Launching a new product can be risky business. In fact, according to the Harvard Business Review only 3% of products meet the $50 million benchmark of a highly successful launch. The other 97% fall into the lukewarm (7.5 million to 20 million) or failure (less than 7.5 million) categories.
Each product launch represents millions of dollars spent in hopes of potentially more millions to be gained. With so much investment and potential, how is it that a greater percentage of products do not achieve overwhelming “success”?
Maybe a better question would be, why is launching a new product so difficult?
One answer is that people are reluctant to change. The Harvard Business Review cites consultant Jack Trout, who has found that families on average buy the same 150 products, which make up 85% of their total household needs. Breaking into that 150 is difficult.
Another answer could be that companies become too emotionally invested in their new product, its adoption, and success; and, in the process do not perform adequate market research prior to launch. Harvard Business School researchers, Schneider and Hall, identified 5 common product launch flaws:
Combating Flaws to Prevent Product Failure
Eliminating all of these flaws may sound overwhelming, but there is a potential solution: Have a concrete plan that involves adequate research and leave room for change.
Sounds too easy, right? Product research can seem like a waste of money when you feel you know the answers, but considering a single product launch can cost millions (after factoring in the cost of product development and publicity), an investment of $30,000, $50,000 or even $100,000 on well-designed research is a drop in the bucket.
At times, millions of dollars are at stake and yet, product research often takes a backseat. A new product risks brand equity and capital; it's important to do it right.
Well-designed marketing research studies can help mitigate many of the aforementioned flaws. Product price elasticity and adoption modeling studies simulate market demand for a product by assessing the most valuable attributes, optimum price, and adoption rate. This enables a company to anticipate the potential demand for their products and to plan their launch accordingly.
Qualitative and quantitative surveys achieve a deeper understanding of consumer motivations and expectations from a product. As consumer questions about reliability, functionality, or product differentiation emerge following these research efforts, they can be resolved prior to the product launch.
All together, these analyses are invaluable to understanding the target audience demographics, which allows key decision-makers to make data-informed decisions to optimize profits and market share.
This blog post is the first in a six-part series on the 5 Common Flaws that Lead to Product Failure. If you're interested in learning more about these flaws and specific market research methods that can be used to combat them, you can subscribe to our bog to receive a notification when the next piece of the series is published.