Reasons Why New Products Fail

When you study new products or marketing in your university degree, you will find that many new products fail to be successful in the marketplace and that evaluation of new product, prior to development and launch, is critical.

This is perhaps surprising given that professional and experienced companies bring products to market after significant research and consideration. So let’s examine the reasons why new products fail.

Reasons why new products fail

There are multiple of reasons for new product failure, some of these include:

  1. No product point-of-difference
  2. Limited retailer support
  3. Poor product design
  4. Established customer loyalty in the market
  5. Weak launch or poorly executed launch
  6. Adverse media attention
  7. Aggressive competitor actions
  8. Poor pricing or cost structure
  9. Weak supporting brand equity
  10. Small target market
  11. No clear market need or perceived product benefits
  12. Poor internal marketing
  13. Existing product cannibalization
  14. Weak sales for size of company
  15. Insufficient time for success

That’s the quick list – let’s now look at these in a touch more detail…

No Product Point-of-Difference

A new product lacking a clear point-of-difference struggles to stand out in a crowded market. Products need to offer unique features, benefits, or improvements over existing solutions to capture consumer interest.

Without this differentiation, consumers have little reason to switch from their current choices, leading to the new product’s failure to gain traction.

Limited Retailer Support

Retailer support is crucial for the success of a new product. Limited shelf space, lack of promotional support, or inadequate retailer enthusiasm can significantly hinder a product’s visibility and accessibility to potential buyers.

Products that fail to secure strong retailer partnerships often struggle to reach their target audience effectively.

Poor Product Design

Design flaws or a lack of alignment with customer needs and preferences can lead to product failure. This includes not only aesthetic aspects but also functionality, usability, and overall customer experience.

Products that are difficult to use, unappealing, or do not meet the expected standards of quality often fail to resonate with consumers.

Established Customer Loyalty in the Market

Breaking into a market with strong customer loyalty to existing brands is extremely challenging.

New products must offer substantial improvements or innovations to persuade customers to switch. Without a compelling value proposition, new entries find it difficult to disrupt established loyalties.

Weak Launch or Poorly Executed Launch

The launch phase is critical in generating initial interest and momentum. A weak or poorly executed product launch, characterized by insufficient marketing efforts, unclear messaging, or logistical mishaps, can severely impact the product’s market entry.

Successful launches require strategic planning, effective communication, and robust distribution channels.

Adverse Media Attention

Negative publicity, whether due to product defects, controversial marketing, or other issues, can irreparably damage a product’s reputation.

Adverse media attention, especially in the early stages of a product’s lifecycle, can lead to consumer distrust and reluctance to purchase, often resulting in product failure.

Aggressive Competitor Actions

The competitive landscape can significantly impact a new product’s success. Aggressive actions by competitors, such as launching similar products, undercutting prices, or intensive marketing campaigns, can overshadow a new product’s entry into the market.

Companies need to anticipate and strategically counter such moves to ensure their product’s survival and success.

Poor Pricing or Cost Structure

Pricing a new product appropriately is a delicate balance. Overpricing can deter potential customers, while underpricing can lead to unsustainable profit margins.

Additionally, a cost structure that does not allow for competitive pricing or sufficient profit margins can lead to a product’s financial unviability.

Weak Supporting Brand Equity

When a new product is introduced by a brand with weak or negative equity, it struggles to gain consumer trust and acceptance.

Brand equity, built through consistent quality, positive customer experiences, and strong marketing, lends credibility and allure to new products. Without this foundation, new offerings may be met with skepticism or indifference, impeding their market success.

Small Target Market

Targeting a market that is too niche or small can limit a product’s potential for success. While niche products can be successful, the target market must be large enough to sustain sales and growth.

Products failing to appeal to a broader audience may struggle to achieve the necessary sales volume, leading to their eventual withdrawal from the market.

No Clear Market Need or Perceived Product Benefits

Products that do not address a clear market need or fail to communicate their benefits effectively often struggle. Consumers must perceive a product as a solution to a specific problem or as offering significant benefits over existing alternatives. Without this clear value proposition, new products can be overlooked in favor of more compelling or established solutions.

Poor Internal Marketing

Successful product launches require the support and enthusiasm of the entire organization. Poor internal marketing can lead to a lack of alignment and commitment within the company, resulting in weak launch efforts and subpar sales performance. Internal stakeholders must be fully on board, understanding the product’s value and being equipped to champion it effectively.

Existing Product Cannibalization

New products can unintentionally cannibalize the sales of a company’s existing products, leading to overall market share loss. This occurs when a new product is too similar to existing offerings, causing customers to switch within the brand rather than attracting new customers. Strategic planning is required to ensure new products complement rather than compete with the existing portfolio.

Weak Sales for Size of Company

For larger companies, new products need to achieve substantial sales volumes to be considered successful. Products that may be viable for smaller firms can fail in larger ones if they do not achieve the scale required to impact overall company performance. This discrepancy can lead to the premature discontinuation of products that don’t meet the high sales expectations.

Insufficient Time for Success

Some products are withdrawn from the market too quickly, not allowing sufficient time for them to gain traction. Building awareness, changing consumer habits, and achieving market penetration often take longer than anticipated. Companies sometimes fail to commit the necessary time and resources to allow a product to establish itself in the market.


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