March 16th, 2010 by Rob Berman Leave a reply »

I have been developing new products for 20 years. Over four posts I will discuss nine broad based reasons why new products are developed and examine them to illustrate the precarious nature of the new product development process.

High Failure Rates

There are incredibly high failure rates for new products being introduced into the business-to-business arena.  A study by the New Products Institute, Inc. in 1955 shows an 81% failure rate.  Similar studies throughout the decades depict an equally gloomy landscape.  The term “products” represents both products and services, with the services industry becoming an increasingly large portion of the economy.  Why have we not learned the lessons of past miscalculations?  Why do so many new products fail?

Many times failed product development is related to poor advertising or distribution.  While these reasons relate strictly to a component of the product design or the execution portion of the marketing plan, they do not address the hidden reasons why many new products fail.

To get the full picture, we must examine the foundations of why we launch new products and eliminate those approaches, which by their nature, are most likely to lead to failure.

The nine reasons for product development we will examine are:

  1. Customers are asking for a product.
  2. Gaps in the product line.
  3. An identified need exists in the marketplace which the product will fill.
  4. Publicity/Public Relations.
  5. Research has shown that …
  6. Keeping up with the Joneses.
  7. “We must use the budget dollars or we will lose them for next year.”
  8. The product concept is the “pet” idea of a senior executive or powerful person in the organization.
  9. We must introduce the product by the promised deadline.

Is the reasoning still valid?

Even when product development efforts are initiated for sound business reasons, we must guard against those reasons not being obviated over time.  At the beginning of a project, the information may be correct for the situation at hand.  Yet, as time progresses in the development effort – especially in multi-year projects – you must revalidate your approach and design to keep up with marketplace evolution.  Flexibility and adaptability should be our watchwords.

Taking action to steer clear of faulty reasons for developing new products will assist you and your firm in having a higher success rate in business-to-business new product introductions.

The Takeaway

Marketers must strive to utilize our precious resources: people, time and capital.  Opportunity costs are indeed high when a new product fails.

That is what is on my mind.  What do you think? Please respond in comments below.

  1. What other reasons are there to launch products?
  2. How do you guard against failure in product development?
  3. How would you rate your product development process?
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  1. Robert Turnbull says:

    You have missed a vast one in my experience and that is business renewal or new business development, where you are targeting products in a different part of the product life cycle or trying to transition your business from one segment to another, in my mind these are the biggest drivers for new product development – all of them are targeted at increasing profitability in your business and improving your asset utilization
    All the best

    • Rob Berman says:


      Thanks for the comments. Please keep reading the next three parts of the series. Parts 2 and 3 are on the blog. Part 4 will come out next Tuesday. Some of what you are discussing is covered in the details of the nine reasons I listed in this part 1 of the series.


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