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New businesses are always in a rush to get new products to market. But how many new products or new businesses fail because the concept is never quite executed correctly for the intended target buyer? When a company doesn't take the time to do it right in the first place, it somehow always has to find the time to correct it later, often at great cost in unnecessary spending, lost time, lost sales, and lost market share.
The fastest way to go out of business is to introduce a great idea, but to never completely deliver the features or benefits that were promised. People who initially buy and then reject a new product are almost impossible to interest in trying the same improved brand again. Small companies who use the real marketplace to develop and refine a new product may never realize the sales potential of the product without a conscious plan for success.
It is estimated that over 40 percent of new packaged consumer products fail. Some 20 percent of new industrial products fail. And 18 percent of new service products fail. If line extensions of current products are included, the failure rate for new packaged consumer products increases to 80 percent, according to Philip Kotler in Marketing Management.
A typical new product development path used in large companies (such as Procter & Gamble, Kraft/General Foods, Nabisco, etc.) can also be modified for new products by smaller companies:
- Company mission must be developed or confirmed.
- Product development strategy must be determined and refined.
- New product ideas must be generated.
- Ideas must be screened for potential profitability and fit with company goals.
- New product prototypes must be developed and refined.
- Packaging, pricing, and advertising strategies must be developed and refined.
- Success of the new product must be measured after introduction.