1. 1Why Products Fail Jonathan Weaver Mike Vinarcik

2. 2Why Products Fail Acknowledgment This lecture is primarily derived from the following Cohort 5 MPD Thesis and Thesis Presentation: A Concept Selection Tool to Extend Pugh Matrices, by Moe Fawaz, Michael J. Vinarcik, Susan Wellman-Smith

3. 3Why Products Fail

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5. 5 Product Planning Gone Wrong What is it? It’s an X-Ray machine used to fit shoes It was popular in the late 1940’s and the 1950’s Then people realized that the radiation danger outweighed the perfect shoe fit – especially when many machines were poorly maintained, leaked radiation, and were improperly adjusted http://www.neatorama.com/2008/03/06/shoe-fitting-x-ray-machine/

6. 6Why Products Fail Definitions Product Failure: (1) occurring whenever management regrets the new product introduction, (2) a product failing to live up to its company expectations in the market Product Successes: products which met or exceeded their objectives

7. 7Why Products Fail Some Basics Likelihood of product success increases if the company understands user requirements and provides “market-pull” type products The most common reason for product failure is inadequate market analysis –Surveys have shown that about 2/3 of products considered to be a technical success are product failures Product success requires: –correct identification of an existing demand –efficient development –presence of key individuals –a clear advantage over competing products

8. 8Why Products Fail Some Stats on New Products 1 of 7 new product concepts succeed commercially –the others are either cancelled or fail after introduction 80% of the products which fail do so very shortly after their introduction; a further 10% die within 5 years 46% of resources are devoted to new products are spent on products that fail Product failure spans all domains of products (and services)

9. 9Why Products Fail Facts About Consumers Consumers are becoming increasingly educated about products and increasingly discriminatory Better products don’t necessarily cost more Consumers select products closely tailored to their needs using factors such as : –Price –Quality –Reliability –Ease Of Operation –Safety…

10. 10Why Products Fail Facts About Companies Established global giants are just as likely to introduce flops as smaller, younger companies Companies do not learn from each others’ mistakes (in fact they often follow them) New products are more likely to succeed if the company truly understands user requirements and selects an appropriate concept which satisfies those requirements

11. 11Why Products Fail Six Main Principles Of Product Failures 1.Idea Failure 2.Extension Failure 3.Public Relation Failure 4.People Failure 5.Re-Branding Failure 6.Culture Failure

12. 12Why Products Fail Idea Failures DescriptionReasons for Failure Lessons Learned Main Rival Persil PowerNew detergent formula that is supposed to fight any stain Formula was so powerful that at high temperature it didn't only destroy the stain but the clothes as well Products need to be tested in every environment they are likely to be used Ariel, effective without destroying the clothes The Hot Wheels Computer A computer that targeted the boys’ market, had hardware decorated with hot wheels flame logo Attempt to gender marketing Get designers involved at the start. Designers should give engineers input on product usability and interface issues RadionA washing powder It wasn't different enough from other popular products Differentiate yourself from the competition More expensive and lower quality than its main rival

13. 13Why Products Fail The Extension Failure Extension cannibalizes sales Divides existing pie into smaller slices Addresses the needs and wants of the marketer rather than those of the consumer

14. 14Why Products Fail Extension Failures DescriptionReasons for FailureLessons Learned Main Rival CrestFirst fluoride toothpaste brand. Crest kept on offering new variations on the same theme, thereby confusing the toothpaste-buying public. Don't confuse the customer by offering too many product duplicates. Colgate came with fluoride, tartar control, gum protection…all in one. Heinz All Natural Cleaning Vinegar A double- strength cleaning aid The fact that both vinegar and Heinz are normally associated with things you can eat only made the product more confusing for the customer. Products can be expanded provided they remain true to their core identity. Xerox Data Systems A computer technology and data processing Xerox was trying to transform itself into an IBM-style "information business,” but the public was unwilling to think of Xerox in any terms other than the copier company. It is vital to know the association of the brand name in the consumer's mind before introducing a new concept. IBM

15. 15Why Products Fail Public Relation Failure When a company doesn’t provide the truth about a negative incident of a particular product –This might lead to an automatic new concept flop –Ex. Firestone handling of the tires issue

16. 16Why Products Fail The People Failure Product ultimately depends on individuals who represent it in order to survive –Ex. Enron, top executive acted irresponsibly

17. 17Why Products Fail The Re-Branding Failure Can undermine the company’s previous marketing efforts –Tommy Hilfiger

18. 18Why Products Fail The Culture Failure The internet facilitates expansion to new markets It is important to remember cultural differences which can affect the product’s chances to succeed in new markets –Hallmark cards in France (they prefer to write their own words inside) –Kellogg's cereals in India (traditionally had hot vegetables for breakfast, cereal expensive) –Pepsi in Taiwan (“Come Alive With the Pepsi Generation” was translated “Pepsi Will Bring Your Ancestors Back From the Dead”) –Parker pens in Mexico (“It Won’t Leak In Your Pocket” was mistranslated to a slogan involving unwanted pregnancies) –Vicks products in Germany (the brand name had negative connotations in German)

19. 19Why Products Fail Some Classic Failures ProductDescriptionFailure criteria Kodak mc3MP3 player, a digital camera, and a digital video camera, all in one. All in one for $ 300 came at the cost of quality BetamaxWas regarded as far superior in sound and picture quality to VHS formats Consumers turned their nose up on the price – which was driven higher than VHS largely due to Sony’s proprietary stance Manual TypewriterA victim of technological evolution Hydraulic elevatorsHad an alarming failure and fatality rate in skyscrapers and were quickly replaced by electric versions

20. 20Why Products Fail Failures Due To Technology Standard Photographic Cameras Vs. Digital Cameras Polaroid Vs. Digital Cameras Heuristic: Concepts Based Around A Particular Technology Have A Short Half-Life

21. 21Why Products Fail Bad Design Concepts Top-loading VCR Can’t Put Anything On Top Of It. Heuristic: Consider The Environment That The New Product Will Be Used In.

22. 22Why Products Fail Bad Design Concepts The On/Off Switch Can Be Easily Activated By Accidentally Pushing An Object Against It On/Off Switch Is Placed At An Angle

23. 23Why Products Fail Bad Design Concepts Most people expect to push the buttons

24. 24Why Products Fail Bad Design Concepts “Difficult To Tell Which Control Goes With Which Burner” “Controls Are Arranged In The Configuration As The Burners”

25. 25Why Products Fail Heuristics From Concepts That Flopped Chord Of Familiarity –Radical concepts should be kept on the market for enough time or be heavily advertised Communicate Clearly –Never assume that the consumers know Why they should use the product How they should operate it What its purpose may be

26. 26Why Products Fail Heuristics-continued Convenience –Consumers will select the product that makes their lives easier Extraneous Extras –Consumers won’t pay for what they don’t want or can’t use Failure Is Opportunity –Failure always presents new opportunities

27. 27Why Products Fail Heuristics-continued Ignore Office Politics –Don’t be afraid of pointing out the flaws of a bad concept Picket Fences –Share thoughts with the people your concept is targeting

28. 28Why Products Fail Hot Buttons For Success In The Millennium Convenience Environment Ethnicity Fun Nutrition Packaging Size Youth

29. 29Why Products Fail Summary of Considerations Creative developers must be given time to make mistakes Innovation= 99% perspiration and 1% inspiration No better way to success than by learning from mistakes There is as much to learn from failures as there is from successes

30. 30Why Products Fail Paul McManus - What Makes A Venture Management Team Successful - RPI Biotechnology Management & Entrepreneurship Seminar Series