Innovation and new product development are fascinating and well-researched fields of study. Much of the content on this site is related to understanding how to better connect with customers and potential customers and, directly or indirectly, supports innovation and other entrepreneurial activity. From concepts like the marketing concept and the diffusion of innovations, to models and tools like the communication exercise, selective attention exercise, and Fishbein model, we provide an introduction to important ideas and, most importantly, simple ways to implement them within your organization.
One area of research in new product development is the exploration of characteristics that make products “winners” in the interest of providing a road map of sorts as to elements that should be incorporated into product (or service) design, as well as those that the organization should create and emphasize as part of an innovation-supporting culture. One of the key scholars and proponents of this type of research is Robert G. Cooper. Along with colleagues Elko Kleinschmidt and Scott Edgett, Dr. Cooper has produced numerous articles, books, and videos describing the new product development process. Many of these videos, and dozens of third party presentations on the subject, are available on YouTube.
Here is a brief overview of new product success factors, and corresponding failure factors, which of course are often the opposite of the former.
Success Factors
Good match between product and market needs. The best way to summarize this success factor is the marketing concept, which we describe under that heading in Resources. If a product or service is developed without studying (asking, observing, etc.) the customers’ needs and wants then it is less likely to flourish in the marketplace.
Adequate target market size. This one is pretty self-explanatory! Marketers need to study the market (!) and determine which parts of it (i.e., segments) are “big enough.” Of course, an adequate size is relevant to the organization’s resources; a small or niche market segment might be highly desirable to a smaller player while larger competitors may require a certain threshold to trigger further action. As with matching needs, more study is needed, including internal data (if available) and research insight from outside entities.
Offers a clear, meaningful benefit. Again, the marketing concept is key, as we try to design a service or product so it can deliver the benefits being sought by potential customers. This boils down to the benefits being delivered exceeding the cost of time to learn about a new product or service and the actual monetary cost (or equivalent) to obtain it. The benefits might exceed how the customer is currently “making do” with some self-provided method of generating the benefits or the benefits being proffered by existing products or services.
Distinguishable from substitute products. As with the clear and meaningful benefit(s), products are more successful when they are not simply “me too” versions of an existing bundle of benefits. A caveat here is that such a copycat offering can succeed if the provider offers it for a much lower price. That is, the benefits can be the same, but the value is greater if the cost of attaining those benefits is less than that of competitors. Of course, to do so and be profitable in the long run requires having a low cost structure in place beforehand.
Offers unique, superior value. This factor is highly correlated with the preceding pair. In other words, there are subtle differences in how to achieve this , or how success is expressed.
Organizational commitment to new product development. This is an overarching aspect of succeeding more than average at new product/service development. It is vital that every member of the organization knows they are expected to generate ideas, work on vetting those ideas, and that they have a vested interest in helping to achieve success. The latter often is expressed via pay or bonuses being tied to a certain proportion of products in the portfolio being more recent ones (e.g., a brand or product manager’s performance goals might include having thirty percent of products in his or her department launched within the past three years). The first five success factors are more likely to be addressed if the organization is truly innovation-centric and everyone working for and with it has confidence in that orientation.
Failure Factors
As mentioned above, new product failure factors are generally opposites of those associated with success. In the brief overview below, some clarification is provided for factors not reflecting that “mirror image.” The factors associated with products that languish and fail are:
Poor match between product and market needs, overestimation of market size, incorrect positioning, inappropriate price, inadequate distribution, and poor promotion. Note that all of these reflect a poor job of executing the marketing concept (that is, the firm is not being market oriented) or an outright omission of that customer-centric belief system on the organization’s part. The first two failure factors are opposites of their corresponding success factors. The latter three are too, but are also specific marketing mix (aka “4P’s) failures; as they are price, place, and promotion shortcomings.
The incorrect positioning factor relates to either, a) how the firm failed to properly arrange for the targeted customers to receive the description needed to understand how the benefits relate to their needs and wants, or b) properly explaining the benefits but failing to tie them to those needs and wants in the first place. The latter is quite close to being an opposite of the first success factor–matching the product’s delivered benefits to the customers’ needs and wants.
Studying both success and failure can help improve new service and new product planning. The key is to ensure as many success factors as possible are addressed appropriately for the project at hand, and to review plans and work completed to check for ways in which failure factors might have appeared. For example, have price and promotion messaging been tested for how well they reflect the realities of the marketplace? Are the resources in place, or being readied, to enable rolling out the new service or product to the intended markets?
Success and failure factors are truly “two sides of the same coin.” Being aware of both can help your organization thrive in its generation of new and exciting services and products.