New-Product Introduction

Paul Sergius Koku

Chapter Chapter 5 in Decision Making in Marketing and Finance, 2014, pp 69-81 from Palgrave Macmillan

Abstract: Abstract Why should a firm introduce a new product/service, particularly in view of the abysmal failure rate of new products in the market? Regarding the grim picture of failure rates, consider the following: some reports state that the failure rate of new products is between 80% and 90% (Crawford, 1987). However, different studies, depending on the methodology and analytical technique used, report rates between 24% and 98%. According to a report by Cooper and Edgett (2010), top-performing organizations experience a higher commercial success rate for their new products. The average success rate for this group is approximately 62% compared to bottom performers’ average success rate of 45%. Now, what do you think could account for this disparity in success rates? Of course, there could be numerous factors. The authors of the study offer two: (1) top performers have well-structured and applied innovation processes, and (2) they also have better gatekeeping and governance protocols. We can add a few more for this disparity in success rates, such as possibly flawed processes for market research of the need for the products/services, a rush to beat top performers, and/or be the first in the market.

Keywords: Abnormal Return; Payback Period; Average Success Rate; Pioneer Brand; Product Development Phase (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-44477-6_5

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DOI: 10.1057/9781137444776_5

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