Today, many consumer goods companies have been forced to accommodate smaller markets, as these niches often provide the only path to growth and escape from heavy price competition. However newly launched products suffer from notoriously high failure rates! Surprisingly new products fail not because of technical shortcomings but because they simply have no market.
Reducing the risks of New product development
Typically companies use traditional forms of market research, including focus groups, to test new product concepts.
Cons of this action:
1. Results from a test with a few consumers are not a reliable indicator of the reactions of the broader population.
2. Focus groups lack realism because consumers are often given only verbal descriptions of concepts or renderings of a product, leading them to possibly underestimate the benefits of a new product that is truly unique.
3. These do not measure people’s real purchasing behaviour. They can reveal information about consumers’ attitudes toward a new product, but they do not provide quantitative estimates of sales, profitability and other information.
3 strategies which have gained traction in the recent past include: Postponement, Mass Customization and Collective Customer Commitment.
