Homework 3: New Product Development and Product
Failures
1. Setting New-Product Goals: Companies set specific financial or strategic
objectives, such as achieving a 15% return on investment within three years. This
phase clarifies expectations and sets a foundation for further decisions.
2. Developing New-Product Ideas: Ideas can come from various sources, including
employees, market research, or brainstorming sessions. Large companies like
Toyota and Kraft utilize focus groups to refine ideas, while brainstorming
encourages diverse solutions.
3. Screening Ideas and Concepts: This step involves filtering ideas to see if they align
with company goals and resources. Ideas that lack synergy with the company’s
technology or strategies are often discarded.
4. Developing the Concept: Companies create prototypes and build a marketing
strategy, establishing factors like target market and pricing. For example, Kraft
might undergo extensive taste tests if creating a new salad dressing flavor, ensuring
product-market fit.
5. Test-Market the New Product: Test-marketing is a trial run in a controlled market
to assess product and marketing strategy effectiveness before a full launch.
Companies avoid expensive failures by observing product reception in real-life
conditions.
6. Introducing the Product: After successful test marketing, the product enters a full
market launch. Coordination between divisions is crucial to ensuring logistics,
training, and marketing are in place for a smooth rollout.
Product launches can sometimes fail spectacularly because companies misjudge
what consumers actually want, conduct poor market research, or create flawed
designs. Take Google Glass for example, it started out targeting the general public
but faced serious issues with privacy, bugs, and short battery life, which forced it to
shift its focus to businesses instead. Similarly, Apple’s Newton PDA and Sega’s
Dreamcast both struggled because they launched before consumers were ready for
them. Atari’s rushed E.T. video game is another example where not enough time was
spent on development, leading to major financial losses. There are also failures that
come from brands misaligning their products with their identity, like when Coca-
Cola introduced New Coke and underestimated customer loyalty to the original
flavor, or when Colgate tried to sell frozen dinners, which didn’t match their brand
image. Other products, such as Apple’s Lisa computer, failed because they were
overpriced with little added value, while Burger King’s Satisfries didn’t attract
customers despite being marketed as healthier. All of these examples highlight how
important it is for companies to understand market timing, pricing, and brand
identity to have a successful product launch.
