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MARKETING MANAGEMENT - New Products Development Strategies

Analysis Of New Product Launches In India - New Products Development Strategies

   Posted On :  18.06.2018 09:46 pm

Empirical data suggests that in highly competitive markets such as in the US, the success rate of new launches, depending on the strictness of definition of success, varies from a low of two per cent to a high of 10 per cent.

Analysis Of New Product Launches In India
 
Empirical data suggests that in highly competitive markets such as in the US, the success rate of new launches, depending on the strictness of definition of success, varies from a low of two per cent to a high of 10 per cent. Markets in India are not as competitive as in the West and therefore, the success rate of new launches is likely to be healthier. A study by Abraham Koshy, revealed the following facts
 
On an overall basis, out of all the new launches, 53 per cent were successes and the remaining 47 per cent were failures. This implies that, cater is paribus, even at an optimistic level, new launches are likely to have a probability of success of around 50 per cent. In reality, this proportion may even at an optimistic level, new launches in the country today, given the level competitiveness in the market and professionalism of companies, is likely to be less than 30 per cent! This is worse than even the odds when an unbiased coin tosses; no company can invest huge resources for new launches if the probability of success is so unfavorable. The message from this insight is clear when the chances of survival are so low, the only way to beat the odds is through a systematic and professional approach to managing new launches. Other wise it is 50 – 50.
 
The mortality rates of new brands indeed tend to the high; only about 36 per cent of new products launched in the market with new brand names survived, the remaining 64 per cent were failures. This is indeed more unfavorable than the overall situation presented in the preceding paragraph it means that if you do not have a strong brand to leverage and therefore, there is a need to build brand awareness and create brand preferences afresh, then you should be even more thorough in your new launch efforts.
 
Life extensions and brand extensions were significantly more successful than the launch of new brands. Thus, 71 per cent of new launches that were line extensions and 63 per cent of brand extensions were successful in the market place. From one perspective, this suggests that your chances of success in a new launch are far greater if you leverage. From a different perspective, it also means that a levering strategy will not automatically guarantee you success; the results show that nearly a third of line extensions as well as brand extensions were failure. These in other words imply that even if you have strong brands, you need to be systematic in configuring your offer in tune with market needs. Inappropriate leveraging of brand names, leveraging weak brands and improper alignment of marketing mix elements are certified formulae for failures.
 

How can one Influence Success of New Launches?

 
 
A perplexing question that a practitioner is often confronted with is the reasons for product failures. Marketing literature suggests several reasons for product failures. These reasons are broadly classified under product (or offer) related factors, market by the research team (or consumer) related factors, market by the research team related factors and competition related factors.

 
 The latter two reasons, namely market related and competition related factors provide the context of a firm’s marketing operations and hence these are factors on which the firms can exert little control. All that a firm can do is to understand these given conditions and then align the total market offer based on these realities. And this is given where many firms slip rather badly. Findings of the study conducted by IIM, Calcutta provided interesting insights into the ways in which firms manage their new product activities. 
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