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
- Product offers nothing new or no improved performance
- Inadequate budget to develop ideas or market the product
- Poor market research, positioning, misunderstanding consumer needs
- Lack of top management support
- Did not involve customer
- Exceptional factors such as government decision
- Market too small, either forecasting error with sales or insufficient demand
- Poor match with company’s capabilities, company has insufficient expierence of the technology market
- Inadequate support from channel
- Competitive response was stong and competitors were able to move quickly to face the challenge of the new product
- Internal organisational problems, often associated with poor communication
- Poor return on investment, forcing company to abandon project
- 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.
Trott, P., 2008. Innovation management and new product development. Pearson education.