New product development comes with a multitude of benefits. Expanding your customer base, increasing your value proposition, strengthening your competitive advantage, and, of course, top-line growth are just a few of the benefits of developing and launching a new product. So why aren’t companies launching new products all the time?
The unfortunate truth is that when it comes to developing and launching a product, success is much rarer than you might think. In fact, more than 80% of new product development ends in failure. Some studies suggest a product failure rate as high as 95%. There are a variety of reasons for this high rate of failure — some avoidable, some inevitable, but all identifiable.
Avoidable mistakes often result from a lack of data or a lack of product development strategy. They could also include skipping or rushing steps in the product development process or not collecting necessary feedback on product performance.
Then there are the inevitable reasons for product development failure: They can’t be controlled or changed. These include a lack of interest in the market or lack of supplies and resources to support the product’s creation, distribution, and sales. Businesses often can’t fix the lack of appetite or internal resources for the product they had in mind. Still, knowing that the product won’t have the support it needs can save businesses from wasting further investment or, worse, an embarrassing launch that damages both the company’s revenue and its reputation.
As you begin to develop your next great product, keep the following tips in mind to protect your investment and identify early signals of failure.
Developing your latest product? Build a successful product by following a New Product Development Checklist.
Give the New Product Development Process Enough Time to Work
New products are often a result of a new need in the industry. In order to beat their competitors to market and capitalize on customer interest, some brands are inclined to skip important stages of product development. With customer needs and preferences shifting, brands are often racing to match customer demand and sacrificing key steps in the product development process.
One frequently skipped step in the production process is concept testing.
A concept test is when you gather feedback from your target market about your prospective product to understand the demand for your new offering. This step provides valuable information and answers critical questions, such as:
- Are customers interested in the product you envision?
- How much are they willing to pay?
- What is the predicted ROI?
While this seems like an obviously important step, it is often overlooked based on inflated assumptions around customer interest.
Skipping any of the stages of product development invites risk and increases the chance of failure. While following every step might prevent you from being the first to market, it will provide you with a better chance of success when you ultimately launch your properly vetted product.
Look for Signals of Product Development Failure
Simply following the product development process isn’t enough. You need to examine what the data is telling you, adjust where you can, and accept when the data is telling you the product will fail. While this may sound like common sense, it’s often easier said than done. When multiple stakeholders get involved and hold firm to their preconceived beliefs, experience, and preferences over what the data shows, it can prove even harder.
The disconnect between multiple goals and priorities, combined with disbelief in the insights, often leads to tunnel vision. When companies have these blinders on, results that disprove the belief are ignored and product development pushes forward, often to ultimate failure.
By ignoring the data, companies miss a potential opportunity to refine their product to ensure market viability and, as a result, protect their investment. If refinement isn’t an option, listening to these signals and accepting the product’s likelihood of failure allows companies to avoid wasting further resources on a product with no return.
Want to protect your product development? Discover the Critical Pitfalls of Product Development to steer your product in the right direction.
Ensure Sustainable Product Development
As you build and refine your products to appeal to customer needs, it’s important to keep long-term sustainability in mind. If you don’t have the means to support the ongoing creation and demand for your product, you will overtax your company and employees. Once your product does generate demand, failing to consistently supply it can also harm your brand reputation, with customers receiving delayed delivery or constant out-of-stock notifications. As you develop and refine your product, keep these questions top of mind:
- Budget: Has your company secured the appropriate amount of money to develop, sell, and distribute your product?
- Materials: Do you have access to materials to build the product secured? Do you and your employees have the tools they need to perform their job?
- Manpower: Do you have enough employees to support the creation, sale, and distribution of your new product? Do those employees have the adequate training, skills, and resources necessary to produce your product?
Developing an in-demand product means nothing if you cannot maintain production in the long run. Make sure your company and employees have all the support they need to sustainably produce your new product.
Consider Long-Term Demand
Before investing a significant amount of time and resources in new product development, keep in mind the long-term demand for your offering. Does the product you’re developing have longevity, or is it a short-lived fad? Developing products in response to a fad or trend isn’t necessarily a bad idea, but it’s important to compare your investment against long-term viability. Consider these questions:
- Are you sacrificing your core product to divert resources to this new product?
- Can you revert this investment if the market for your new product cools down?
While you may have the resources and time available to produce your new product, if the demand for your product is short-lived, then your return might fall short of your long-term expectations. It can also harm your core products and leave you with an excess of supply and no demand.
Monitor the Competitive Landscape
Last but not least, remember you aren’t building your product in a vacuum. There are other companies out there who are likely investing in a similar offering. And, despite the demand for your product and your ability to produce it, if there’s a better product available, your product could fail.
It’s important to monitor what your competitors are building and how your product will compare. Ask yourself the following questions:
- Is this new product applicable in your industry where your brand is recognizable, or will your competitor have stronger brand recognition?
- Do your employees have the skills and knowledge to quickly produce a competitive product, or will you be outperformed by your competitor?
If the results of these questions favor your competitors, this might not be the right product for your company to invest in. While you might end up losing this battle, by redirecting your resources and investment to areas with higher returns, you can still win in the long run.