We know it, inside out.
Why do products fail? Managers become too ego involved with pet products and overestimate their chance of success. Over the past three decades considerable progress has been made in developing new marketing research techniques. Similar advances have been made in the understanding of consumer behavior.
These developments would be expected to lower the failure rate for new products, yet the product failure rate has remained high and constant—some estimates place it at about 85 percent for consumer goods. Of the many factors that influence product success or failure, the most common one is competence, i.
But competence would presumably increase with the use of new marketing techniques because that was what the techniques were designed for.
What can account for the fact that it apparently does not? Marketing managers responsible for new product decisions are typically very experienced.
They usually have marketing research information about the new products, often of good quality, and they want new products to succeed. Perhaps it is this very "want" on the part of managers that partially explains high and constant new product failure rates.
Perhaps managers are not so much failing to understand consumer needs as failing to see just how many consumers have this need.
Indeed, the most common public statements by managers about new product introductions are those concerning market size.
Many times products that seem to others to be clear niche products are touted by managers as mass-market breakthroughs. It seems as if managers' views are influenced by their closeness to the product. Research in decision making has consistently shown that ego-involvementselective perception, wishful thinking and optimism can lead to biases in the direction of wants.
Similar results obtain from studies of vested interest, illusion of control, overconfidence and risk taking. Thus, marketing managers are predisposed to think in terms of product success, not product failure.
Consequently, marketing managers usually overestimate product demand because of the way they interpret evidence for the products they care about most. This tendency provides a partial explanation for high and constant new product failure rates.
They would remain high due to continual overestimation and not to the lack of success of marketing research techniques.
It is very easy to find examples of managers expressing opinions about the chance of product success despite sometimes obvious evidence to the contrary. The product was launched in but dropped in due to lack of demand. Other companies launched versions of the picturephone in,and and each time the product was a failure.
Today, even in an age of Internet-based cell phones this product's time has not come. Today consumers want smart phones, but they still don't want picture phones.
To reduce the chance of failure, product managers use tools to help identify consumer attitudes and preferences. These tools range from simple market surveys to sophisticated conjoint studies and pre-test market models.
Managers can examine the findings from these studies or models before making a decision to continue with product development, test market a product, or attempt full-scale commercialization.
Since product managers usually have profit and loss responsibility for new product introductions, they are ego involved. If the product is a pet project, they have even more ego involvement. In this way, the product is personalized.© Journal of Consumer Research, Inc. All rights reserved.
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