The product launch – guarantee of failure or success?

Posted: June 17, 2015

More new product launches fail than succeed. About 75% of retail and consumer products fail to earn even US$7.5m during their first year, while less than three percent of new consumer packaged goods exceed first-year sales of $50m – considered the benchmark of a highly successful launch.

This is according to the Harvard Review, April 2011, in which the failure of product launches is explored.

It examined 70 top products in the Most Memorable New Product Launch survey (which it helps to conduct) from 2002 to 2008. “A dozen of them are already off the market.

One reason for this is consumer shopping habits. ‘American families, on average, repeatedly buy the same 150 items, which constitute as much as 85% of their household needs; it’s hard to get something new on the radar,’ says the article. Catherine Kitcho, in Product Launch as a Key Business Process, says 10 years ago product launches just happened. “Companies somehow got their products to market, but no one really knew how they did it. Today’s dynamic economy and the pressures to be more competitive and profitable, make solid launch processes critical.”

She identifies three reasons why product launches fail:

The product launch is viewed as a once off,
Product launches are usually homeless and do not quite fit in the marketing or product management groups, and
The rush from business to get the product to market means often no processes are followed and/or carried out by the incorrect company.

“Successful launches require a solid mix of project management and marketing skills, and a simple, realistic process to follow,” says Kitcho.

Agreeing with her is Preetesh Sewraj, CEO and Chief Innovation Analyst, Product of the Year, South Africa, who says part of launch strategy should be a robust launch pipeline. “Brands approach product launches as one-hit wonders, and push the product initially, but a year down the line there is nothing. When you launch a product today, already you need to be asking what the next step is. If you cannot excite the customer a year later, your competitor might instead when they come up with something better.”

He says brands should focus on areas where they can communicate directly with the consumer. “If you are a FMCG brand, go in-store. Find experiential places where the consumer spends time and enjoys being. I have never understood why motor vehicle manufacturers have not gone into car washes to promote their brand.”

All Gold (condiments and Sauces) has won the Ask Afrika ICON Brand Survey for two consecutive years.

Edith Maphita,Category Marketing Manager: Condiments & Spreads, (which includes All Gold, Crosse & Blackwell, Colman’s, Mrs Ball’s, Black Cat) at Tiger Brands, explains that the brand is 108 years old, so to remain relevant they have to do things differently. This led them to focus on the consumer experience, instead of the brand. “This allows us to speak to the emotions of South Africans. The brand is secondary to the experience.”

Last year their campaign focused on creating brand experiences that were in line with each province’s lifestyle. For example, the brand hosted a touch rugby festival in the Western Cape, the Michell’s Plain Festival, that was attended by over 10 000 people. Her tip for a successful product launch is research, research, and more research. “Base your campaigns on the insights into your consumers.”

Sewraj agrees with her. “Steve Jobs said it was not necessary to research and that the consumer does not know what he/she wants. The reality is that traditional products need research. Research the proposition you take to market, find out if people love and enjoy it for the same reason you think they do.”

He adds that the problem is not just research, but that brands are not using research adequately to launch products. “Research should be part of your strategy and you need to do it from the day you launch, not a year down the line.” A popular strategy when launching a product is price. Sewraj says an over-extended price-fighting campaign leads to long-term issues that affect not only that price-cutting brand, but the entire category. “A price-fighting campaign should be maximum three months. After three months it becomes hazardous to the brands and category.”

Ariel dropped their price when they launched so everyone could try it. However, when the price reverted to normal, the number of people that stayed with them was not as many as anticipated.

The category also determines the value of the brand vs. the price, says Pippa Capstick, Executive Creative Director at Ignite Joe Public. “You need to look at the big picture when you launch a product. You must create a brand proposition that is different, and not just about price. Instead, look at how you can leverage an idea.”

Most brands have worked out that it is not enough to give out samples. “The launch needs to make sure that consumers understand what a product is for and how to use it.”

Comfort, a softener for laundry, instead of handing out samples, gave every consumer who bought a set of sheets from @Home a Comfort sample. This gave the consumer an instant understanding of what the product was for and how to use it.

The lower end of the market is more about price and added value (What plus from the product can I get?) while at the upper end authenticity becomes more relevant.

Authenticity speaks to the trust that consumers have with a brand. “Consumers do not interact or just view a brand, they want to bond with them. This requires being authentic, and is what Unilever and Clover are exploring.”

Capstick’s advice is go big or go home. “Many brands are fearful to go big, and big ideas frighten them. We say do a big idea because you can never do it again. Take the big route and be amazing. Be brave when you launch a product. Every brand who has done it has succeeded.”

Her proof is the Volvo Truck ad. “The Volvo truck advertisement is a watershed moment in product launches. It is a breath of fresh air and is about how amazing you can be. It talks to the point made about the consumers not interacting or just viewing a brand, but wanting to bond with it.”

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