Assignment 1
On
New product fails, despite being a wow idea
Course Title: Introduction to Marketing Management
Course Code: MKT 322 (67c)
Prepared For
Mohammad Nazmul Huq (MNH)
Assistant Professor & Coordinator
Department of Business Administration
Stamford University Bangladesh
Prepared By
Md. Mahbub-e-Khuda
ID NO: BBA 071-19324
Date of Submission: July 17th, 2020
New product fails, despite being a wow idea
New products are important to both customers and businesses. They bring new solutions and
variety to the customers, and they are a key source of growth for businesses. Firms can obtain
new products in two ways. Through -
1. Acquisition: Firms can buy a whole company, a patent, or a license to produce someone
else’s product.
For example; Japan Tobacco Inc. acquired the tobacco division of Akij Groups for $1.4
billion.
2. New product development: The development of original products, product
improvements, product modifications, and new brands through the firm’s own research
and development (R&D) efforts.
For example; Apple’s iPhone & iPad line-up.
New product development can be very expensive and very risky. A firm might have a fantastic
idea for a new product. Despite being a wow idea, the new product can still fail for several
reasons. These are –
Overestimation of market size: Firms may fail to estimate the actual market size for a
new product. They may assume incorrectly that the product will capture a much larger
market share and direct its marketing activities towards that. This will increase marketing
costs and raise prices, ultimately causing the product to fail.
Poor design: The product’s actual design might have some flaws that may not appealing
to the target customers. Suppose; a smartphone has some exciting features that the
customers want, but require them to use both hands to operate effectively. Generally,
people do not use phones with both hands. Such a flaw in design can cause the product to
fail.
Incorrect positioning: Firms may unable to position the product in minds of the targeted
customers correctly. Suppose; a firm produces detergent, tries to position the product that
not only clean the clothes but also soften it after a wash. Customers on the other hand,
thought of the product as a fabric softener. Since, the product is a detergent and not a
fabric softener, it performs poorly in softening fabrics. Thus, the firm incorrectly position
the product to customers and therefore fail the product as it is unable to attract customers.
Wrong timing: The timing of the product launch may cause the product to fail. Suppose,
a designer launched its new bridal collection during the monsoon season. Typically, most
marriages in Bangladesh occur during the winter season, and since most of the purchases
are made immediately before the wedding. The product may not capture enough
customers and failed.
Priced too high: If the price of the product is set too high, it may fail to attract customers
despite being a superior product. Customers may not willing to buy product at higher
prices, if a relatively similar product exist at cheaper prices. Therefore, if the higher price
does not justify greater value to customers, can cause product failure.
Ineffective promotion: A new product may also fail due to the lack of or ineffective
promotional activities. When customers do not have knowledge about the product, its
quality, features, and usefulness or, the promotional activities fail to capture customer
attention customers will not purchase the product.
Management influence: Management decisions on budget, time, research etc. can also
influence the success or failure of new products. For example, a high-level executive
might push a favorite idea despite poor marketing research findings.
High development costs: Product development cost is the expenses that is incurred to
develop the product. Higher development cost will force the company to charge higher
prices for their product, customers may not willing to pay the high prices. As a result, the
new product may fail entirely.
Competition: The competitor’s response to the market can cause new products to fail.
Suppose, a firm launched a new product, later competitors offered a similar product at
lower price or with enhanced features which can cause the new product to fail.
To create successful new products, a firm must understand its customers, markets, and
competitors and develop products that deliver superior value to customers.
