Eight Ways New Products Die｜New Distribution

New products are of such great significance to a company, and once launched, if they fail, they consume a lot of resources. So, if you're going to launch, you must ensure the success of the new product promotion. But in reality, most new products end in failure, even becoming the main reason for a company's decline. So why do new products die prematurely? Only by finding the root cause can we prescribe the right remedy. Happy families are all alike; every unhappy family is unhappy in its own way. There are too many factors that lead to the premature death of new products, from concepts to methods, from strategy to execution, every link can have problems. Here, we analyze the eight common ways new products die in domestic SMEs, or the most common mistakes in new product promotion, as a warning. The First Death: Imitation and Following Trends, Delusion of "Winning by Quality" Perhaps because the first generation of Chinese business owners were mostly from production backgrounds (including some who switched from foreign trade to domestic sales), when I communicate with them about how to promote new products, "good product quality" is the selling point they feel most proud of. The new products they launch are all imitations of mature products, with no individuality or advantage in packaging, price, or appeal points. They always think wishfully: "If the competitor can sell well, it means consumers accept this product. My product design is almost the same as theirs, and the quality is even better, so why wouldn't it sell?" Expecting product quality as the core competitive advantage is a big misconception. Think about it, if marketing were this simple, success would be too easy, right? Ultimately, this is still typical product-oriented marketing thinking. In fact, besides product quality, brand, sales network, personnel, market management capabilities, etc., all contribute to the successful operation of new products, and none can be missing! Imitating mature products is not wrong. These products' success shows there is market demand, and these products have also done some consumer education, establishing a market foundation. But now we are "fighting a big battle with small forces"; others already have first-mover advantages. To win, we need to have "outstanding" qualities. From a product perspective, our products must highlight differences from mature products. For example, new product packaging should be more novel, which can grab consumers' attention on the shelf, like the antique paper bag packaging of Chacha melon seeds; or new packaging should be more convenient for consumers, like PET bottled canned food replacing glass bottled canned food. Companies must dispel the illusion of entering the market solely based on "my product quality is better" (e.g., "tastier, more nutritious"). In fact, the best-selling products in the market (especially food) are often not the best quality; consumers mostly lack professional appreciation ability. Good product quality can only be one advantage that promotes sales, but it can never be the sole support for your successful launch. Under the premise of similar product performance and packaging, the latecomer's channel profit must be much higher than competitors. Whatever advantages you have, higher channel profit is a necessary condition for domestic SMEs to enter unfamiliar markets. When the company's own sales capability is inferior to competitors, it must fully leverage the channel's power. On one hand, someone must buy (product selling point), and on the other hand, someone must be willing to help you sell (guaranteed by channel profit), then the chance of winning increases. The Second Death: New Product Concept Challenges New Concepts Some companies, when setting up new product concepts, unilaterally misunderstand the meaning of differentiated advantages, seeking novelty and strangeness, launching product concepts never tried before. Unless you have full confidence that your "new appeal" hits a widespread urgent need (e.g., thermal underwear's thin and warm features hit consumers' pursuit of fashion; cup-brewed milk tea hits leisure and fashion needs; these can form a "trend"). Otherwise, the shaping of product differentiation advantages should be based on mature market demand. That is, new products should imitate mature consumption concepts, then innovate at a certain point. "Leading the opponent by half a step" is enough. New product operation capability is one of Wahaha's core competencies. But if you analyze carefully, Wahaha's products are never first-movers. Calcium milk learned from Robust, eight-treasure porridge from Yinlu, tea drinks from Master Kong, purified water from Danone, Future Cola from "Two Colas". This imitation saves Wahaha a lot of "market education costs": through massive advertising, trials, and promotional investments, making consumers go from unfamiliar to aware, to interested, to purchase, and forming a stable consumer group requires significant costs and carries great risks. You must believe that guiding consumers to change their purchasing psychology and behavior even slightly is extremely difficult for a company. Nestle took over a decade to get Chinese people used to drinking coffee; P&G paid a huge price to make Chinese consumers think having dandruff is embarrassing. Now JDB has been trying to make people realize "drink JDB when afraid of getting heaty" (instead of its previously promoted Wanglaoji) since 2012, constantly advertising in the air and on the ground. Following the trend, innovating on the basis of predecessors may be the most "economical", but you must innovate. Still taking Wahaha as an example, although it imitates predecessors, its new product positioning is always a step ahead. Wahaha's first product was children's nutritional liquid. At that time, there were over 30 companies making nutritional liquids, but none targeted children. Wahaha seized this market segment and dug out the selling point of "fragrant appetite", using the emotional appeal of "drink Wahaha, eat with fragrance", triggering interaction between adults and children; AD calcium milk was first launched by Robust, but when Wahaha followed, it added the concept of "easy absorption"; Wahaha's tea followed Master Kong and Uni-President, but the pioneers only promoted the commonality of the product category, while Wahaha omitted commonality and emphasized its individuality "Heavenly Water, Longjing Tea"; in the Future series, Future Cola followed Coca-Cola and Pepsi, targeting the male market; Future Lemon imitated Sprite, targeting the female market; Future Orange Juice imitated Fanta, targeting the children's market. And in the early stage of market promotion, the Future series avoided Coca-Cola's core market—urban markets—and took the rural route, a judo strategy. In business, vision can be ahead, but steps cannot be too far ahead, otherwise you may turn from pioneer to martyr. Tea was first by Xurisheng, the predecessor became a martyr; ham sausage was first by Chundu, the predecessor also became a martyr. The Third Death: "Slapped-Together" New Products Many new products in domestic SMEs are "slapped together"—slapping the head for ideas, slapping the chest for resources, slapping the thigh in complaint, and finally slapping the butt to leave. Because the entire process, standards, and methods for new product launches are still in the "experience" stage, unlike finance or production functions which are quite "scientific", experience is like "crossing the river by feeling the stones", with many unreliable elements. If the new product is slapped together by someone with experience and insight, the chance of success is much greater. For example, many of Wahaha's products were "slapped" by Zong Qinghou (Wahaha's boss), and many of Yake's products were "slapped" by President Chen. Although Shuanghui's products have less direct involvement from President Wan, if they are slapped by senior regional managers, the chance of success is also greater. For instance, the "garlic-flavored ham sausage" and "cauliflower ham sausage" slapped by a regional manager in Northeast China were well received in the Northeast market. The problem is when "there are no generals in the court", lacking experienced and insightful people in the marketing team, or the company's marketing management mechanism has issues, not providing the "soil" for talented people to create new product ideas. Let me share a case about "new product pricing" for beer, "Sell at 12 or 15?—Answering Beer Retail Pricing". In fact, every link of new product launch has "experts" slapping their heads to come up with plans. When I met a marketing director of a beer company in Shanghai, he asked me to "appreciate" one of their new products, saying they planned to use it to expand their high-end beer market in Shanghai in 2008. The product's differentiation appeal was mainly "high-quality brewing water source and green ecology", 570ml/bottle, 8° wort concentration, mainly going through large catering channels in Shanghai. He asked me: From a consumer's perspective, what price would I be willing to accept for this product in mid-to-high-end hotels in Shanghai? Forced by him, I had to "guess" a price of 8-12 yuan/bottle, depending on the hotel's grade. It turned out his business team (including the division director) suggested pricing at 10-12 yuan/bottle, but a consulting company boss invited by the owner said it could be set at 15 yuan/bottle, and it was still undecided. Without a set price, customers were hard to finalize, and it was impossible to distribute to stores. They were anxious and wanted my opinion. Selling at a good price is naturally our common wish. From the company's perspective, it can enhance brand image and improve profits. For the sales team, if they can really sell at a high price, they would have more operational space due to higher gross margins, and establishing a high-end image would facilitate product line extension. Moreover, if the brand truly builds up and creates "pull", the market would be easier to manage. But what do we have to justify setting it at 15 yuan/bottle?

Brand: We are a new entrant with low awareness. Beer brands are highly regional; even Snow, Tsingtao, and Yanjing can only be strong in certain regions, and may not beat local "warlord" brands elsewhere. When I did beer market consulting in Changshu, Jiangsu, each town had a different strong beer brand—one town had "Suntory" strong, another "Taihu Lake Water" strong, and another "Dafuhao" strong. A Shanghai distributor once told me that Hongshiliang might be strong in Jiaxing, but in Shanghai (only 80 km away), it was worthless. So, as a new entrant without a strong brand promotion budget, you must consider the difficult start.
Channel: Our product has no distributor in Shanghai's urban area yet; entering the Shanghai market starts with finding customers. So what can we use to impress customers and foster cooperation? Weak brand, high price, low market investment budget, little sales team support—can we be convincing with only some differences in product concept (absolute or essential differences)?
Product: The differentiation appeal of high-quality brewing water source and green ecology is indeed visible and specific for this brand, and it aligns well with high-end beer consumers' needs, so it can be affirmed. But can a good product idea alone suffice? Not to mention whether this valuable difference is effective in "communication", even if the brand is built, its premium realization ability is limited. Similarly packaged Coca-Cola can be 2 mao more expensive than Pepsi and roughly break even, but 5 mao more would be hard to sell. Why should your brand be higher than Budweiser? Besides the current state of this product and the company itself, from the perspective of competition and market operation rules, setting it at 15 yuan/bottle is also unreasonable.
Market Structure Hard to Break Currently, the main brands and sales prices in the Shanghai market can be listed as follows: Main high-end beer products sold in Shanghai Distributor purchase price Terminal purchase price Retail price Budweiser 580ML 44.5 yuan/case 68.5 yuan/case 10 yuan Suntory Sezon 580ML 42 yuan/case 66 yuan/case 10 yuan Tsingtao Pure Draft 600ML 43 yuan/case 66 yuan/case 10 yuan Heineken 500ML 45 yuan/case 68 yuan/case 15 yuan Note: Terminal retail price refers to the price set by mainstream catering; catering can set different prices for the same product based on their grade. Currently, the beers mainly sold in mid-to-high-end catering in Shanghai include Budweiser, Tsingtao Pure Draft, Tiger, Heineken, and (Suntory) Sezon. Among these, except Heineken selling at 15 yuan/bottle, the rest are mostly 10 yuan/bottle, and Heineken's sales volume is not large. So the mainstream products sell at 10 yuan/bottle. This structure has existed for a while, and once formed, it is really hard to change. A small new entrant cannot shake it. If you insist on a retail price of 15 yuan/bottle, you'll find that our salespeople will have a very difficult time persuading distributors, terminals, and consumers at any link! And if the retail price is set at 15 yuan/bottle, how do we operate? Since we mostly operate large catering through distributors, if we give distributors a price within this "structure", i.e., 42-45 yuan/case, then it's definitely not guaranteed that the terminal can sell at 15 yuan/bottle. In reality, distributors will either lower the price to move volume or hold it for profit, which will lead the market into a deformed state. If our company makes great efforts to directly operate terminal stores to support the retail price of 15 yuan/bottle, then we must ask: Can our market management level surpass that of local distributors? What is the execution capability of your business team when actually implementing market operations? How do we divide work with distributors (we certainly cannot completely bypass them)? Facing "money-absorbing" high-end catering stores, to what extent can the company achieve? And is it worth it for the company? These are big topics and not easy to handle.
Market Operation Needs Rhythm; New Product Launch Priority is Market Share Market expansion has a certain rhythm; new entrants must act quickly. The priority for new product launch is market share, not profit or brand building. If the price is still undecided at this time (say, January), it will delay the entire year's sales work. Without a set price, customers are hard to finalize, and distribution to stores is impossible. The Spring Festival high-end liquor consumption season will also be missed; Shanghai restaurants' New Year's Eve dinner business is very hot. By the time you deliberate, the opportunity is gone. If the price is set so high, finding customers is not easy, whether it can be distributed to terminals is a problem, and whether it can achieve good sell-through at the consumer level is even less guaranteed. Low sales volume will demoralize channel members and the company's business team. Such stumbling will only make the market "half-baked", which is fatal. Therefore, it is recommended that this product be priced at a maximum of 12 yuan/bottle, conforming to the current Shanghai mid-to-high-end beer market structure, giving the sales team some confidence to start sales work quickly. Once there is a certain sales volume as a foundation, you can follow up with an image product for branding, which may be more practical. This also serves as some justification for my initial "guess" pricing. The Fourth Death: Poor Coordination in R&D, Production, and Sales The success of new product promotion is never the responsibility of one department; its failure may be due to a mistake in one link, but its success must be the result of the entire company's operation. I once trained a company that switched from foreign trade to domestic sales. Their foreign trade was very successful, with annual revenue of nearly 3 billion, but domestic sales failed, with little improvement in a year or two. In 2011, the leader's expectation was: Can domestic sales losses be controlled within 2 million?! What a primary goal. The domestic sales director complained to me after class: "It's not that our domestic sales team isn't strong; domestic sales is not valued in the company. Our orders are always out of stock. How can we do the market?" And this director came from Master Kong, accustomed to doing supermarket channels. An unknown brand doing supermarkets, with frequent stockouts, the result can be imagined. Logically, a company doing foreign trade should have strong production capacity; the advantage of foreign trade is low product cost, full variety, and good quality. So why does domestic sales often run out of stock? It turns out the production system looks down on domestic sales orders, which are many in variety but small in quantity, so they don't schedule production if possible. A mindset issue leads to domestic sales failure! Converting foreign trade products to domestic sales is also a topic of new product promotion, and failure is doomed due to production-sales coordination issues. That's the first problem. The second problem. When launching a new product, especially when it's an upgrade of an old product, the old products in the market should be digested in advance, otherwise the new product promotion will have problems. In this unfavorable situation, old products sell even slower due to quality and shelf life differences, while new products face distribution difficulties due to large old product inventories in the channel, because merchants always want to sell old stock before taking new stock to reduce their own losses. How to deal with this?
If old product inventory is in channels like distributors and wholesalers, and the stock is large, then decisively exchange all goods (exchange new for old with a certain price difference), and concentrate sales in areas where the new product is not yet launched.
If old products mainly appear in retail stores, and the distribution rate and inventory are not large, just do price promotions on old products at those few terminals; but if the distribution rate or inventory of old products in retail stores is still considerable, resolutely exchange goods and digest them through "sewer" channels.
No matter how you "handle" old products, it will be a market loss. Therefore, before launching the new product, production-sales coordination should be done well, giving old products appropriate promotional strength to sell quickly. If recovered old products are expired or cannot be sold for other reasons, be sure to destroy them all, leaving no future problems.
Never adopt the method of recalling old products: First, there is no fair price for recall, which will cause customer complaints and obstacles to financial control, giving salespeople and distributors opportunities to embezzle public funds; second, if the manufacturer's recall action is rumored as "a certain factory's products have serious quality problems and are being recalled", the consequences would be disastrous. The third problem. If there is continuous out-of-stock during the distribution period, it will be fatal. New products just entering the market, with massive advertising, distribution, and promotions, attract consumers' attention to try the new product. Once there is a stockout in the early stage of launch, consumers will inevitably turn to competitors, and competitors will also take this opportunity to counterattack. When you return after a period of stockout, you can no longer arouse consumers' "desire to try something new"; consumers have become accustomed to buying competitors' products; the stockout during the launch stage has severely dampened channel enthusiasm, and they are unwilling to actively stock and distribute. New products, due to small quantities, may also face capacity and raw material issues, even technical issues, logistics issues, sales forecast issues, etc. This situation is common but "fatal". To avoid this, note:
Before launch, the marketing department, sales department, and production department should communicate with each other, based on the company's production capacity for the product, sales forecast, and set the initial launch area. If the company's current raw material reserves are limited or production capacity is insufficient, the first wave of launch can lock in some markets first, and gradually expand the launch area based on subsequent sales and capacity replenishment. Resolutely avoid blind full-market distribution, leading to stockouts or expirations in various markets.
Strive to ensure supply; if necessary, sacrifice a little profit, transfer goods from areas with sufficient supply or less competition to protect the hard-won market share.
If the supply problem cannot be solved, also strive to maintain basic distribution rate to minimize adverse effects. For example, increase POP promotion and special product displays, using limited supply for end-of-chain distribution like supermarkets and retail stores; at the same time, stop all channel and consumer promotions in a timely manner. The Fifth Death: "Marketing" and "Sales" Two Legs, Always Missing One Marketing includes "marketing" and "sales". The marketing function, such as consumer research, new product planning, packaging, advertising, media, graphic design, material design and procurement, is mostly undertaken by the marketing department; the sales function, such as channel development, orders, payment collection, market management, terminal maintenance, is mostly undertaken by the sales department. New product development is mostly led by the marketing department, but after launch, the sales department takes the lead. Because domestic companies' marketing often starts with sales, the marketing department's function develops later, so its capabilities differ. Thus, during new product launch, the sales "push" ability is strong, but the marketing department's "pull" is weak. I have seen companies with tens of billions in sales revenue, where after products are distributed to terminals, there isn't even a POP (point-of-sale advertisement), which is really worrying. This operation method easily causes channel inventory buildup, and the "slow sales" situation immediately after launch further discourages distributors from reordering, creating greater obstacles for future product promotion. Another situation is also quite common: The marketing department spends great effort on high-density advertising and promotional activities, and through sampling, tasting, roadshows, and other consumer pull activities, effectively increases product awareness and trial. However, due to extremely low distribution rate, consumers cannot buy. This situation is sometimes called "advertising first", and even with careful operation, it can create a special effect like "waiting to buy". However, in most cases, this is very risky; especially for FMCG, with high homogeneity and low purchase involvement, it's almost impossible to make them "wait to buy". Thus, the huge advertising expenditure goes down the drain. Here, a key coordinator is needed: the product manager. During the new product launch stage, the product manager should supervise and coordinate the production and distribution of promotional materials, procurement and batch production of product and packaging materials, and airing of advertisements, ensuring supply and providing logistical support for the sales department's launch execution. This requires mobilizing resources from production, marketing, sales, storage, and procurement departments. During the launch plan formulation, distribution progress requirements should be communicated with the sales department in a timely manner to ensure feasibility. After launch, through field surveys, monitor whether distribution progress meets standards. Once discovering the sales department's distribution is insufficient, the planning department should first directly inform the sales department leadership and communicate to explore obstacles and seek solutions. The Sixth Death: Thinking Pleasing Consumers Is Enough When launching new products, companies know they mainly need to cater to consumers, and research on consumer psychology and behavior is certainly important for new product success. But this is not the only thing. New product success is closely related to three stakeholders: competitors, internal teams, and channel members. First, pay attention to your competitors. Influenced by domestic marketing education, meeting consumer needs is the first priority of marketing, but in actual operation, many marketing activities seem to target competitors, such as brand communication strategies, sales policy formulation, price adjustments, etc., including the "terminal interception" deep distribution marketing model, Wahaha's "secondary joint sales system" for stronger channel control, etc., all actually target competitors. In fact, this competition-oriented operation method is increasingly showing its power. Whether the first priority of marketing is to "meet consumer needs" or "surpass competitors" is actually a debatable proposition.
Consumers don't know their needs; needs are created by marketing masters. Modern consumption shifts from physiological needs to psychological needs. When consumer needs reach the level of desire, the needs themselves become uncertain, and consumers don't know what they want. They only know their purchasing power, hence the "impulse buying" of consumer goods. Since P&G entered China, who thought having dandruff was embarrassing? Before Sony introduced the Walkman, who had the experience of listening to music while walking? There are too many such cases in marketing. The microelectronics industry competition doesn't care about consumer needs; otherwise, Microsoft or Intel's introduction of a new product every 18 months according to Moore's Law would be unnecessary.
It's hard to figure out what consumers need, but it's easy to know what competitors are doing. We should learn to find marketing ideas from competitors. Even as a follower, if competitors are right, we won't fall behind, but if we don't follow and competitors are right, we may fall behind!
Meeting consumer needs is not absolute and unconditional; it is relative to competitors. Only with competition will consumers be truly respected, and their needs possibly met. In the planned economy era, when supply fell short of demand and everything required "coupons", who cared about the service level of salespeople? "The customer is God" only exists in the context of market economy competition. Consumer satisfaction is also a relative concept. When we are stronger than competitors, consumers are not satisfied but have no better choice. Consumers are always in this state. Remember: We "win the bid" always because customers choose us when they have no better option. Gandhi said: "The material resources of humanity are sufficient to meet human needs, but the only thing that cannot be satisfied is human desire." Consumer desires are endless; no matter what you give, they won't be satisfied. This also proves that consumer needs should not be the first element of marketing. In our marketing process, which behavior is not centered on competition? For example, when we say "differentiation", whether for products, regions, or sales policies, it's actually about avoiding competition and leveraging our strengths to surpass competitors. Modern marketing textbooks no longer just say "meet consumer needs" but "guide and create consumer needs", which is a great progress! This idea is important; throughout the new product promotion process, competitors must be considered. Second, pay attention to the company's own business team. If your new product promotion harms the interests of some internal people, the promotion process will definitely encounter resistance. For example, if you ask the sales team to put in a lot of effort but the assessment indicators are unfavorable to them, there will be no good results. A parachuted marketing leader leading a new product promotion project often faces more challenges; without the trust and support of the internal team, it will definitely not succeed. Third, pay attention to channel partners. This issue has been emphasized many times; the market truly requires joint construction by manufacturers and channels. Without channel support, it will definitely not work. P&G's launch of new product Runyan failed partly because the brand was too self-important, giving distributors the same profit as old products. Small companies launching new products especially need to leave sufficient profit space for channel partners. The Seventh Death: Greedy and Aggressive, Insufficient Resources Resources must be concentrated to achieve the best results; this concept applies throughout the new product promotion process. For example, some companies launch more than two new products simultaneously, which is worrying. When a company launches several new products at once, first, facing consumers, your promotional resources will be dispersed, even canceling each other out, with no prominent focus, and consumers will be at a loss; facing channel partners, asking them to invest in several new products at once will make them more hesitant and reduce willingness to stock; for salespeople executing distribution, display, promotion, and supermarket entry, the workload will multiply, attention will be divided and cannot be balanced, and ultimately, not a single product may succeed! So it is recommended to launch only one new product at a time, or if multiple, they must differ in suitable channels and price points. If two new products with similar positioning must be launched together, also pay attention to early identification of the one with greater potential for timely strategy adjustment. Another example is aiming for a large target market. After forming a seemingly unique and market-compliant product concept, companies become ecstatic and directly set the target region to the whole country, intending to "win with one strike", without considering the company's financial, sales, storage, and production status. Eventually, because the launch area is too wide, the battle line too long, resources insufficient, and follow-up support lacking, the new product fails. The target market planning for new products should not only consider suitable sales regions and consumer groups, but also consider how much market the company's human resources, financial status, production and distribution capabilities can support. Generally, the failure rate of new products in new markets is much higher than in old markets. Contracting the battle line, doing deep and thorough work in local markets, and then seeking development after gaining a foothold is also the core idea of ARS (Area Roll-out Strategy) deep distribution. The Eighth Death: Price Chaos, Die Once "Red" Channel diversion (cross-region selling) is the main cause of price disruption. Diversion can be benign or malignant. The so-called benign or malignant depends on whether it is under your control. Snow Beer can even use diversion to help new products achieve distribution rate and distributor selection. For example, in 2007 when Snow Beer entered the Hangzhou market, it first attracted distributors by lowering the threshold. With high-altitude advertising and consumer pull, attracting distributors was easy, so many customers gathered at once. But Snow Beer did not guarantee distributor territory, so everyone diverted, quickly forming a wide distribution rate. Channels complained a lot, but fortunately it was all under Snow's control, and the chaos was limited to Hangzhou. After a year, through a beer peak season, the waves washed away the weak, leaving some willing and strong customers. When the off-season came, Snow helped these customers define territories, and the next year, it was orderly. This is an example of using chaos to make the market "red". But most domestic companies don't have the strength to control channels. Many times, when the market hasn't developed, no one diverts your goods; once it develops, chaos ensues. Poor channel management is like a crab: once it turns "red", it dies. During the new product promotion process, from the initial price system design, to promotional policy design, to channel design and control, to salesperson follow-up supervision, every link must pay attention to this issue. Controllability is the minimum requirement of management. This article is excerpted from Mr. Wang Tong's new book "New Products Sell Like Crazy: This Way to Promote New Products Definitely Makes Money". -END- Editor's PS: The editor has selected 1,067 quality articles from nearly 1,900 published on this official account, divided into 14 categories and 57 knowledge points, systematically organizing frontline marketing management content into a library for your learning. From market to customers, covering practical combat and management, all are dry goods. Follow the official account and reply with the number "1" to browse and view related content.