“Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
—John Wanamaker, Department store king,
Seventy percent of all new consumer packaged goods (CPGs) fail within a few years of introduction. One problem is that nobody knows which 70% it will be. Most new products actually fail more quickly than that, but they limp along because nobody wants to pull the plug. Testing with focus groups, test marketing, promotion, and so on may weed out some of the losers but success rates continue to be low.
If nothing can significantly improve the success rate, the solution may be to improve the failure rate. New products should fail quickly if they are going to fail at all. When the failed product is kept going because “If we just give it some time, it might get better”, it sucks capital, resources, and (most importantly) managerial focus out of the business. The failures need to be killed off rapidly to free up the company for the next idea.
To some extent it is a numbers game. If 3 out of 10 attempts will be successful, it is likely that 6 out of 20, 9 out of 30 and so on will succeed. The more products a company tries, the sooner it will get to its next success.
One excuse for not failing is that significant investments have been made for the failed product. It’s time for a new strategy. Minimize investment in the new product until it has proven itself. Give it what it needs but no more. Focus on getting the product to the market where it can succeed or fail. Manufacturing costs and efficiencies, as important as they are, are not as important at this stage as success or failure.
Rather than a new line, using all the latest technologies, keep the investment down and get quickly to market before anyone else. Use the money you save for promotion and marketing to get the product to consumers. The more you invest in machinery, the harder it will be to kill the product quickly. Quality Pre-Owned and/or rented production machinery minimizes risk and time to market.
At Frain Industries we provide both. Call us at 630-629-9900 to find out how.
