Marketing Management Article on How to Assess Market Viability of New Products
Marketing Management Article on How to Assess Market Viability of New Products
Surveyor of the Fittest
[pic]
BY HONGJUN (HJ) LI
With the correct methodology, companies can effectively assess what market is viable and what market is not.
Industry research shows that
75% of new-product launches fail in the marketplace (visit www.microsoft.com to read its sec- tion about new–product development performance). That number does not even include product concepts that never successfully enter the market. There are many reasons for such failures, but lack of market demand for new products introduced is definitely the most important one.
M M S e p t e m b e r / O c t o b e r 2 0 0 7R 39
EXECUTIVE briefing
You might be surprised at how many new-product introductions fail every year. Unfortunately, such failure is not necessarily due to lack of market investigation. That is not to state, however, that market investigation is not relevant anymore. On the contrary: The industry’s poor performance with new-product introductions pinpoints the importance of doing the right market investigation the right way. Here is a systematic, effective, and easy-to-follow methodology that illustrates exactly how to accomplish that.
According to an AMR Research Inc. report released in June
2005: Out of 20 large manufacturers polled about poor per- formance of product launches, 47% cited failing to understand and meet customer needs exactly—compared with 33% citing being late to market and 23% citing poor pricing. No company will develop and introduce a new product if it knows beforehand that there will be no market demand.
Unfortunately, most companies try to justify new-product development (NPD) expenditures by doing some market analysis—only to find out later that projected market demand has failed to materialize. Thus, a critical question to industry players is how they can become more effective in their market assessment efforts. This article offers
Surveyor of the Fittest
[pic]
BY HONGJUN (HJ) LI
With the correct methodology, companies can effectively assess what market is viable and what market is not.
Industry research shows that
75% of new-product launches fail in the marketplace (visit www.microsoft.com to read its sec- tion about new–product development performance). That number does not even include product concepts that never successfully enter the market. There are many reasons for such failures, but lack of market demand for new products introduced is definitely the most important one.
M M S e p t e m b e r / O c t o b e r 2 0 0 7R 39
EXECUTIVE briefing
You might be surprised at how many new-product introductions fail every year. Unfortunately, such failure is not necessarily due to lack of market investigation. That is not to state, however, that market investigation is not relevant anymore. On the contrary: The industry’s poor performance with new-product introductions pinpoints the importance of doing the right market investigation the right way. Here is a systematic, effective, and easy-to-follow methodology that illustrates exactly how to accomplish that.
According to an AMR Research Inc. report released in June
2005: Out of 20 large manufacturers polled about poor per- formance of product launches, 47% cited failing to understand and meet customer needs exactly—compared with 33% citing being late to market and 23% citing poor pricing. No company will develop and introduce a new product if it knows beforehand that there will be no market demand.
Unfortunately, most companies try to justify new-product development (NPD) expenditures by doing some market analysis—only to find out later that projected market demand has failed to materialize. Thus, a critical question to industry players is how they can become more effective in their market assessment efforts. This article offers