PRO1ECT
ON
WHY PRODUCT FAIL?
SUB1ECT
PRODUCT MANAGEMENT
INTRODUCTION
Once a company has carefully segmented the market, chosen its target customers,
identifying their needs and determined its market positioning, it is better able to develop
new products. Marketer play a key role in the new product process , by identifying and
evaluating new product ideas and working with R & D and others in every stage of
development.
New product development shapes the companys future. New product launch is a very
comple!, time consuming and is financially a big issue for any company. "here is
e!pectation from every new product launched to have high sales, to have good margins,
to capture market share and thus become market leader. "hese are the e!pectations
however the real picture may be not so good or as e!pected. Many a time the products
introduce are flops and thus results in loss. "his loss may be in terms of monetary as lot
of money is involved in launching a new product. #t also results in loss in terms of image.
Only $% of new products survive for more than one year. & '( % failure rate does little
to promote the current efficiency of company marketing. "he reasons some business fail
to innovate is not that they shy away from ideas) it is that they engage in hopelessly
romantic one*at great cost in men + women and money. &n idea must meet rigorous tests
of practicality if it is to be capable of making a business successful in the future.
,ource- Dr. .eter Drucker, /arvard 0usiness Review, 1''2.
& product can fail on any of the stages of .roduct 3ife 4ycle #. e. #ntroduction ,atage,
5rowth ,tage, Maturity ,tage, Decline ,tage. "he understanding of a products life
cycle, can help a company to understand and reali6e when it is to introduce and withdraw
a product from a market, its position in the market is compared to competitors, and the
products success or failure.
.roduct failures can serve one useful purpose- #nvestors, entrepreneurs and new product
team leaders can learn valuable lessons about what not to do.
The Four Stages of the Product Life Cycle
(1) Introduction Stage
7 "he initial stage of a products life cycle8its first appearance in the
marketplace8when sales start at 6ero and profits are negative
7 9hy new products fail
: Lack of resources, knowledge, and marketing skills to
successfully launch the product
: High pricing to recoup research and development costs
(2) Growth Stage
7 "he stage of a products life cycle when sales rise rapidly and profits reach
a peak and then start to decline
: More competitors enter the market
: Product pricing is aggressive
: Brand loyalty becomes important
: Gaps in market coverage are filled
: Promotion expenditures moderate
: Production efficiencies lower costs
(3) Maturity Stage
7 "he stage of a products life cycle when the sales curve peaks and starts to
decline and profits continue to fall
: Intense competition
: Emphasis on improvements and differences in competitors`
products
: Weaker competitors lose interest and exit the market
: Advertising and dealer-oriented promotions predominate
: Distribution sometimes expands to the global market
7 ,trategic ob;ectives for maturity stage
: Generate cash flow
: Maintain market share
: Increase share of customer
(4) Decline Stage
7 "he stage of a products life cycle when sales fall rapidly
: Pruning items from the product line
: Cutting promotion expenditures
: Eliminating marginal distributors
: Planning to phase out the product
7 ,trategic choices
: Harvesting the product`s remaining value
: Divesting the product when losses are
sustained and a return to profitability
is unlikely
Why Some Products Fail and Others Succeed
: Reasons for .roduct <ailure
7 .roducts value or features did not match customer needs
7 #neffective or inconsistent branding that failed to convey the right message
or image to customers
7 "echnical or design problems
7 .oor market timing
7 Overestimation of market si6e
7 #neffective promotion
7 #nsufficient distribution
WHY PRODUCTS FAIL?
#t could be any reason for the product failure. #t is not one particular reason) it could be a
combination of both reasons. #t is up to company and for the product managers to find out
the e!act reason for the failure. "here can be several reasons for a product failure like-*
1. MARKET RESEARCH:- Market research needs a lot of investment and efforts
therefore sometimes companies skip this part or do little research and launch the
product. /ere, the mistake has been done. 9ithout a proper research, the launch
of a product could not be successful.
EXAMPLE: - Real =alue 4ompany is a successful name in fire e!tinguishers
market. "he company launched a new product 7 =acuum proof bo!es thinking that
it would be success but it was not going to happen because #ndian consumers never
wanted this. "his all was done due to lack of market research.
(. WRONG POSITIONING: * .ositioning is a critical aspect of a product and
when it is done properly, it becomes a disaster. .roduct positioning strategies are
developed to hit the brain of a consumer towards an idea but when this idea can
not be digested by the consumer, it becomes indigestible which ultimately lead
to failure.
EXAMPLE: - Maruti =ersa is an e!cellent e!ample for wrong positioning. &t the
time of its launch, it was promoted as a comfortable personal car. &mitabh 0achhan
and &bhishek 0achhan told us about the benefit of "win &.4. and the comforts of
the seats but #ndian consumers were not able to understand it as a personal car and
they were confused that is why now company is promoting a family car.
>. WRONG PRICING STRATEGY -*.rice is the main factor for the success of
failure of any product in the #ndian market. #ndian market is very price sensitive
that is why this factor remains in the top of the mind of the marketers. "he idea
of the marketer will fail if the consumer is not able to buy it.
EXAMPLE: - /ero /onda ?ari6ma is a good e!ample of over pricing. @arlier it
was priced more than Rs. $A,AAA thats why sales were not picking up and it was
assumed as a failure in the market. /ero /onda reali6ed the mistake and reduced the
price by 1A,AAA directly. #t is a big amount for a Mobike to reduce.
2. Insufficient Promotion: - .romotion is one of the main components for a
product success. Bntil and unless people will not know about it or they are not
able to connect it then also product could be a failure.
EXAMPLE: <ord <usion is a classic e!ample of insufficient promotion. #t was
launched in December (AA2 but till today, not many people know about it and those
who know are not clear about the product features.
C. HIGH RUNNING COST: - "he purchasing price as well as the running cost is
important for any product. #f the product is rightly priced to buy but it is costly
to use it then also it could be a failure in the market.
EXAMPLE: * <iat .alio is a right e!ample. #t is a good looking car and
competitively priced according to its features but it is a costly affair to drive it as it
is less fuel efficient and the spare parts are very costly. "hat is why company is
trying hard to make it more fuel efficient.
D. Distribution Network: - "imely Distribution of a product increases the chances
of success of a product. #t is very common in the case of <M45 companies that
their product is not available in the market. Many a times, they start advertising
the new product but dont ensure the availability of that product in the market
that is why consumer goes back to his+her home without the product and that
product becomes a failure very soon.
E. Wrong Timing of Launch: - "iming also plays a role in the success of a
product. 9rong timing could be a disaster for the product launch. "his kind of
mistakes is very general in the release of a movie.
$. Culture Differences: - Bnderstanding the culture of a country is very important
for launching a product. "he product may not suit to the lifestyle of the people,
may not match with the eating hobbits.
EXAMPLE: - ?elloggs 4ornflakes. 9hen the concept of cornflakes was
introduced by this company, it didnt like by the many people because we #ndians
were not used to have cornflakes at the time of breakfast. "hats why ?elloggs
4ornflakes failed initially.
"he introduction of a new product or service remains stressful for anyone involved in the
process. @verything needs to be well orchestrated and coordinated. <rom conception to
roll out, product development is a ma;or and costly process in which manufacturing and
marketing skills and competencies are tested. Research has found that there were >1,$EC
products introduced in (AA( representing a cumulative investment of F(>> billion. Gust
over half of these products failed before they were two years old. &ll other things being
eHual, this implies overF1AA billion per year spent on new products that fail. .roducts that
achieve both commercial and economic success are rare. "he development of new
.roduct is labour intensive and is a highly studied and comple! activity in the corporate
world. 3aunching a new product means coordinating marketing, sales, manufacturing,
organi6ational design, consumer research and human resources, among other functions. #t
is also preparing for t he worst Icontingency planningJ in case something goes wrong
Iproduct recall, production interruption, product transportation and delivery failures etc.J
"he ability to target the right customers the right way is a challenge and the comple!
nature of the process is one of the reasons why so many companies lose touch with the
reality of what consumers want and misspend huge sums of money on products that fail.
@conomically, two necessary conditions must be met for a new product to succeed. "he
first is that the product must deliver a better value*to*price ratio to targeted consumers
than the competition. "his can be achieved either by providing more benefits for a given
price than the competition or by providing the same benefits as the competition at a lower
price. "he second condition reHuires that the company deliver the product at a cost that
will provide a positive return on the capital invested. "o achieve this, cost advantages
must be achieved in one or several areas of the business such as manufacturing,
marketing or sales. Despite the large number of talented and Hualified scientists,
engineers, marketers that most organi6ations employ, many of the products being
designed and introduced do not have the value or are not perceived by customers the way
the company had anticipated they would be. "hey therefore fall short of delivering the
anticipated profits. ,o why, with all of this effort and know*how do so many new
products failK 4ould it be because companies tend to overestimate their commercial
success Isales and market shareJ and underestimate the underlying economic cost Iwill
the product actually earn any profit above the cost of capitalKJ.
#n most cases product failures happen because of one or more of the following reasons-
1. Unprofitable Segments
"here are four main characteristics which a segment needs to have to be a business
opportunity- #t must be identifiable, demand*related, attainable Ieffective distributionJ
and of an adeHuate si6e.( &s a matter of fact, studies have shown that the segment
si6e, or lack of it, is the most common reason for new product failure. @rroneous sales
forecasts affect cash flow estimates and pro;ected profitability. "he estimated sales
potential must therefore be accurate to make the company generate enough economic
return Ireturn in e!cess of cost of capitalJ. @ven if a product or service is well
designed and meets the needs of its target customers, if the segment itself is too small
and does not have enough customers, failure is around the corner.
2. Poor Identification of Needs and Weak Product Positioning
New products can also fail simply because companies misunderstand or ignore customer
needs, attitudes and behaviors. ,ome might argue that the products were right and that the
target market was wrong or improperly identified- misconception or misunderstanding
customer needs, attitudes or behaviors is fairly common and leads to weak product and
service positioning. 9hat is the reasonK Organi6ations are sometimes reluctant to take the
necessary steps, to find out what their customers need and behaviors are Iit is after all
money spent up*frontJ."hey place insufficient emphasis on understanding customer
demographics, .sychographics and their implications. #n other words companies have
insufficient knowledge of who their potential clients are, what makes them what they are,
what their customers think and how they behave. 9hat is not invested upfront could
come back and cost valuable dollars later.
3. Competing Value-to-Price Ratio
& common mistake Ibesides failing to communicate with customers through advertising,
.R, promotion, etc.J, occurs when companies introduce a new product that does not offer
a better value*to*price ratio compared to the competition. 4onsumers are usually guided
by the notion that what they are acHuiring or paying for is worth something and have
attached a sub;ective value*to*price ratio to it. 0oth the perceived value and the benefits
are compared to similar items available on the market. &t that point products+services are
ranked in the consumers mind in order of preference. @!treme ratios are eliminated Ihigh
price*low perceived value ratiosJ and a pool of most favored items gets selected and
analy6ed. 3ater, a final purchase decision is made. 4ompanies need to be very aware of
this phenomenon because too often consumer attitude is confused with consumer
behavior. 4onsumer attitude towards product is essentially driven by its features whereas
consumer purchase behavior is driven by value*to*price ratio or LLwhat do # get for my
money. & consumers positive attitude towards a product or service may result in
positive word of mouth but not necessarily in sales. & poorly crafted pricing strategy can
in turn deliver disappointing results.
4. Economic Cost
"he last reason new products fail is that companys underestimate the new product
development and launching costs involved. & successful new product must deliver a
better value*to*price ratio to the customer and must do so profitably. =alue*based pricing
must be introduced and managed because the value that is created dictates consumer
prices. #n the early 1''As 5eneral Motors introduced the ,aturn car line and ignored this
principle. #t is a classic e!ample of accompany that delivered value for its consumers but
not for its shareholders.
Common Reasons for Product Failures
#n addition to a faulty concept or product design, some of the most common reasons for
product failures typically fall into one or more of these categories-
• /igh level e!ecutive push of an idea that does not fit the targeted market.
• Overestimated market si6e.
• #ncorrectly positioned product.
• #neffective promotion, including packaging message, which may have used
misleading or confusing marketing message about the product, its features, or its
use.
• Not understanding the target market segment and the branding process that would
provide the most value for that segment.
• #ncorrectly priced8too high and too low.
• @!cessive research and+or product development costs.
• Bnderestimating or not correctly understanding competitive activity or retaliatory
response.
• .oor timing of distribution.
• Misleading market research that did not accurately reflect the actual consumers
behavior for the targeted segment.
• 4onducted marketing research and ignored those findings.
• ?ey channel partners were not involved, informed, or both.
• 3ower than anticipated margins.
Reasons Why a Great Product Launch Can Fail and How To Avoid It
#ts reported that EA% of all new product launches fail in the first year. "he Huestion is,
why do some succeed when others failK /aving seen both sides of the product launch
picture, here are a few pitfalls to watch out for-
1. The market does not ~need¨ your offering.
,ome product launches are steeped in a philosophy called M#f # build it, they will come.N
Many start*ups find themselves building a market solution that is based on one or two
customer e!periences. "he reality isOwithout the proper market research, even the best
launch plans can fail. "o avoid this mistake, adeHuate research needs to be completed to
ensure that your go*to*market plan is based on facts and substance. #ts imperative that
you validate there is a market out there. Does the market have a business needK 9ho are
your best customersK &re there enough to sustain growthK /ow does this solution tie into
the bigger growth picture for a businessK
2. Sales training/enablement was ineffective.
& key element in a product launch is training and enabling the channel to sell the new
product or service. ,ales training+enablement means that your company has carefully
considered what information will be communicated-*
I1J "o the sales channel so they can effectively sell the new product or service.
I(J "o your prospects and customers so they can make an intelligent buying decision.
"his reHuires taking a look at the sales cycle and making ;udgments about what the field
will need to know and what they will be able to deliver to a prospect or customer.
3. Message/value proposition did not create urgency.
9hen looking at messages in the conte!t of a product launch, the same guidelines apply.
Pour messages must help a prospect or customer understand the following-
• 9hat makes your product or service different in the marketK /ave you
highlighted those facts+features in your launchK
• /ow does this compare with the competition in terms of pricing, messages, and
modelsK
• #s your solution+service aligned to help solve a business problem in your marketK
#f not, then your solution becomes a Mnice to haveN vs. a Mmust have now.N
• &re messages aligned to who actually purchases this product+serviceK 3ook at the
functional titles 7 who are you selling to and are you speaking a language they
understandK
4. Launch did not plant enough seeds.
# often compare the role of marketing to that of planting a garden. "he fruits that you
en;oy after youve done the work come in the form of new sales. /owever, we all know
that fruit ;ust does not simply appear out of nowhere. #t takes months to develop, and only
after planting good seeds and freHuent watering. Marketing a new product or service
reHuires much the same model. #f you are entering a new market with something
spectacular and the market doesnt know you or your solution, then you have some
serious planting Itelling the world what it is you are doingJ and watering Icreating
urgencyJ ahead. #f you are already established in a market and are coming out with
something new and e!citing, then you may not need as many seeds, but be prepared to
plant and water anyway.
,etting the stage in your market reHuires mapping out what a prospect or customer will
need to know and understand when making a purchasing decision for your type of
product or service. Do not assume that your market will draw the same conclusion you
are anticipating. Pour launch strategy and e!ecution must reflect a clear understanding
and path that helps a prospect or customer make intelligent decisions, create an urgency
that they really need what you are selling, and provide guidance on what they should be
doing+thinking about ne!t.
5. No BETA customers or references were available
"his obstacle tends to surface well into the launch plan. 9hat happens here is thisOK &ll
launch plans are a M5ONO Pou have seeded the market and they responded in kind. "he
channel knows what they are selling and are doing a good ;ob of it. ,ales cycles are in
process. &nd then 0OOMOsomeone wants to talk to a reference. Now whatK &re you
prepared for handling this sales obstacleK
Many product launches have overcome this obstacle. Pour references dont need to be
perfect, but you need a plan to address this stage. "he good news is that if youve gotten
this far, your launch is probably working. Now, you need to button up this latter stage so
you can turn these opportunities into sales.
References fall under two categories-
I1J "he ideal reference that served as a 0@"& customer during product development and
can speak to your vision, the product, and working with your organi6ation.
I(J "he not*so*ideal reference who is using a different Ior older versionJ product+service
by your company. 0oth have fantastic validation points and will serve you well. Gust
know what each reference is offering and e!plain to the channel how to get the most out
of the references you have lined up. Do not leave this to chance or assume the channel
knows how to use the reference.
&lso beware of reference burnout. "ry to spread the wealth and have different references
lined up to address specific issues. #f, in the end, you do not have a reference prepared,
then you may want to offer one of the first, really interested prospects a sweet deal to
help you with the rest of the launch.
6. The company did not fully commit to the product
"his issue will also come up during the sales cycle because your sales message is not
tight. #f your company is throwing development dollars at fi!ing a MholeN in an older
product line, and has not shared a larger vision of where this product is going in the
future, you will run into issues. Pour channels credibility is on the line, as well as your
company as a whole. Make sure you have taken the time to prepare answers to the
Huestions that will come up-
• 9hat is the long term plan for this product lineK
• /ow does it fit in with your other products+servicesK
• 9hat is the planned upgrade+release scheduleK /ow freHuentK
• 9here was this product developed Ibe prepared to address off*shore issues and
concernsJK
7. The sale of this product/service eroded other revenue generation
opportunities
"his is an issue that # have seen come up more than once as this side of the launch is
often not thought through sufficiently. "he issue focuses on the McostN of the launch to
the use ness 7 and deserves your attention. #t is not as much an issue for new sales as it is
for your e!isting customer base that has already made investments with your company.
"he Huestions you must answer to avoid MsurprisesN include-
• /ow does the sale of this new product impact our other product linesK
• Do we have a clear upgrade+migration path for current customersK
• 9hat is their benefit to upgrading systems or migrating to a new platformK
• 9hat is the cost of conversion for each of these deals to our businessK Ilong term
and short termJ
#f you have successfully uncovered each of these issues, then you have dramatically
increased your chances of a successful launch. 0eing part of a successful launch is one of
he most e!hilarating and rewarding e!periences as a marketer. &lways remember to take
the time to reflect on how your product launch is performing so you can learn as you go. #
recently heard a great phrase, M&n error only becomes a mistake when you do it more
than once.N ,o, heres to your successQ
Examples of failed products
CASE OF GM SATURN
"he ,aturn car line has ranked high in customer satisfaction surveys IG.D..ower &
&ssociatesJ and, during its first few years of production, was so popular that the company
could not keep up with demand. 5M invested roughly FDbillion to develop and
manufacture the ,aturn and then priced the cars low to be attractive to young, import car
buyers I"oyota 4orolla or /onda 4ivic buyers were the main targetsJ. "he result was a
line of cars that gained market share and provided superior value to its buyers but
remained unprofitable. ,aturn fail to turn its LLstar into a LLcash cow > and fell short in
producing the cash flow that needed and could have used for new product development.
"his situation led to a loss of strategic focus, a tightening of financial controls, worker
discontent and slow product line re*new land e!pansion. "o this day, ,aturn has not been
able to recoup its huge development costs.
Over the long run, a firms ability to add value to both their customers and their
shareholders by understanding what customers want, need and how they behave impacts
directly the firms bottom line. "he ability to serve Ior not serveJ its customers is
reflected directly in the companys share prices. 5Ms and "oyotas Inumber one and
two respectively in the worldJ stock prices over the past ten years have behaved
differently-
9hile "oyotas stock price almost doubled over the past ten years 5Ms stock price
increased only by 1>%.
Consumers buy products they've learned to trust. Your trust is what the
retailers are after. But, sometimes for various reasons, products just
don't work. And some of them end up in the failed products museum.
.
RPou cannot assume you know how consumers are going to use it,R McMath says. /e
points to a product label that reads- Sfresh roasted peanuts.S R#t has Mr. .eanut on it,R says
McMath. R#t was sold in supermarkets in the peanut rack, but people were taking it off
the shelves in the supermarkets in the snack section and taking it to the coffee grinder and
grinding it. "hey thought it was a new kind of coffee, purely because of the association of
the package with the coffee.R
¬her fau! pas would be to underestimate how a child will use the product.
A bottle of
"Garlic Cake"
R"his is actually a 4anadian product,R he says, pointing to a can of
SDr. 4are "oothpaste.S R&nybody with kids would know that you donSt
make an aerosol can of toothpaste and put it in the hands of kids.R
&nd kids might have liked this- a product that was Rsupposed to be sprayed on your
marshmallow, so that when you put it on the fire it wonSt charcoal.R
Only five per cent of new products actually end up on your trusted shelves.
Don 9attSs savvy marketing has been behind some of the most successful products in the
grocery store * SNo NameS and S.residentSs 4hoice.S
9att says that R'C per cent of the reason they fail is an inability to communicate them.R
0ut communication costs. Pou have to advertise if you want to get noticed, and that
means television and radio spots, billboards, maga6ine ads. &ccording to 9att, RitSs ;ust
impossible for consumers to reali6e how much money it will take to reach consumers
today.R
9atch "= for an evening though, and youSre inundated with commercial after
commercial. 9ith all the ads out there, how can a product failK
9att says Rthere are ;ust so many images that share your mind that you hardly see
anything, you tune them out. &dvertising used to be about 1A per cent of marketing cost
and it used to be about EA per cent effective. Now itSs about (A per cent of cost and about
2A per cent effective.R
#n short, itSs a bit of a war 6one to get your name out there, your product out there.R#tSs an
adversarial environment, thereSs no Huestion,R says 9att.
A can of "Dr.
Care Toothpaste"
Brand idea failures: Kellogg’s Cereal Mates
Warm milk, frosty reception
?elloggs may have had problems when marketing in certain foreign territories such as
#ndia, but the company has also come unstuck on its home turf, most notably with its
4ereal Mates product. "he idea was simple. 4ereal Mates were small bo!es of ?elloggs
cereal packed with a container of milk and a plastic spoon. "he advantage of the product
was eHually straightforward. &n increase in working hours in the Bnited ,tates,
combined with the rise in fast*food chains, led ?elloggs to believe that there was a
demand for an Lall*in*one breakfast product. "o ma!imi6e 4ereal Mates chances of
success, the line included the four most powerful ?elloggs brands in the B, 7 namely
4orn <lakes, <rosted <lakes I<rostiesJ, <ruit 3oops, and Mini 9heats.
/owever, despite ?elloggs best efforts, the 4ereal Mates brand proved a ma;or flop, and
in 1''', the year ?elloggs rival 5eneral Mills took over as the Bnited ,tates number
one cereal maker, the product was pulled from the shelves.
"he reasons why 4ereal Mates failed to win over consumers are various, and have been
dissected by various ;ournalists and marketing professionals. /ere are some of the main
factors behind 4ereal Mates brand failure-*
1. Factor one: warm milk. &s each container of milk was Laseptically packaged, it
didnt need refrigeration. /owever, consumers didnt like the idea of warm milk.
(. Factor two: cool milk. #n order to accommodate for the consumers preference
for cool milk, ?elloggs eventually decided to place 4ereal Mates in refrigerators
to imply that consumers should have the milk cold. /owever, as Robert McMath,
president of New .roduct 9orks and author of 9hat 9ere "hey "hinkingK, has
observed, this led to even more confusion. L"his decision inevitably caused a
problem in that 4ereal Mates was not in a location where you would generally
e!pect to find breakfast cereal. "he e!pense of trying to re*educate the consumer
to look for cereal in the dairy case proved too enormous 7 way beyond,
apparently, what ?elloggs wanted to spend on selling the new line, writes
McMath.
>. Factor three: advertising. &s if the consumer wasnt confused enough, ?elloggs
complicated matters further with the advertising campaign for 4ereal Mates. "he
"= ads featured young kids helping themselves to the product, while their parents
lay snoring contentedly in bed. /owever, the packaging of the product was far
from child*friendly, and if they left their kids to help themselves, the parents
would have probably been crying Ior at least getting crossJ over spilt milk.
2. Factor four: the taste. @ven when picked up from a refrigerator, the product was
often consumed at work or away from home. #n other words, when the milk was
warm and tasted terrible.
C. Factor five: the price. Retailing at way over a dollar, 4ereal Mates was
considered too e!pensive by many consumers.
"hese factors, working in con;unction, caused the 4ereal Mates brand to fail. &nd so,
after two years on the shelves Ior in refrigeratorsJ, ?elloggs pulled the plug on the
product. /owever, there may be one more reason why 4ereal Mates failed to spark a
revolution in breakfast habits. &s a convenience food, it simply wasnt convenient
enough. & <ebruary (AAA article in Newsweek IL4runch time at ?elloggJ looked at the
changing demands for breakfast products, and the conseHuences for the cereal company.
&mericans hectic new morning routine is wreaking havoc on ?ellogg 4o. ?iller
commutes Inearly an hour round trip in many citiesJ leave no time to fi! even the
simplest breakfast. 5etting out the door is eHually challenging for the D2 percent of
families in which both parents work. More &mericans than ever simply skip breakfast,
according to new data from N.D 5roup, an eating*habits researcher. L.eople wish they
could ;ust get breakfast in;ected into them on the run, says 5erald 4elente, editor of the
"rends Gournal, a marketing*industry newsletter.
4ereal Mates may have enabled people to take their cereal with them, but they still had to
pour the milk over it, and spend valuable time eating the cereal with a small spoon. &s
?eith Naughton concluded in the article above, 0reakfast Mates Lfailed to catch on
because it was impossible to eat while driving.
#ndeed, where ?elloggs has had success in the convenience food market it is with
breakfast bars such as Nutri*grain. Bnlike 4ereal Mates, these bars can be consumed in
seconds, and on the move. Moreover, they dont involve warm milk.
Lessons from Kellogg`s Cereal Mates
? 4onsumers dont like warm milk on their cereal.
? Dont mi! your messages. On the one hand, 4ereal Mates was an Leat anywhere
product. On the other, ?elloggs was implying it needed to be stored in a
refrigerator.
? ,ell the brand in the right place. 4ereal Mates was, essentially, a cereal rather
than a milk product. 4onsumers would have therefore e!pected to see it on the
shelves ne!t to the other cereal products.
? 0e the best in at least one thing. &s a cereal product 4ereal Mates failed because
there were tastier and eHually healthy alternatives. &s a convenience product it
failed because breakfast bars proved to be a faster, more fle!ible option.
? Dont price too high. 4onsumers did not e!pect to pay as much as they did for a
four ounce bo! of cereal.
Hindus, vegetarians sue McDonald's over frying process
& claim by McDonaldSs that its famous <rench fries are cooked in R1AA percent vegetable
oilR is being challenged by a ,eattle lawyer representing /indus and vegetarians.
"he fast*food chain stopped frying fries in beef fat 11 years ago ** a move that was hailed
by health groups across the country.
0ut now several consumers have filed suit, claiming McDonaldSs has admitted that Rbeef
flavoringR is used in the making of the salty potato strips.
& class*action suit filed yesterday in ?ing 4ounty ,uperior 4ourt contends McDonaldSs
Rintentionally failed to publicly disclose its continued use of beef tallow in the Ifrench
fryJ cooking process under the guise of Snatural flavor.SR
R"his is pretty outrageous behavior,R said attorney /arish 0harti, who filed the suit.
R/indus and vegetarians all over the world feel shocked and betrayed by McDonaldSs
deception and ultimate greed.R
/indus regard the cow as a sacred animal, and as a general rule do not eat beef.
Officials at McDonaldSs headHuarters in Oak .ark, #ll., could not be reached for comment
yesterday.
"here are three named plaintiffs in the suit- two /indus who live in 3ynnwood and
,eattle, respectively) and a non*/indu vegetarian from ,eattle. 0harti said he wants the
class to include the estimated 1 million /indus and 1C million vegetarians who live in the
Bnited ,tates.
0harti is relying in part on a recent e*mail from a McDonaldSs official to a concerned
/indu man that appears to confirm that beef e!tract is in the fries.
R<or flavor enhancement, McDonaldSs french*fry suppliers use a miniscule amount of
beef flavoring as an ingredient in the raw product,R wrote Megan Magee of McDonaldSs
/ome Office 4ustomer ,atisfaction Department. "he e*mail was sent March ($ to /itesh
,hah, a 3os &ngeles software engineer.
<hough beef is not listed as an ingredient in McDonaldSs fries, it is part of what is
described by the company as Rnatural flavor,R according to the suit.
&fter the raw potatoes are shipped to McDonaldSs distribution centers, the suit says, the
spuds are cut into strips and blanched in beef tallow.
"he suit seeks unspecified damages for violations of the 9ashington 4onsumer
.rotection &ct and intentional infliction of emotional distress.
French-fry flap spurs McDonald's apology
Company says it's sorry for 'confusion' over beef flavoring
McDonaldSs, which gave the world the 0ig Mac and /amburger Bniversity, is
apologi6ing for beef.
"he fast*food giant faces lawsuits in ,eattle and elsewhere in North &merica and protests
in #ndia over using beef products in its <rench fries. Now itSs offering an e!planation and
contrition on its 9eb site.
RMcDonaldSs B,& is always sensitive to customersS concerns. 0ecause it is our policy to
communicate to customers, we regret if customers felt that the information we provided
was not complete enough to meet their needs. #f there was confusion, we apologi6e,R the
companySs B.,. 9eb page says.
& ,eattle lawyer who has sued McDonaldSs over its fries was unimpressed with the
statement. R&pologies are good if they are sincere. 0ut halfhearted apologies donSt work,R
/arish 0harti said.
"he company said it adds Ra small amount of beef flavoringR to potatoes as they are being
lightly fried at a processing plant. McDonaldSs then free6es the fries and ships them off to
its B.,. restaurants, which cook the potatoes in vegetable oil, the company said.
"he company switched to vegetable oil for restaurant cooking of fries in 1''A to please
cholesterol*conscious customers. "he move attracted the attention of newspapers around
the country.
0ut 0harti says the 1''A announcement was deceptive.
/e sued McDonaldSs in ?ing 4ounty ,uperior 4ourt earlier this month over its continued
use of what he believes is beef tallow in the processing of fries. /e sued, he said, on
behalf of his 1 million fellow /indus in the Bnited ,tates and the nationSs 1C million
vegetarians.
0harti said he has filed similar lawsuits in the ,an <rancisco 0ay area and 0ritish
4olumbia.
9ord of the ,eattle lawsuit became big news in #ndia, whose /indu population does not
eat beef for religious reasons. #ndians held anti*McDonaldSs protests, vandals hit one
restaurant, and some radical /indu groups called for the fast*food chain to leave the
country.
McDonaldSs said almost immediately that it didnSt use beef or pork products in its <rench
fries in #ndia. #t also said it doesnSt use pork or beef products in any vegetarian meals in
#ndia.
#n fact, the company said it has tried to comply with local dietary customs, following
#slamic rules, for e!ample, in the Middle @ast.
#n #ndia, the company introduced Mahara;a Macs that have Rtwo all*lamb patties,R rather
than the beef 0ig Mac popular in the Bnited ,tates.
#n the Bnited ,tates, the companySs beef additive to fries falls under Rnatural flavorR in
the nutrition information that customers can pick up at restaurants. & company
spokesman did not respond to a reHuest for comment about why the company didnSt list
beef flavoring by name or what the flavoring consists of.
Vicco : Lost in the woods?
Brand: Vicco turmeric
Company: Vicco lab
=icco "urmeric cream is #ndiaSs first fairness cream although it is not positioned as a
fairness cream. "he product which is based on turmeric has a C2 year old history. "he
product was launched in 1'CD missed the liberali6ation era all together.
<hough the product is successfully e!ported, the potential of =icco "urmeric is not
fully utili6ed in the #ndian market. =icco was marketed as a skin care cream. Over the
years this product is stereotyped as a brand for Mwould be bridesN. "he ads which were
aired for a long time had this theme.
#n olden times this theme perfectly works since marriage is the most important occasion
in a womanSs life. 0ut =icco failed to understand the changing consumer trends which
<air & 3ovely correctly sensed. 9omen have changed and their attitude towards life has
also changed. #nstead of marriage, now there are many occasions where women
celebrate. #nfact the stereotype of marriage now donSt work. #n simple terms the "5
changed.=icco never was aggressive. #t continued with its conventional traditional
strategies while /33 marched away with the market.
=icco "urmeric ayurvedic cream is in the naturals segment of #ndian skin care segment
which is estimated to be around 1>AA crore. @!cept for =icco there are no pure naturals
brands in this segment. &ll ma;or brands have a naturals e!tension some of them have
failed miserably.
=icco had huge potential because of its e!cellent Huality, brand recall and more
importantly the ingredient R"urmericR. #t should have owned R"urmericR factor. Now we
see lot of local manufacturers selling turmeric powder to women to be used as a cosmetic.
"hat was a market that =icco should have concentrated. <airever succeeded because of
the ingredient saffron. =icco could have made a killing with turmeric which is one of the
best ingredient you can ever have. 0ut alas....<hough there is lot of concentration on
fairness market, there is a market for pure beauty creams which can give a wholesome
solution to the consumers, =icco turmeric had all that to be a leader. & brand is built only
if there is a clear strategy and support. =icco failed to understand the changing value
system of the customers. 9hat it needs is a repositioning strategy based on the
wholesome properties of turmeric and lot of noise in the market. 9hat a potential to be
wasted.......
Margo: lost in the Neem trees!
Brand: Margo
Company: Henkel
Agency: FCB Ulka
Margo is one of the oldest herbal soaps in #ndia. "he brand which is more than $C years
old is famous for its neem content. "he product although famous for its positive effects to
the skin is nowhere in the market. "his is a brand which never changed with the
customer. During its launch, the product had dedicated customer base and since the
product was uniHue due to its medicinal value, customers tend to be loyal. "he whole
brand was having Neem as its core identity.
0ut Margo failed to understand the changing dynamics of #ndian consumers, more and
more choices began to unfold before the consumer and Margo was becoming a niche
brand. Margo was positioned asNcomplete skin care soapR. 9hen market became
fragmented with lot of products positioning at different attributes, Margo was sidelined as
a medicinal soap.
"he product has inherent negatives, the fragrant was not attractive nor the shape. #t was
also less lathering compared to its competitors. Margo changed hands from ,haw
9allace to /enkel. <hough Margo was relaunched in (AA> with a new fragrance and
shape, it has not e!cited the market so far. "he new positioning is MMargo skin clear
skinR. "he brand had a following in &., "amilnadu and 9est 0engal Iam not sure about
its present statusJ. "he single mistake the brand made was to miss the new generation. #t
failed to attract the young users.
9ith 3ifebouy herbal variant and other established brands taking in the RneemR content
away from Margo, this brand needs a hell lot of money to re;uvenate itself. May be a high
decibel big celebrity endorsement may help this brand Itry &ishwarya for a changeJ. 4an
it change its avatar and fight lifebuoy in the health platformK
"his is a brand that failed to change with the customer or changed very late.
CONCLUSION
4ompanies that fail to develop new products are putting themselves at great risk.
"heir e!isting products are vulnerable to changing customer needs and tastes, new
technologies, shortened product life cycles and increased domestic and foreign
competition. &t the same time, new product development is risky. New products
continue to fail at a disturbing rate and the reasons may vary.
4ompanies need to give more time on the new product development so that they do
not have to face failure and then they try to correct their mistakes. "here are only
few things which need to consider before the launch of any product. Research and
development, innovative ideas, new technology, better marketing strategy, proper
distribution channels and respect towards the need of the consumer can make a
product successful.
/ere, the need is to make product successful at the very first go rather to try out
another time. "his helps the company to save money, gaining trust among the
employees and consumers and last of all, increase the confidence to launch more
new products which will serve the customer better.
REFERENCES
• www.marketingprofs.com+ea+HstTHuestion.aspKHst#DU$'(2 * 22k
• blog.e!periencecurve.com+archives+ killing*your*brand*is*difficult*
e!pensive*and*a*pr*nightmare*so*murder*it * >Ck
• ries.typepad.com+riesTblog+ * $E
• www.6illions.org+<eatures+0rand+brandAA1.html * 'k
• Haable.com+inde!.phpK+archives+ >A*5reat*brand*V*shit*product*&*
very*e!pensive*death.html * 1Ck
• en.wikipedia.org+wiki+3u!uryTgoods * ($k
• www.pcacard.com+static+pca+pdf+AC*AA$1>.4&<orm.pdf
• *e!pensive*and*a*pr*nightmare*so*murder*it+feed+
• www.forbes.com+wineandfood+(AAC+1(+ 1>+most*e!pensive*
champages*c!TnpT1(12featTls.html
• http-++www.itvsales.com+itv+e!port+itvsales+insight+casestudies+0uildin
g&wareness+avon.html
doc_833856382.doc
ON
WHY PRODUCT FAIL?
SUB1ECT
PRODUCT MANAGEMENT
INTRODUCTION
Once a company has carefully segmented the market, chosen its target customers,
identifying their needs and determined its market positioning, it is better able to develop
new products. Marketer play a key role in the new product process , by identifying and
evaluating new product ideas and working with R & D and others in every stage of
development.
New product development shapes the companys future. New product launch is a very
comple!, time consuming and is financially a big issue for any company. "here is
e!pectation from every new product launched to have high sales, to have good margins,
to capture market share and thus become market leader. "hese are the e!pectations
however the real picture may be not so good or as e!pected. Many a time the products
introduce are flops and thus results in loss. "his loss may be in terms of monetary as lot
of money is involved in launching a new product. #t also results in loss in terms of image.
Only $% of new products survive for more than one year. & '( % failure rate does little
to promote the current efficiency of company marketing. "he reasons some business fail
to innovate is not that they shy away from ideas) it is that they engage in hopelessly
romantic one*at great cost in men + women and money. &n idea must meet rigorous tests
of practicality if it is to be capable of making a business successful in the future.
,ource- Dr. .eter Drucker, /arvard 0usiness Review, 1''2.
& product can fail on any of the stages of .roduct 3ife 4ycle #. e. #ntroduction ,atage,
5rowth ,tage, Maturity ,tage, Decline ,tage. "he understanding of a products life
cycle, can help a company to understand and reali6e when it is to introduce and withdraw
a product from a market, its position in the market is compared to competitors, and the
products success or failure.
.roduct failures can serve one useful purpose- #nvestors, entrepreneurs and new product
team leaders can learn valuable lessons about what not to do.
The Four Stages of the Product Life Cycle
(1) Introduction Stage
7 "he initial stage of a products life cycle8its first appearance in the
marketplace8when sales start at 6ero and profits are negative
7 9hy new products fail
: Lack of resources, knowledge, and marketing skills to
successfully launch the product
: High pricing to recoup research and development costs
(2) Growth Stage
7 "he stage of a products life cycle when sales rise rapidly and profits reach
a peak and then start to decline
: More competitors enter the market
: Product pricing is aggressive
: Brand loyalty becomes important
: Gaps in market coverage are filled
: Promotion expenditures moderate
: Production efficiencies lower costs
(3) Maturity Stage
7 "he stage of a products life cycle when the sales curve peaks and starts to
decline and profits continue to fall
: Intense competition
: Emphasis on improvements and differences in competitors`
products
: Weaker competitors lose interest and exit the market
: Advertising and dealer-oriented promotions predominate
: Distribution sometimes expands to the global market
7 ,trategic ob;ectives for maturity stage
: Generate cash flow
: Maintain market share
: Increase share of customer
(4) Decline Stage
7 "he stage of a products life cycle when sales fall rapidly
: Pruning items from the product line
: Cutting promotion expenditures
: Eliminating marginal distributors
: Planning to phase out the product
7 ,trategic choices
: Harvesting the product`s remaining value
: Divesting the product when losses are
sustained and a return to profitability
is unlikely
Why Some Products Fail and Others Succeed
: Reasons for .roduct <ailure
7 .roducts value or features did not match customer needs
7 #neffective or inconsistent branding that failed to convey the right message
or image to customers
7 "echnical or design problems
7 .oor market timing
7 Overestimation of market si6e
7 #neffective promotion
7 #nsufficient distribution
WHY PRODUCTS FAIL?
#t could be any reason for the product failure. #t is not one particular reason) it could be a
combination of both reasons. #t is up to company and for the product managers to find out
the e!act reason for the failure. "here can be several reasons for a product failure like-*
1. MARKET RESEARCH:- Market research needs a lot of investment and efforts
therefore sometimes companies skip this part or do little research and launch the
product. /ere, the mistake has been done. 9ithout a proper research, the launch
of a product could not be successful.
EXAMPLE: - Real =alue 4ompany is a successful name in fire e!tinguishers
market. "he company launched a new product 7 =acuum proof bo!es thinking that
it would be success but it was not going to happen because #ndian consumers never
wanted this. "his all was done due to lack of market research.
(. WRONG POSITIONING: * .ositioning is a critical aspect of a product and
when it is done properly, it becomes a disaster. .roduct positioning strategies are
developed to hit the brain of a consumer towards an idea but when this idea can
not be digested by the consumer, it becomes indigestible which ultimately lead
to failure.
EXAMPLE: - Maruti =ersa is an e!cellent e!ample for wrong positioning. &t the
time of its launch, it was promoted as a comfortable personal car. &mitabh 0achhan
and &bhishek 0achhan told us about the benefit of "win &.4. and the comforts of
the seats but #ndian consumers were not able to understand it as a personal car and
they were confused that is why now company is promoting a family car.
>. WRONG PRICING STRATEGY -*.rice is the main factor for the success of
failure of any product in the #ndian market. #ndian market is very price sensitive
that is why this factor remains in the top of the mind of the marketers. "he idea
of the marketer will fail if the consumer is not able to buy it.
EXAMPLE: - /ero /onda ?ari6ma is a good e!ample of over pricing. @arlier it
was priced more than Rs. $A,AAA thats why sales were not picking up and it was
assumed as a failure in the market. /ero /onda reali6ed the mistake and reduced the
price by 1A,AAA directly. #t is a big amount for a Mobike to reduce.
2. Insufficient Promotion: - .romotion is one of the main components for a
product success. Bntil and unless people will not know about it or they are not
able to connect it then also product could be a failure.
EXAMPLE: <ord <usion is a classic e!ample of insufficient promotion. #t was
launched in December (AA2 but till today, not many people know about it and those
who know are not clear about the product features.
C. HIGH RUNNING COST: - "he purchasing price as well as the running cost is
important for any product. #f the product is rightly priced to buy but it is costly
to use it then also it could be a failure in the market.
EXAMPLE: * <iat .alio is a right e!ample. #t is a good looking car and
competitively priced according to its features but it is a costly affair to drive it as it
is less fuel efficient and the spare parts are very costly. "hat is why company is
trying hard to make it more fuel efficient.
D. Distribution Network: - "imely Distribution of a product increases the chances
of success of a product. #t is very common in the case of <M45 companies that
their product is not available in the market. Many a times, they start advertising
the new product but dont ensure the availability of that product in the market
that is why consumer goes back to his+her home without the product and that
product becomes a failure very soon.
E. Wrong Timing of Launch: - "iming also plays a role in the success of a
product. 9rong timing could be a disaster for the product launch. "his kind of
mistakes is very general in the release of a movie.
$. Culture Differences: - Bnderstanding the culture of a country is very important
for launching a product. "he product may not suit to the lifestyle of the people,
may not match with the eating hobbits.
EXAMPLE: - ?elloggs 4ornflakes. 9hen the concept of cornflakes was
introduced by this company, it didnt like by the many people because we #ndians
were not used to have cornflakes at the time of breakfast. "hats why ?elloggs
4ornflakes failed initially.
"he introduction of a new product or service remains stressful for anyone involved in the
process. @verything needs to be well orchestrated and coordinated. <rom conception to
roll out, product development is a ma;or and costly process in which manufacturing and
marketing skills and competencies are tested. Research has found that there were >1,$EC
products introduced in (AA( representing a cumulative investment of F(>> billion. Gust
over half of these products failed before they were two years old. &ll other things being
eHual, this implies overF1AA billion per year spent on new products that fail. .roducts that
achieve both commercial and economic success are rare. "he development of new
.roduct is labour intensive and is a highly studied and comple! activity in the corporate
world. 3aunching a new product means coordinating marketing, sales, manufacturing,
organi6ational design, consumer research and human resources, among other functions. #t
is also preparing for t he worst Icontingency planningJ in case something goes wrong
Iproduct recall, production interruption, product transportation and delivery failures etc.J
"he ability to target the right customers the right way is a challenge and the comple!
nature of the process is one of the reasons why so many companies lose touch with the
reality of what consumers want and misspend huge sums of money on products that fail.
@conomically, two necessary conditions must be met for a new product to succeed. "he
first is that the product must deliver a better value*to*price ratio to targeted consumers
than the competition. "his can be achieved either by providing more benefits for a given
price than the competition or by providing the same benefits as the competition at a lower
price. "he second condition reHuires that the company deliver the product at a cost that
will provide a positive return on the capital invested. "o achieve this, cost advantages
must be achieved in one or several areas of the business such as manufacturing,
marketing or sales. Despite the large number of talented and Hualified scientists,
engineers, marketers that most organi6ations employ, many of the products being
designed and introduced do not have the value or are not perceived by customers the way
the company had anticipated they would be. "hey therefore fall short of delivering the
anticipated profits. ,o why, with all of this effort and know*how do so many new
products failK 4ould it be because companies tend to overestimate their commercial
success Isales and market shareJ and underestimate the underlying economic cost Iwill
the product actually earn any profit above the cost of capitalKJ.
#n most cases product failures happen because of one or more of the following reasons-
1. Unprofitable Segments
"here are four main characteristics which a segment needs to have to be a business
opportunity- #t must be identifiable, demand*related, attainable Ieffective distributionJ
and of an adeHuate si6e.( &s a matter of fact, studies have shown that the segment
si6e, or lack of it, is the most common reason for new product failure. @rroneous sales
forecasts affect cash flow estimates and pro;ected profitability. "he estimated sales
potential must therefore be accurate to make the company generate enough economic
return Ireturn in e!cess of cost of capitalJ. @ven if a product or service is well
designed and meets the needs of its target customers, if the segment itself is too small
and does not have enough customers, failure is around the corner.
2. Poor Identification of Needs and Weak Product Positioning
New products can also fail simply because companies misunderstand or ignore customer
needs, attitudes and behaviors. ,ome might argue that the products were right and that the
target market was wrong or improperly identified- misconception or misunderstanding
customer needs, attitudes or behaviors is fairly common and leads to weak product and
service positioning. 9hat is the reasonK Organi6ations are sometimes reluctant to take the
necessary steps, to find out what their customers need and behaviors are Iit is after all
money spent up*frontJ."hey place insufficient emphasis on understanding customer
demographics, .sychographics and their implications. #n other words companies have
insufficient knowledge of who their potential clients are, what makes them what they are,
what their customers think and how they behave. 9hat is not invested upfront could
come back and cost valuable dollars later.
3. Competing Value-to-Price Ratio
& common mistake Ibesides failing to communicate with customers through advertising,
.R, promotion, etc.J, occurs when companies introduce a new product that does not offer
a better value*to*price ratio compared to the competition. 4onsumers are usually guided
by the notion that what they are acHuiring or paying for is worth something and have
attached a sub;ective value*to*price ratio to it. 0oth the perceived value and the benefits
are compared to similar items available on the market. &t that point products+services are
ranked in the consumers mind in order of preference. @!treme ratios are eliminated Ihigh
price*low perceived value ratiosJ and a pool of most favored items gets selected and
analy6ed. 3ater, a final purchase decision is made. 4ompanies need to be very aware of
this phenomenon because too often consumer attitude is confused with consumer
behavior. 4onsumer attitude towards product is essentially driven by its features whereas
consumer purchase behavior is driven by value*to*price ratio or LLwhat do # get for my
money. & consumers positive attitude towards a product or service may result in
positive word of mouth but not necessarily in sales. & poorly crafted pricing strategy can
in turn deliver disappointing results.
4. Economic Cost
"he last reason new products fail is that companys underestimate the new product
development and launching costs involved. & successful new product must deliver a
better value*to*price ratio to the customer and must do so profitably. =alue*based pricing
must be introduced and managed because the value that is created dictates consumer
prices. #n the early 1''As 5eneral Motors introduced the ,aturn car line and ignored this
principle. #t is a classic e!ample of accompany that delivered value for its consumers but
not for its shareholders.
Common Reasons for Product Failures
#n addition to a faulty concept or product design, some of the most common reasons for
product failures typically fall into one or more of these categories-
• /igh level e!ecutive push of an idea that does not fit the targeted market.
• Overestimated market si6e.
• #ncorrectly positioned product.
• #neffective promotion, including packaging message, which may have used
misleading or confusing marketing message about the product, its features, or its
use.
• Not understanding the target market segment and the branding process that would
provide the most value for that segment.
• #ncorrectly priced8too high and too low.
• @!cessive research and+or product development costs.
• Bnderestimating or not correctly understanding competitive activity or retaliatory
response.
• .oor timing of distribution.
• Misleading market research that did not accurately reflect the actual consumers
behavior for the targeted segment.
• 4onducted marketing research and ignored those findings.
• ?ey channel partners were not involved, informed, or both.
• 3ower than anticipated margins.
Reasons Why a Great Product Launch Can Fail and How To Avoid It
#ts reported that EA% of all new product launches fail in the first year. "he Huestion is,
why do some succeed when others failK /aving seen both sides of the product launch
picture, here are a few pitfalls to watch out for-
1. The market does not ~need¨ your offering.
,ome product launches are steeped in a philosophy called M#f # build it, they will come.N
Many start*ups find themselves building a market solution that is based on one or two
customer e!periences. "he reality isOwithout the proper market research, even the best
launch plans can fail. "o avoid this mistake, adeHuate research needs to be completed to
ensure that your go*to*market plan is based on facts and substance. #ts imperative that
you validate there is a market out there. Does the market have a business needK 9ho are
your best customersK &re there enough to sustain growthK /ow does this solution tie into
the bigger growth picture for a businessK
2. Sales training/enablement was ineffective.
& key element in a product launch is training and enabling the channel to sell the new
product or service. ,ales training+enablement means that your company has carefully
considered what information will be communicated-*
I1J "o the sales channel so they can effectively sell the new product or service.
I(J "o your prospects and customers so they can make an intelligent buying decision.
"his reHuires taking a look at the sales cycle and making ;udgments about what the field
will need to know and what they will be able to deliver to a prospect or customer.
3. Message/value proposition did not create urgency.
9hen looking at messages in the conte!t of a product launch, the same guidelines apply.
Pour messages must help a prospect or customer understand the following-
• 9hat makes your product or service different in the marketK /ave you
highlighted those facts+features in your launchK
• /ow does this compare with the competition in terms of pricing, messages, and
modelsK
• #s your solution+service aligned to help solve a business problem in your marketK
#f not, then your solution becomes a Mnice to haveN vs. a Mmust have now.N
• &re messages aligned to who actually purchases this product+serviceK 3ook at the
functional titles 7 who are you selling to and are you speaking a language they
understandK
4. Launch did not plant enough seeds.
# often compare the role of marketing to that of planting a garden. "he fruits that you
en;oy after youve done the work come in the form of new sales. /owever, we all know
that fruit ;ust does not simply appear out of nowhere. #t takes months to develop, and only
after planting good seeds and freHuent watering. Marketing a new product or service
reHuires much the same model. #f you are entering a new market with something
spectacular and the market doesnt know you or your solution, then you have some
serious planting Itelling the world what it is you are doingJ and watering Icreating
urgencyJ ahead. #f you are already established in a market and are coming out with
something new and e!citing, then you may not need as many seeds, but be prepared to
plant and water anyway.
,etting the stage in your market reHuires mapping out what a prospect or customer will
need to know and understand when making a purchasing decision for your type of
product or service. Do not assume that your market will draw the same conclusion you
are anticipating. Pour launch strategy and e!ecution must reflect a clear understanding
and path that helps a prospect or customer make intelligent decisions, create an urgency
that they really need what you are selling, and provide guidance on what they should be
doing+thinking about ne!t.
5. No BETA customers or references were available
"his obstacle tends to surface well into the launch plan. 9hat happens here is thisOK &ll
launch plans are a M5ONO Pou have seeded the market and they responded in kind. "he
channel knows what they are selling and are doing a good ;ob of it. ,ales cycles are in
process. &nd then 0OOMOsomeone wants to talk to a reference. Now whatK &re you
prepared for handling this sales obstacleK
Many product launches have overcome this obstacle. Pour references dont need to be
perfect, but you need a plan to address this stage. "he good news is that if youve gotten
this far, your launch is probably working. Now, you need to button up this latter stage so
you can turn these opportunities into sales.
References fall under two categories-
I1J "he ideal reference that served as a 0@"& customer during product development and
can speak to your vision, the product, and working with your organi6ation.
I(J "he not*so*ideal reference who is using a different Ior older versionJ product+service
by your company. 0oth have fantastic validation points and will serve you well. Gust
know what each reference is offering and e!plain to the channel how to get the most out
of the references you have lined up. Do not leave this to chance or assume the channel
knows how to use the reference.
&lso beware of reference burnout. "ry to spread the wealth and have different references
lined up to address specific issues. #f, in the end, you do not have a reference prepared,
then you may want to offer one of the first, really interested prospects a sweet deal to
help you with the rest of the launch.
6. The company did not fully commit to the product
"his issue will also come up during the sales cycle because your sales message is not
tight. #f your company is throwing development dollars at fi!ing a MholeN in an older
product line, and has not shared a larger vision of where this product is going in the
future, you will run into issues. Pour channels credibility is on the line, as well as your
company as a whole. Make sure you have taken the time to prepare answers to the
Huestions that will come up-
• 9hat is the long term plan for this product lineK
• /ow does it fit in with your other products+servicesK
• 9hat is the planned upgrade+release scheduleK /ow freHuentK
• 9here was this product developed Ibe prepared to address off*shore issues and
concernsJK
7. The sale of this product/service eroded other revenue generation
opportunities
"his is an issue that # have seen come up more than once as this side of the launch is
often not thought through sufficiently. "he issue focuses on the McostN of the launch to
the use ness 7 and deserves your attention. #t is not as much an issue for new sales as it is
for your e!isting customer base that has already made investments with your company.
"he Huestions you must answer to avoid MsurprisesN include-
• /ow does the sale of this new product impact our other product linesK
• Do we have a clear upgrade+migration path for current customersK
• 9hat is their benefit to upgrading systems or migrating to a new platformK
• 9hat is the cost of conversion for each of these deals to our businessK Ilong term
and short termJ
#f you have successfully uncovered each of these issues, then you have dramatically
increased your chances of a successful launch. 0eing part of a successful launch is one of
he most e!hilarating and rewarding e!periences as a marketer. &lways remember to take
the time to reflect on how your product launch is performing so you can learn as you go. #
recently heard a great phrase, M&n error only becomes a mistake when you do it more
than once.N ,o, heres to your successQ
Examples of failed products
CASE OF GM SATURN
"he ,aturn car line has ranked high in customer satisfaction surveys IG.D..ower &
&ssociatesJ and, during its first few years of production, was so popular that the company
could not keep up with demand. 5M invested roughly FDbillion to develop and
manufacture the ,aturn and then priced the cars low to be attractive to young, import car
buyers I"oyota 4orolla or /onda 4ivic buyers were the main targetsJ. "he result was a
line of cars that gained market share and provided superior value to its buyers but
remained unprofitable. ,aturn fail to turn its LLstar into a LLcash cow > and fell short in
producing the cash flow that needed and could have used for new product development.
"his situation led to a loss of strategic focus, a tightening of financial controls, worker
discontent and slow product line re*new land e!pansion. "o this day, ,aturn has not been
able to recoup its huge development costs.
Over the long run, a firms ability to add value to both their customers and their
shareholders by understanding what customers want, need and how they behave impacts
directly the firms bottom line. "he ability to serve Ior not serveJ its customers is
reflected directly in the companys share prices. 5Ms and "oyotas Inumber one and
two respectively in the worldJ stock prices over the past ten years have behaved
differently-
9hile "oyotas stock price almost doubled over the past ten years 5Ms stock price
increased only by 1>%.
Consumers buy products they've learned to trust. Your trust is what the
retailers are after. But, sometimes for various reasons, products just
don't work. And some of them end up in the failed products museum.
.
RPou cannot assume you know how consumers are going to use it,R McMath says. /e
points to a product label that reads- Sfresh roasted peanuts.S R#t has Mr. .eanut on it,R says
McMath. R#t was sold in supermarkets in the peanut rack, but people were taking it off
the shelves in the supermarkets in the snack section and taking it to the coffee grinder and
grinding it. "hey thought it was a new kind of coffee, purely because of the association of
the package with the coffee.R
¬her fau! pas would be to underestimate how a child will use the product.
A bottle of
"Garlic Cake"
R"his is actually a 4anadian product,R he says, pointing to a can of
SDr. 4are "oothpaste.S R&nybody with kids would know that you donSt
make an aerosol can of toothpaste and put it in the hands of kids.R
&nd kids might have liked this- a product that was Rsupposed to be sprayed on your
marshmallow, so that when you put it on the fire it wonSt charcoal.R
Only five per cent of new products actually end up on your trusted shelves.
Don 9attSs savvy marketing has been behind some of the most successful products in the
grocery store * SNo NameS and S.residentSs 4hoice.S
9att says that R'C per cent of the reason they fail is an inability to communicate them.R
0ut communication costs. Pou have to advertise if you want to get noticed, and that
means television and radio spots, billboards, maga6ine ads. &ccording to 9att, RitSs ;ust
impossible for consumers to reali6e how much money it will take to reach consumers
today.R
9atch "= for an evening though, and youSre inundated with commercial after
commercial. 9ith all the ads out there, how can a product failK
9att says Rthere are ;ust so many images that share your mind that you hardly see
anything, you tune them out. &dvertising used to be about 1A per cent of marketing cost
and it used to be about EA per cent effective. Now itSs about (A per cent of cost and about
2A per cent effective.R
#n short, itSs a bit of a war 6one to get your name out there, your product out there.R#tSs an
adversarial environment, thereSs no Huestion,R says 9att.
A can of "Dr.
Care Toothpaste"
Brand idea failures: Kellogg’s Cereal Mates
Warm milk, frosty reception
?elloggs may have had problems when marketing in certain foreign territories such as
#ndia, but the company has also come unstuck on its home turf, most notably with its
4ereal Mates product. "he idea was simple. 4ereal Mates were small bo!es of ?elloggs
cereal packed with a container of milk and a plastic spoon. "he advantage of the product
was eHually straightforward. &n increase in working hours in the Bnited ,tates,
combined with the rise in fast*food chains, led ?elloggs to believe that there was a
demand for an Lall*in*one breakfast product. "o ma!imi6e 4ereal Mates chances of
success, the line included the four most powerful ?elloggs brands in the B, 7 namely
4orn <lakes, <rosted <lakes I<rostiesJ, <ruit 3oops, and Mini 9heats.
/owever, despite ?elloggs best efforts, the 4ereal Mates brand proved a ma;or flop, and
in 1''', the year ?elloggs rival 5eneral Mills took over as the Bnited ,tates number
one cereal maker, the product was pulled from the shelves.
"he reasons why 4ereal Mates failed to win over consumers are various, and have been
dissected by various ;ournalists and marketing professionals. /ere are some of the main
factors behind 4ereal Mates brand failure-*
1. Factor one: warm milk. &s each container of milk was Laseptically packaged, it
didnt need refrigeration. /owever, consumers didnt like the idea of warm milk.
(. Factor two: cool milk. #n order to accommodate for the consumers preference
for cool milk, ?elloggs eventually decided to place 4ereal Mates in refrigerators
to imply that consumers should have the milk cold. /owever, as Robert McMath,
president of New .roduct 9orks and author of 9hat 9ere "hey "hinkingK, has
observed, this led to even more confusion. L"his decision inevitably caused a
problem in that 4ereal Mates was not in a location where you would generally
e!pect to find breakfast cereal. "he e!pense of trying to re*educate the consumer
to look for cereal in the dairy case proved too enormous 7 way beyond,
apparently, what ?elloggs wanted to spend on selling the new line, writes
McMath.
>. Factor three: advertising. &s if the consumer wasnt confused enough, ?elloggs
complicated matters further with the advertising campaign for 4ereal Mates. "he
"= ads featured young kids helping themselves to the product, while their parents
lay snoring contentedly in bed. /owever, the packaging of the product was far
from child*friendly, and if they left their kids to help themselves, the parents
would have probably been crying Ior at least getting crossJ over spilt milk.
2. Factor four: the taste. @ven when picked up from a refrigerator, the product was
often consumed at work or away from home. #n other words, when the milk was
warm and tasted terrible.
C. Factor five: the price. Retailing at way over a dollar, 4ereal Mates was
considered too e!pensive by many consumers.
"hese factors, working in con;unction, caused the 4ereal Mates brand to fail. &nd so,
after two years on the shelves Ior in refrigeratorsJ, ?elloggs pulled the plug on the
product. /owever, there may be one more reason why 4ereal Mates failed to spark a
revolution in breakfast habits. &s a convenience food, it simply wasnt convenient
enough. & <ebruary (AAA article in Newsweek IL4runch time at ?elloggJ looked at the
changing demands for breakfast products, and the conseHuences for the cereal company.
&mericans hectic new morning routine is wreaking havoc on ?ellogg 4o. ?iller
commutes Inearly an hour round trip in many citiesJ leave no time to fi! even the
simplest breakfast. 5etting out the door is eHually challenging for the D2 percent of
families in which both parents work. More &mericans than ever simply skip breakfast,
according to new data from N.D 5roup, an eating*habits researcher. L.eople wish they
could ;ust get breakfast in;ected into them on the run, says 5erald 4elente, editor of the
"rends Gournal, a marketing*industry newsletter.
4ereal Mates may have enabled people to take their cereal with them, but they still had to
pour the milk over it, and spend valuable time eating the cereal with a small spoon. &s
?eith Naughton concluded in the article above, 0reakfast Mates Lfailed to catch on
because it was impossible to eat while driving.
#ndeed, where ?elloggs has had success in the convenience food market it is with
breakfast bars such as Nutri*grain. Bnlike 4ereal Mates, these bars can be consumed in
seconds, and on the move. Moreover, they dont involve warm milk.
Lessons from Kellogg`s Cereal Mates
? 4onsumers dont like warm milk on their cereal.
? Dont mi! your messages. On the one hand, 4ereal Mates was an Leat anywhere
product. On the other, ?elloggs was implying it needed to be stored in a
refrigerator.
? ,ell the brand in the right place. 4ereal Mates was, essentially, a cereal rather
than a milk product. 4onsumers would have therefore e!pected to see it on the
shelves ne!t to the other cereal products.
? 0e the best in at least one thing. &s a cereal product 4ereal Mates failed because
there were tastier and eHually healthy alternatives. &s a convenience product it
failed because breakfast bars proved to be a faster, more fle!ible option.
? Dont price too high. 4onsumers did not e!pect to pay as much as they did for a
four ounce bo! of cereal.
Hindus, vegetarians sue McDonald's over frying process
& claim by McDonaldSs that its famous <rench fries are cooked in R1AA percent vegetable
oilR is being challenged by a ,eattle lawyer representing /indus and vegetarians.
"he fast*food chain stopped frying fries in beef fat 11 years ago ** a move that was hailed
by health groups across the country.
0ut now several consumers have filed suit, claiming McDonaldSs has admitted that Rbeef
flavoringR is used in the making of the salty potato strips.
& class*action suit filed yesterday in ?ing 4ounty ,uperior 4ourt contends McDonaldSs
Rintentionally failed to publicly disclose its continued use of beef tallow in the Ifrench
fryJ cooking process under the guise of Snatural flavor.SR
R"his is pretty outrageous behavior,R said attorney /arish 0harti, who filed the suit.
R/indus and vegetarians all over the world feel shocked and betrayed by McDonaldSs
deception and ultimate greed.R
/indus regard the cow as a sacred animal, and as a general rule do not eat beef.
Officials at McDonaldSs headHuarters in Oak .ark, #ll., could not be reached for comment
yesterday.
"here are three named plaintiffs in the suit- two /indus who live in 3ynnwood and
,eattle, respectively) and a non*/indu vegetarian from ,eattle. 0harti said he wants the
class to include the estimated 1 million /indus and 1C million vegetarians who live in the
Bnited ,tates.
0harti is relying in part on a recent e*mail from a McDonaldSs official to a concerned
/indu man that appears to confirm that beef e!tract is in the fries.
R<or flavor enhancement, McDonaldSs french*fry suppliers use a miniscule amount of
beef flavoring as an ingredient in the raw product,R wrote Megan Magee of McDonaldSs
/ome Office 4ustomer ,atisfaction Department. "he e*mail was sent March ($ to /itesh
,hah, a 3os &ngeles software engineer.
<hough beef is not listed as an ingredient in McDonaldSs fries, it is part of what is
described by the company as Rnatural flavor,R according to the suit.
&fter the raw potatoes are shipped to McDonaldSs distribution centers, the suit says, the
spuds are cut into strips and blanched in beef tallow.
"he suit seeks unspecified damages for violations of the 9ashington 4onsumer
.rotection &ct and intentional infliction of emotional distress.
French-fry flap spurs McDonald's apology
Company says it's sorry for 'confusion' over beef flavoring
McDonaldSs, which gave the world the 0ig Mac and /amburger Bniversity, is
apologi6ing for beef.
"he fast*food giant faces lawsuits in ,eattle and elsewhere in North &merica and protests
in #ndia over using beef products in its <rench fries. Now itSs offering an e!planation and
contrition on its 9eb site.
RMcDonaldSs B,& is always sensitive to customersS concerns. 0ecause it is our policy to
communicate to customers, we regret if customers felt that the information we provided
was not complete enough to meet their needs. #f there was confusion, we apologi6e,R the
companySs B.,. 9eb page says.
& ,eattle lawyer who has sued McDonaldSs over its fries was unimpressed with the
statement. R&pologies are good if they are sincere. 0ut halfhearted apologies donSt work,R
/arish 0harti said.
"he company said it adds Ra small amount of beef flavoringR to potatoes as they are being
lightly fried at a processing plant. McDonaldSs then free6es the fries and ships them off to
its B.,. restaurants, which cook the potatoes in vegetable oil, the company said.
"he company switched to vegetable oil for restaurant cooking of fries in 1''A to please
cholesterol*conscious customers. "he move attracted the attention of newspapers around
the country.
0ut 0harti says the 1''A announcement was deceptive.
/e sued McDonaldSs in ?ing 4ounty ,uperior 4ourt earlier this month over its continued
use of what he believes is beef tallow in the processing of fries. /e sued, he said, on
behalf of his 1 million fellow /indus in the Bnited ,tates and the nationSs 1C million
vegetarians.
0harti said he has filed similar lawsuits in the ,an <rancisco 0ay area and 0ritish
4olumbia.
9ord of the ,eattle lawsuit became big news in #ndia, whose /indu population does not
eat beef for religious reasons. #ndians held anti*McDonaldSs protests, vandals hit one
restaurant, and some radical /indu groups called for the fast*food chain to leave the
country.
McDonaldSs said almost immediately that it didnSt use beef or pork products in its <rench
fries in #ndia. #t also said it doesnSt use pork or beef products in any vegetarian meals in
#ndia.
#n fact, the company said it has tried to comply with local dietary customs, following
#slamic rules, for e!ample, in the Middle @ast.
#n #ndia, the company introduced Mahara;a Macs that have Rtwo all*lamb patties,R rather
than the beef 0ig Mac popular in the Bnited ,tates.
#n the Bnited ,tates, the companySs beef additive to fries falls under Rnatural flavorR in
the nutrition information that customers can pick up at restaurants. & company
spokesman did not respond to a reHuest for comment about why the company didnSt list
beef flavoring by name or what the flavoring consists of.
Vicco : Lost in the woods?
Brand: Vicco turmeric
Company: Vicco lab
=icco "urmeric cream is #ndiaSs first fairness cream although it is not positioned as a
fairness cream. "he product which is based on turmeric has a C2 year old history. "he
product was launched in 1'CD missed the liberali6ation era all together.
<hough the product is successfully e!ported, the potential of =icco "urmeric is not
fully utili6ed in the #ndian market. =icco was marketed as a skin care cream. Over the
years this product is stereotyped as a brand for Mwould be bridesN. "he ads which were
aired for a long time had this theme.
#n olden times this theme perfectly works since marriage is the most important occasion
in a womanSs life. 0ut =icco failed to understand the changing consumer trends which
<air & 3ovely correctly sensed. 9omen have changed and their attitude towards life has
also changed. #nstead of marriage, now there are many occasions where women
celebrate. #nfact the stereotype of marriage now donSt work. #n simple terms the "5
changed.=icco never was aggressive. #t continued with its conventional traditional
strategies while /33 marched away with the market.
=icco "urmeric ayurvedic cream is in the naturals segment of #ndian skin care segment
which is estimated to be around 1>AA crore. @!cept for =icco there are no pure naturals
brands in this segment. &ll ma;or brands have a naturals e!tension some of them have
failed miserably.
=icco had huge potential because of its e!cellent Huality, brand recall and more
importantly the ingredient R"urmericR. #t should have owned R"urmericR factor. Now we
see lot of local manufacturers selling turmeric powder to women to be used as a cosmetic.
"hat was a market that =icco should have concentrated. <airever succeeded because of
the ingredient saffron. =icco could have made a killing with turmeric which is one of the
best ingredient you can ever have. 0ut alas....<hough there is lot of concentration on
fairness market, there is a market for pure beauty creams which can give a wholesome
solution to the consumers, =icco turmeric had all that to be a leader. & brand is built only
if there is a clear strategy and support. =icco failed to understand the changing value
system of the customers. 9hat it needs is a repositioning strategy based on the
wholesome properties of turmeric and lot of noise in the market. 9hat a potential to be
wasted.......
Margo: lost in the Neem trees!
Brand: Margo
Company: Henkel
Agency: FCB Ulka
Margo is one of the oldest herbal soaps in #ndia. "he brand which is more than $C years
old is famous for its neem content. "he product although famous for its positive effects to
the skin is nowhere in the market. "his is a brand which never changed with the
customer. During its launch, the product had dedicated customer base and since the
product was uniHue due to its medicinal value, customers tend to be loyal. "he whole
brand was having Neem as its core identity.
0ut Margo failed to understand the changing dynamics of #ndian consumers, more and
more choices began to unfold before the consumer and Margo was becoming a niche
brand. Margo was positioned asNcomplete skin care soapR. 9hen market became
fragmented with lot of products positioning at different attributes, Margo was sidelined as
a medicinal soap.
"he product has inherent negatives, the fragrant was not attractive nor the shape. #t was
also less lathering compared to its competitors. Margo changed hands from ,haw
9allace to /enkel. <hough Margo was relaunched in (AA> with a new fragrance and
shape, it has not e!cited the market so far. "he new positioning is MMargo skin clear
skinR. "he brand had a following in &., "amilnadu and 9est 0engal Iam not sure about
its present statusJ. "he single mistake the brand made was to miss the new generation. #t
failed to attract the young users.
9ith 3ifebouy herbal variant and other established brands taking in the RneemR content
away from Margo, this brand needs a hell lot of money to re;uvenate itself. May be a high
decibel big celebrity endorsement may help this brand Itry &ishwarya for a changeJ. 4an
it change its avatar and fight lifebuoy in the health platformK
"his is a brand that failed to change with the customer or changed very late.
CONCLUSION
4ompanies that fail to develop new products are putting themselves at great risk.
"heir e!isting products are vulnerable to changing customer needs and tastes, new
technologies, shortened product life cycles and increased domestic and foreign
competition. &t the same time, new product development is risky. New products
continue to fail at a disturbing rate and the reasons may vary.
4ompanies need to give more time on the new product development so that they do
not have to face failure and then they try to correct their mistakes. "here are only
few things which need to consider before the launch of any product. Research and
development, innovative ideas, new technology, better marketing strategy, proper
distribution channels and respect towards the need of the consumer can make a
product successful.
/ere, the need is to make product successful at the very first go rather to try out
another time. "his helps the company to save money, gaining trust among the
employees and consumers and last of all, increase the confidence to launch more
new products which will serve the customer better.
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• ries.typepad.com+riesTblog+ * $E
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doc_833856382.doc