.
3. External Factors.
4. Marketing Mix Strategy.
Each pillar is made up of various activities
which form the bricks of the structure.

14. OEEM Framework- Details
Critical factors to consider for success of New Product
Organisational Excellence
Execution Skills
External Factors
• Constant environmental Mapping
• Professional Management
• Strong NPD Process
• Strong R&D
• CFT's for NPD's
• Multi -skilled employees
• Collaborative departments
• Customer -Centric
• Strong Project execution skills
• Risk taking
• First-time-right motto
• Innovative
• Speed in development
• Technology seeker
• Adequate resources
Marketing Mix Strategy
• Minimal time from conception to
launch
• Product uniqueness
• Large Market Size
• Growing Economy
• Stable Market
• Tab on Competition
• Vigil for opportunities
• Responsible suppliers
• Strong network of suppliers
• Right Price
• Knowledgable Channel Partners.
• Value for Money products.
• Ease of usage/application
• Service excellence
• Effective segmentation
• Product differentiation
• Strong grounding inTQM and Six
Sigma
• Emphasis on cost reduction
• Excellent planning skills
• Access to raw materials
• Fast ramp up of production
• Flexible and adaptable
manufacturing
• Knowledgeable customer
• Strong base in forecasting
techniques
• Effective Supply Chain
Management .
• Conducive business atmosphere
• Effective positioning of NP's
• Proactive Government
• Integrated marketing
communications
• Quality oriented.
• Excellent PR
• Regular Training & Development
Programmes.
• Strong Brand equity
• Bench marking
Figure - 4
The OEEM Framework by Pawan, Gopaldas , 2013

15. References
Berry ,Tim ,” Product and Brand Failures : A Marketing Perspective” Bplans.com ,2010
http://www.mplans.com/articles/product-and-brand-failures-a-marketing-perspective/
Kahn ,B Kenneth, ”New Product Planning”,Response Books, New Delhi, 110044, 2008.
Kotler,Philip,Keller ,Kevin Lane , Koshy , Abram and Jha Mithileshwar, “Marketing
Management”,DorlingKinderslay(I)Pvt Ltd, Licencee Pearson Education,Inc,2013, Page 291
.Mootee, Idris , “10 Big Reasons Why Most Innovative Products & Services Fail”
,www.innovationexcellence.com 22.08.2012
,http://www.innovationexcellence.com/blog/2012/08/22/10-big-reasons-why-most-innovativeproducts-services-fail/21.11.13
Pessemier , Edgar A; “Product Management”, Robert E . Kreiger Publishing Company, Florida USA,1986,
Schneider and Hall Julie , Joan, “Why Product Launches Fail” , hbr.org/2011/04
http://hbr.org/2011/04/why-most-product-launches-fail/
Wheelwright, Steven C. and Sasser, Jr. W. Earl ,” The New Product Development Map “ , Harvard
Business Review, May 1989 http://hbr.org/1989/05/the-new-product-development-map/ar/pr
03.12.13

16. The End