Every day, new products enter the market, while others die for various reasons. As the saying goes, 'Happy families are all alike; every unhappy family is unhappy in its own way.' This applies to new products: successful ones share similarities, but each failure has its own cause. After ten years in FMCG sales, I've seen many companies rise and fall, but one common thread is that launching new products is a key strategy for growth. However, before launching, we must consider the reasons for failure. Here are my insights:
- Unclear or Incorrect Product Positioning Before launching a product, companies typically conduct extensive market research and feasibility studies, and develop promotional plans to ensure success. However, due to limitations in capability and understanding, incorrect positioning can lead to product failure.
For example, a company produced a beverage but insisted it had preventive health functions, turning a few-yuan drink into a health product. This confused consumers: beverage drinkers wouldn't buy it, and health product buyers wouldn't either, because it wasn't positioned as a health product. Despite thorough preparation, the wrong direction made execution futile, and the product died.
Another form of unclear positioning is misidentifying the target audience. Companies often either target the user but ignore the purchaser, or misidentify the consumer entirely, leading to misdirected marketing. The product fails because the right buyers aren't reached.
- Lack of Persistence in Promotion Companies often expect immediate success from new products and can't handle setbacks. When sales and profits fall short or market resistance is high, they may prematurely declare the product dead without proper analysis, killing it just before dawn.
For instance, L Company, a well-known dairy company, developed a low-lactose, low-fat milk targeting consumers who can't drink regular milk or want to lose weight. Market research was positive, and the launch went smoothly with high distribution. However, after a few months, high return rates and slow progress led the marketing head to halt all promotions and production without investigating whether the issue was promotion, channel, or communication. Shortly after discontinuation, demand surged, and a competitor adapted the product with better channel and promotion strategies, achieving strong sales. L Company later realized that minor channel improvements and continued support would have made the product successful.
Too Many Benefits A product's unique selling proposition (USP) should be clear and memorable. However, companies often either list too many benefits or fail to articulate them clearly. In today's information-saturated world, consumers remember less, so they selectively accept and remember only what they frequently hear or care about. Therefore, fewer, clearer benefits are better. Overloading consumers with benefits confuses them and fails to give a reason to buy. For example, Nongfu Spring's simple slogan 'Nongfu Spring is a little sweet' made it memorable and built loyalty.
Inappropriate Channel Selection As the saying goes, 'Every snake has its own path.' Each product has its own suitable channel. Choosing the wrong channel can doom a new product. For example, Hengshui Laobaigan's 'Shiba Jiufang' targeted high-end consumers and focused on premium supermarkets and restaurants, avoiding price wars and achieving success. Similarly, 'Six Walnuts' targeted the gift market and focused on supermarket and circulation channels, turning a struggling company into a famous brand.
Pricing Mistakes Pricing directly reflects product value. Companies often swing between two extremes: setting high prices for high profits, which may price out target consumers, or setting low prices to boost sales, which may undermine perceived value or leave insufficient margins for promotion. For example, M Company launched a great-tasting product with a low price, leaving less than 10% gross margin. It sold well initially, but competitors quickly copied it with aggressive promotions. M Company's counter-promotions led to losses, and stopping them caused sales to plummet, leaving the product struggling to survive.
Product Naming Issues Poor or inappropriate naming can hinder communication and consumer acceptance. In 2003, Wahaha launched a vitamin drink called 'Kang Youli' during the SARS period, but it failed. The name lacked novelty and sounded like a health product, which didn't resonate. In contrast, competitor Robust's 'Mizone' succeeded later, partly due to innovative packaging and a catchy name. Similarly, Wahaha's 'Nutrition Express' succeeded in 2006, largely due to its appealing, modern name.
Packaging Problems As the saying goes, 'Clothes make the man.' Packaging is a product's first advertisement and influences consumer perception. Yet 99% of companies overlook its importance. Common issues include:
- Packaging not matching the product: high-value products with cheap packaging, or packaging style inconsistent with the product.
- Packaging design causing misunderstanding. For example, a tissue brand's packaging looked like feminine hygiene products, deterring male buyers.
Overly Advanced Innovation An industry saying goes, 'Leading by half a step means victory; leading by a full step means death.' Many products fail not due to product or promotion issues, but because they enter a market too early, before consumers understand the concept or the market is ready. For example, 'Xurisheng' tea drinks entered the market before tea drinks were accepted. They spent heavily to educate the market but failed, and then prematurely introduced 'warm tea' concept, wasting resources. Eventually, they lost the market to competitors like Uni-President, who succeeded later. Similarly, Wan Yan, a pioneer in VCDs, suffered the same fate.
Supply Chain Issues New products often face unstable supply and demand. Companies may have stockouts when sales need products, or oversupply when not needed. Seasonal fluctuations can cause shortages during peak demand. This inconsistency frustrates salespeople, retailers, and distributors, leading to abandonment and product death.
Sales Team Selection Issues Over-reliance on existing sales teams can cause product failure. Common scenarios:
- Salespeople lack understanding or confidence in the new product, so it's important to get their input before launch and secure their support.
- Distributors may hoard stock to take advantage of launch incentives without promoting, or refuse to stock, leaving the product to die in warehouses.
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