Product failure

Business market is highly competitive, it is very important for company to develop new product at regular intervals because customer constantly wants something new. It is not necessary that whole product is new to the market, the new product can be new in terms of packaging, new flavour or modification in the exciting product. New products involve lot of risk for the company that is risk of failure of product. Company invests lot of money in research, designing, production, commercialization of product. If product fails then it is big loss to company in terms of finance and in terms of time. It has been experienced that consumers buy only those products, which they have trusted . However, then at times there is gap and a product fails.

Why product fails in market? Well reasons are different for different products. One of the reasons of product failure is faulty idea for e.g. in case of “COOL CATS” - fans from polar industries. These new fans from company were decorated with cartoon character meant primarily to attract children. Price was kept high. Huge advertisement was done for promotion, but product failed. Because when the fan was put on, it did not have any colour effect and so its price was not justified. Another reason of product failure is improper positioning- Positioning means putting the product into predetermined orbit. However, Tanishq- a jewellery brand by titan failed in this. When company introduced its 18-carat jewellery and the product was positioned at elite class, there was contradiction. In Indi,a norms for gold at that time was 22 carat so, why this elite segment should go for low carat gold, so product failed miserably.

According to market sources, 95% of products fail due to inability to communicate them. Communication is costly business, companies have to spend huge amount to reach to consumer. Even after reaching to consumer its effectiveness cannot be guaranteed. Product also fails when company has no plan related to distribution strategy. How the product will reach to consumer? Which network will be used? How much distribution cost to company? This was the case with Nestle they launched new chocolate, which is meant to store in refrigerator. Large number of retailers did not have this facility so company has to suffer losses.

Size of market is another big criteria, faulty selection increase complexity. The bigger the market the more complex is to handle. In a smaller market it is much easy to penetrate and to prove itself. For e.g. if MNC has decided to enter India, then they should clearly define which part of India they want to cater to. Faulty Packaging also results into product failure. Product benefits should be clearly mentioned of packaging which influence consumer buying. Quality of packaging should be taken care of. Apart from all the above mentioned reasons product can also fail due to no justifiable pricing even cannibalization result into product failure. One of the solutions to increase the cycle time of new product is testing the product prior to its launch. Thereby a well designed test market reduces the risk of launching a flop product.

However, in the times of Confidence Crisis, every successful company is investing lot in new product development. During these times, cost of input factors are less and all companies want to leverage the opportunity. In order to increase the brand awareness and brand loyalty companies come up with new products or variants at frequent intervals but the reasons mentioned above if ignored can be costly affair to the company.