Product Launches
Why Most Product Launches
Fail
by Joan Schneider and Julie Hall
From the Magazine (April 2011)
As partners in a firm that specializes in product launches, we
regularly get calls from entrepreneurs and brand managers
seeking help with their “revolutionary” products. After listening
politely, we ask about the research supporting their claims. The
classic response? “We haven’t done the research yet, but we know
anecdotally that it works and is totally safe.” We’ve been fielding
these calls for so long that we can often tell from one conversation
whether the launch will succeed.
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Most won’t. According to a leading market research firm, about
75% of consumer packaged goods and retail products fail to earn
even $7.5 million during their first year. This is in part because of
the intransigence of consumer shopping habits. The consultant
Jack Trout has found that American families, on average,
repeatedly buy the same 150 items, which constitute as much as
85% of their household needs; it’s hard to get something new on
the radar. Even P&G routinely whiffs with product rollouts. Less
than 3% of new consumer packaged goods exceed first-year sales
of $50 million—considered the benchmark of a highly successful
launch. And products that start out strong may have trouble
sustaining success: We looked at more than 70 top products in the
Most Memorable New Product Launch survey (which we help
conduct) for the years 2002 through 2008. A dozen of them are
already off the market.
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Numerous factors can cause new products to fail. (See the sidebar
“40 Ways to Crash a Product Launch.”) The biggest problem we’ve
encountered is lack of preparation: Companies are so focused on
designing and manufacturing new products that they postpone
the hard work of getting ready to market them until too late in the
game. Here are five other frequent, and frequently fatal, flaws.
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Flaw 1: The company can’t support fast growth.
The Lesson: Have a plan to ramp up quickly if the product takes
off.
Mosquito Magnet
:
In 2000 we worked with American Biophysics on the launch of its
Mosquito Magnet, which uses carbon dioxide to lure mosquitoes
into a trap. The timing was perfect: The West Nile virus scare had
elevated mosquitoes from irritating nuisances to life-threatening
disease carriers.
Mosquito Magnet quickly became one of the top-selling products
in the Frontgate catalog and at Home Depot. But American
Biophysics proved more adept at killing mosquitoes than at
running a fast-growing consumer products company. When it
expanded manufacturing from its low-volume Rhode Island
facility to a mass-production plant in China, quality dropped.
Consumers became angry, and a product that was saving lives
almost went off the market. American Biophysics, which had
once had $70 million in annual revenue, was sold to Woodstream
for the bargain-basement price of $6 million. Mosquito Magnet is
making money for Woodstream today, but the shareholders who
originally funded the device have little to show for its belated
success.
Flaw 2: The product falls short of claims and gets bashed.
The Lesson: Delay your launch until the product is really ready.
Microsoft Windows Vista
In 2007, when Microsoft launched Windows Vista, the media and
the public had high expectations. So did the company, which
allotted $500 million for marketing and predicted that 50% of
users would run the premium edition within two years. But the
software had so many compatibility and performance problems
that even Microsoft’s most loyal customers revolted. Vista
:
flopped, and Apple lampooned it in an ad campaign (“I’m a Mac”),
causing many consumers to believe that Vista had even more
problems than it did.
If Vista were launched today, the outcome might be even worse,
owing to the rising popularity of Twitter and YouTube and the
prevalence of Facebook “hate” pages. As social media and user-
generated reviews proliferate, the power of negative feedback will
only increase—making it even more imperative that products be
ready before they hit the market.
Flaw 3: The new item exists in “product limbo.”
The Lesson: Test the product to make sure its differences will
sway buyers.
Coca-Cola C2
For its biggest launch since Diet Coke, Coca-Cola identified a new
market: 20- to 40-year-old men who liked the taste of Coke (but
not its calories and carbs) and liked the no-calorie aspect of Diet
Coke (but not its taste or feminine image). C2, which had half the
calories and carbs and all the taste of original Coke, was
introduced in 2004 with a $50 million advertising campaign.
However, the budget couldn’t overcome the fact that C2’s benefits
weren’t distinctive enough. Men rejected the hybrid drink; they
wanted full flavor with no calories or carbs, not half the calories
and carbs. And the low-carb trend turned out to be short-lived.
(Positioning a product to leverage a fad is a common mistake.)
:
Why didn’t these issues come up before the launch? Sometimes
market research is skewed by asking the wrong questions or
rendered useless by failing to look objectively at the results. New
products can take on a life of their own within an organization,
becoming so hyped that there’s no turning back. Coca-Cola’s
management ultimately deemed C2 a failure. Worldwide case
volume for all three drinks grew by only 2% in 2004 (and growth
in North America was flat), suggesting that C2’s few sales came
mostly at the expense of Coke and Diet Coke. The company
learned from its mistake, though: A year later it launched Coke
Zero, a no-calorie, full-flavor product that can be found on shelves
—and in men’s hands—today.
Flaw 4: The product defines a new category and requires
substantial consumer education—but doesn’t get it.
The Lesson: If consumers can’t quickly grasp how to use your
product, it’s toast.
Febreze Scentstories
In 2004 P&G launched a scent “player” that looked like a CD
player and emitted scents (contained on $5.99 discs with names
like “Relaxing in the Hammock”) every 30 minutes. The company
hired the singer Shania Twain for its launch commercials. This
confused consumers, many of whom thought the device involved
both music and scents, and the ambiguity caused Scentstories to
fail.
When a product is truly revolutionary, celebrity spokespeople
may do more harm than good. A strong educational campaign
may be a better way to go. The product’s features provide the
:
messages to build brand voice, aided by research and
development teams, outside experts, and consumers who’ve
tested and love the product.
Flaw 5: The product is revolutionary, but there’s no
market for it.
The Lesson: Don’t gloss over the basic questions “Who will buy
this and at what price?”
Segway
The buzz spiraled out of control when news of a secret new
product code-named Ginger and created by the renowned
inventor Dean Kamen leaked to the press nearly 12 months before
the product’s release. Kamen, it was said, was coming up with
nothing less than an alternative to the automobile. When
investors and the public learned that the invention was actually a
technologically advanced motorized scooter, they were
dumbfounded. Ads showing riders who looked like circus
performers perching on weird-looking chariots didn’t help, nor
did the price tag—$5,000. Instead of selling 10,000 machines a
week, as Kamen had predicted, the Segway sold about 24,000 in
its first five years. Now it sells for far less to police forces, urban
tour guides, and warehouse companies, not the general public. If
there was ever a product to disprove the axiom “If you build it,
they will come,” it’s the Segway.
Some of these problems are more fixable than others. Flaws 1 and
2 are largely matters of timing: If the launches of Mosquito
Magnet and Microsoft Vista had been postponed, the
manufacturing and quality problems might have been resolved.
:
Even though companies may be wedded to long-established or
seasonal launch dates, they would do well to delay if waiting
might increase the odds of success. Flaws 3, 4, and 5 are trickier,
because they relate more directly to the product itself. Managers
must learn to engage the brand team and marketing, sales,
advertising, public relations, and web professionals early on, thus
gaining valuable feedback that can help steer a launch or, if
necessary, abort it. Hearing opposing opinions can be painful—
but not as painful as launching a product that’s not right for the
market or has no market at all.
A version of this article appeared in the April 2011 issue of Harvard Business
Review.
JS
Joan Schneider is CEO of Schneider
Associates, an integrated marketing and public
relations agency , and the author of The New
Launch Plan.
JH
Julie Hall is its executive vice president. They
are the coauthors of The New Launch Plan: 152
Tips, Tactics and Trends from the Most
Memorable New Products (BNP Media, 2010).
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