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.
Tags : MARKETING MANAGEMENT - New Products Development Strategies
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