Reasons for failure

As new product projects evolve and progress through each stage of development, many will be cancelled or stopped for a variety of reasons. The failure of a product idea to be developed into a product is not necessarily a bad thing. It may save the company enormous sums of money.

Reasons for new product failure

1. Product offers nothing new or no improved performance

2. Inadequate budget to develop ideas or market the product

3. Poor market research, positioning, misunderstanding consumer needs

4. Lack of top management support

5. Did not involve customer

6. Exceptional factors such as government decision

7. Market too small, either forecasting error with sales or insufficient demand

8. Poor match with company’s capabilities, company has insufficient expierence of the technology market

9. Inadequate support from channel

10. Competitive response was stong and competitors were able to move quickly to face the challenge of the new product

11. Internal organisational problems, often associated with poor communication

12. Poor return on investment, forcing company to abandon project

13. Unexpected changes in consumer tastes / fashion

Product ideas are rejected throughout the new product development process. Costs rise as the product moves closer to launch. This is based on FMCG industries, which involve high-cost promotional campaigns. Costs for science-intensive industries is inverse, which high costs being associated with R&D activities and relatively low-cost promotional activities towards the end of the development.

Adapted from

Trott, P., 2008. Innovation management and new product development. Pearson education.