The Innovation Imperative and New Product Success

In an economy of rapid change, continuous innovation is a necessity. Companies that fail to develop new products leave themselves vulnerable to changing customer needs and tastes, shortened product life cycles, increased domestic and foreign competition, and especially new technologies. Most established companies focus on incremental innovation, entering new markets by tweaking products for new customers, using variations on a core product to stay one step ahead of the market, and creating interim solutions for industry-wide problems. Newer companies create disruptive technologies that are cheaper and more likely to alter the competitive space

New-product specialists Robert Cooper and Elko Kleinschmidt found that unique, superior products succeed 98 percent of the time, compared with products that have a moderate advantage (58 percent success) or minimal advantage (18 percent success). Other factors include a well-defined product concept, well-defined target market and benefits, technological and marketing synergy, quality of execution, and market attractiveness.

New products continue to fail at rates estimated as high as 50 percent or even 95 percent in the United States and 90 percent in Europe. The reasons are many: ignored or misinterpreted market research; overestimates of market size; high development costs; poor design or ineffectual performance; incorrect positioning, advertising, or price; insufficient distribution support; competitors who fight back hard; and inadequate ROI or payback.

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