---
title: "Why Do New Products from Manufacturers Fail to Sell?"
description: "Every year, about 30,000 new products are launched, and approximately 95% of them ultimately fail. How can you create a new product that can ignite the industry in a market where supply exceeds demand? What are the key points from conception to success? A single product can save a company, and a single product can change an industry!"
author: "赵正强"
publisher: "New Distribution"
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published: "2019-07-08"
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# Why Do New Products from Manufacturers Fail to Sell?

> Every year, about 30,000 new products are launched, and approximately 95% of them ultimately fail. How can you create a new product that can ignite the industry in a market where supply exceeds demand? What are the key points from conception to success? A single product can save a company, and a single product can change an industry!

Click to read the original article for details.
Every year, about 30,000 new products are launched, and approximately 95% of them ultimately fail. How can you create a new product that can ignite the industry in a market where supply exceeds demand? What are the key points from conception to success?
**A single product can save a company, and a single product can change an industry!**
In today's rapidly developing FMCG industry and the flourishing new era of the internet, explosive products frequently appear in the market. Whether it's the upgrade of hot and sour noodles, which rapidly increased the market share of instant cup hot and sour noodles, or the popular crispy pot snacks this year, they have all caused a sensation in the industry and brought considerable profits to many practitioners.
So, how can you create a product that can ignite the industry in a market where supply exceeds demand? From conception to success, there are 13 key points to achieve, analyzed as follows:
**The timing for launching new products must be well chosen**
In the FMCG industry, there are three time points each year for launching new products:
**The first time point is in March at the Chengdu Spring Sugar and Wine Fair.**
This event is an excellent opportunity for new product promotion. It allows many distributors to select new products at the fair and online. Especially for new categories, there is a high success rate. For example, the turkey-flavored noodles launched in 2016, the glucose hydration drink in 2017, the hot and sour noodles in 2018, and the coarse grain old bread in 2019 have all brought brand recognition and profits to manufacturers and merchants who seized the opportunity.
**The second time point is one month before August.**
This is the season for selecting products for the second half of the year. Schools have reopened, and the season has arrived. Many distributors need to finalize their product selections for the latter half of the year. Products like instant noodles, mooncakes, snack foods, and baijiu (white liquor) will enter a good sales period.
**The third time point is more than two months before the Spring Festival.**
This is a crucial time for launching gift box products. Small and medium-sized manufacturers need to start precise regional layout and recruitment. Pastries, gift box beverages, and local specialty gift boxes are all suitable opportunities.
**These three time points are the best opportunities for new product recruitment and sell-through. Therefore, accurately grasping the timing for new product promotion yields the highest success rate.**
**The cost budget for new products must be planned in advance**
When designing a new product, the company must calculate the overall cost of launching the product, including direct costs: packaging materials, raw materials, personnel, finance, etc., as well as early-stage R&D costs. Additionally, there are indirect costs such as machine wear and tear or depreciation, defect rate budgets, and basic production management expenses, which significantly impact the product cost.
Why do some companies calculate profits when selling products, but after a period of market launch, they find no profit or even losses? This does not include market operation investment costs.
**Therefore, when designing the profit for a new product, the allocation of comprehensive operating expenses must be considered, and the price should not be set too high without considering the market. If this happens, it is an internal problem of the company.**
**The selection of primary sales channels must be accurate**
**For every new product, its sales channels should be determined in advance.** The analysis of channels can be roughly divided into two periods. In the early stage, channels are mainly traditional and relatively singular. We can do channel promotion that follows the natural flow, which means using the new product to open up new channels.
Currently, sales channels have become fragmented and diversified. Whether it's online, community group buying platforms, social communities, related e-commerce channels, or offline supermarkets, circulation, and large wholesale markets, the complexity of channels has increased. Manufacturers can achieve results by leveraging various methods to accumulate early fans or members, and then achieve the level of having channels before introducing products, so that products naturally flow through the channels.
Therefore, **the attention to new product channels is very important.** Early channels are mostly derived from market research. After a period of product operation, **the precision and expansion of channels must be seized promptly, and rapid channel fission should be carried out to achieve the goal of multiplying sales.**
**The initial determination of target consumer groups must be in place**
Which mainstream consumer group is the product intended for? There are three positioning strategies:
**One is the study and judgment of regional human nature. The Chinese market is vast and different, with different consumer groups having different demands for products.**
For example, for a leisure snack product, East China North emphasizes color and saltiness, East China South requires sweetness, Northwest China emphasizes spiciness first and numbness later, while Southwest China emphasizes numbness first and spiciness later. Therefore, different regions have different demands for products, which forces companies to design product flavors carefully.
**The second is based on the economic class of consumers.** That is, consumers with different income levels express different purchasing methods. Those with better economic conditions and those with weaker economic conditions are completely different.
Rational and emotional purchasing behavior determines product prices. The higher the product price, the weaker the consumer's sensitivity to price adjustments; the lower the product price, the stronger the consumer's sensitivity to price adjustments.
**The third is the different requirements for products due to age and gender.**
The post-70s generation has a high demand for brands; they choose a product because of the brand. The post-80s generation focuses on the experience of the product; only more suitable products can trigger the needs of this age group. For the post-95s and post-00s, the most important requirements for products may be stimulation, fun, interest, and personalization. Two men wearing the same clothes feel that they have the same taste and aesthetic; while for female consumers, if two people wear clothes of the same color and style, it means a fashion clash, which makes them feel very uncomfortable.
Therefore, different products face different consumers and different choices. Only by studying consumer psychology can you make your product more precise, and targeted positioning can generate long-term repeat purchases.
So, **the target consumer group must be clear to enable the product to sell quickly and effectively.**
**The profit design for new products must be in place**
Before a new product is born, what is the gross margin? How much net profit can it bring to the company? What is the sales breakeven point? How much are the early market investment, marketing expenses, and logistics costs? All these should be initially calculated.
A simple profit calculation method is: **Operating profit = main business profit + other business profit - operating expenses - management expenses - financial expenses.** Building a brand with a product that has no profit is mostly self-entertainment and self-congratulatory.
At the same time, marketing personnel should be given high incentive plans. Remember, high rewards will attract brave people; only when there is profit in each channel can the enthusiasm of customers for promotion be mobilized.
**The direction for finding customer groups must be set**
Where are the company's target customers? Through which channels can precise customers be found? Currently, the customer base is very broad, and customers also need products. However, finding a customer group that matches the product and can achieve cooperation is a challenge.
It's like marriage: if the families are well-matched, the relationship can last longer. This difficulty coefficient is very high.
Should early customers be primarily online or offline? Should the sales unit be at the county level offline, or at the city or provincial level? Online, should we use new media platforms like Douyin and Kuaishou, or Taobao, Pinduoduo, and related website sales platforms? All these require a plan to find matching customer groups.
In this regard, there is a requirement: **learn to screen customers, and do not give up customer matching for the sake of urgent recruitment.** Choose customers that add brilliance to the present splendor, and do not settle for cooperation that is like sending charcoal in snowy weather. Otherwise, it will cause more market problems in the middle and late stages, and cooperation will become a super game.
**The product selling point must be transformed into the consumer's buying point, and positioning must be in place**
We often talk about what the product's selling point is. However, consumers do not buy because of the selling point; many times they buy because of the recognized buying point. Therefore, **it is very important to determine what the buying point of the new product is.**
For example, the buying point for soy products is high protein, low fat, low carbohydrates. Or functional beverages that can refresh, or dairy drinks that promote gastrointestinal function. These are all about transforming the product's selling point into the product's buying point. In-depth market research should be conducted, listening to the voices of target customers, to make precise judgments and ensure that the new product can effectively interact with consumers. Then, the repurchase rate of the new product will be very high.
**The internal production environment and capacity must be ensured**
The production environment and capacity should be initially budgeted. What is the production capacity of the new product? How many boxes can be produced in a 12-hour shift? How many boxes per month? If production runs 24 hours, how many can be produced? This way, we can be flexible in balancing production and sales and in market layout for the new product.
**If the production capacity is not large, with a monthly production of 10 million, but the company plans sales of 30 million per month, then it is like a big horse pulling a small cart. This will lead to untimely market shipments, and channels that do not see products for a long time will lose trust in the company, causing the loss of developed markets. The time and economic cost of secondary development is 3 to 5 times that of the first development.**
If the company's monthly production capacity is over 30 million, but the layout is only 10 million, then the personnel and market planning are not in place. This is like a small horse pulling a big cart, and the company's sales will not have a major and rapid breakthrough.
Often, some companies launch a new product and immediately recruit nationwide, without ensuring the supply chain. This results in the monkey breaking corn, opening markets in the front while losing markets in the back, with customers complaining bitterly. The gain is not worth the loss. Therefore, internal hardware conditions must be configured properly, and the quality and characteristics of the new product must be fully guaranteed, so that customers vote with their money rather than their feet.
**The technical barriers for new products should be raised as much as possible**
Currently, the overall technical barriers in the FMCG industry are relatively low, and the product's characteristics are that it has some aspects higher than competitors. The higher the technical barrier, the slower competitors can follow, and the higher the chance of market success.
Heavily invest in R&D personnel, introduce advanced machinery and equipment, increase R&D expenses, and continuously introduce research results from scientific research institutions to build the product's market competitiveness and quickly push the new product to market. If you want to build a company brand in the market, you must make great efforts to improve the company's core R&D competitiveness.
**The preparation of early-stage capital investment must be in place**
Plan before acting. The company needs a certain amount of capital to support cooperation with top packaging and raw material suppliers, equipment optimization, and marketing investment.
For example, when a new product first enters the market, what sales volume can it achieve? According to normal capital allocation, the budget should be 20% higher than the estimated budget. This budget range can ensure the continuous output of high-quality products. Also, plan how much credit can be obtained from suppliers and how much payment can be received in advance from customers.
Capital is a strong guarantee for promoting a company to become specialized, strong, and large.
**The prediction of market sales should be as accurate as possible**
There should be a preliminary budget for the quantity and quality of early market development. How many team members are appropriate? The results of market expansion should also be predicted.
For example: in the first quarter of 90 days, plan to develop 100 customers, with each customer's initial purchase amount ranging from 50,000 to 100,000 yuan. Then, be prepared for quarterly sales of 5 million to 10 million yuan. Even if there is a gap in quantity, it will ensure that the company's supporting aspects do not have problems. This way, the company can be more confident in the promotion of new products and not lose its pace. Especially the promotion of new products is the best test of a company's operational level.
**The pre-launch publicity and hype must be in place**
Nowadays, online is particularly obvious. Product preheating through images, videos, and copy continuously creates momentum. Through various self-media, industry platforms, influential exhibitions, and support from industry big shots, companies can hold their own new product promotion conferences. Customers can leverage the situation, such as during the Sugar and Wine Fair, to invite interested customers for rapid product promotion, quickly establishing the leading position in the category industry. When the new product is launched, it can quickly gain recognition from distributors.
After preheating channel merchants, gradually convert the heat to the demand of target customers. The direction of publicity should shift with the development focus, and avoid the phenomenon of hot channels but cold consumers.
**The risk of new products in the market must be controlled**
**When launching a new product, there are certainly risks. They should be calculated. Is there a risk of technology and production during the launch, a risk of insufficient channel profits, or a risk of poor later sell-through?** If risks occur, how to handle them quickly and make effective contingency plans? If the worst-case scenario of new product promotion failure occurs, how to face it? At the same time, can we handle and resolve the risks? That is, what is the maximum loss? Can the company bear it? This ensures the company can survive, and as long as it survives, there is another chance of success.
**Promoting new products is the most effective way for companies to increase growth. Launching new products is the best way for companies to have the opportunity to become industry leaders. Winning with new products is also an effective magic weapon for companies to revive.** Therefore, companies should dare to launch new products, know how to launch new products, and be able to launch new products. It reflects the company's level, and successfully launching new products demonstrates the company's high standards!
Source: FMCG Elite Club


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