Only a ‘few’ new products can succeed each year

There seems to be broad agreement that in the large developed markets, for example the US, about 80% to 90% of new products fail. The definitions of success vary but they tend to centre around things like achieving good sales and distribution in year 2. The key point about new products is that there is a relatively absolute limit to how many products can be successful in a given year and there is no, practical, limit to the number of new products that can be launched. The reasons for this are covered below in this post, but the consequence of a relatively fixed number of successes and a growing number of new products is a declining success rate for products. Behavioural Economics and New Products One of the things we have been reminded of by the likes of Daniel Kahneman and Dan Ariely is that making choices takes effort, changing behaviour takes effort, and the energy for these choices and changes is in limited supply. Consider products like your regular/normal brand of coffee, detergent, or toothpaste, changing requires a decision, not changing simply requires the heuristics of repeat behaviour. Households don’t buy an endless supply of brands/products In ‘Differentiate or […]

Is it a bad thing that 80% of new products fail?

Posted by Ray Poynter, March 2013 In a recent LinkedIn discussion, one contributor suggested that 80% of new product launches fail. This sort of statistic occurs in marketing discussions on a regular basis, with varying definitions of failing and various values being quoted, sometimes as high as 95% sometimes as low as 75%. But I feel that these discussions are often addressing the wrong issue. When they discuss ‘Why is market research concept testing so bad?’ Whenever I hear stats like ‘80% of product launches fail’, I ask myself, what percentage of new launches should fail? I think that we need to move the question away from percentages and ask ‘How many product launches, in absolute terms, could be successful?’ As people like Mark Earls (author of Herd) have shown, we are creatures of habit and we mostly copy behaviour. As an individual most of us are only going to fully adopt a handful of new products each year, and we are more likely to adopt a product if others do. So, I would contend that within any specific market, there is a limit to the absolute number of new products that can be successful. In my 35 years in […]