Special edition: The New Product Development Process
Datamonitor analyst: ‘Product failure is the Area 51 of the food industry’
Failure rates for new product launches in the food industry can be as high as 50%, although rates may vary depending on the product category, according to a recent study. So what happens when products fail?
Vierhile, innovation insights director at Datamonitor, said that few food company executives gather behind closed doors to dissect the corpse – and perhaps they should.
“I think probably the best thing to do with failure is to learn from it,” he said. “I think that when companies are dealing with failure, instead of sweeping it under the rug, they should launch some kind of analysis that they can take forward and learn about what kind of factors may have played a part.”
In fact, it can sometimes be challenging to work out when products have failed, as companies don’t tend to shout about ceasing production, he said – adding his view of how most companies deal with product failures: “They are buried in an unmarked grave. There’s no tombstone. There’s no coroner on duty when products fail. Product failure is the Area 51 of the food industry.”
Fear of failure
For some larger food manufacturers fear of failure can be a problem in itself, and some companies are so fearful that they become too conservative, Vierhile said.
“One way to avoid failure in introducing new products is to never introduce new products…You have to expect some degree of failure if you are going to bring new products to the marketplace.”
Of course, there are numerous ways in which things can go wrong when launching new products, and it is clearly important to keep activities under wraps as much as possible to avoid being preempted by competitors. If a company is trying to tie together a product launch with a coupon drop, timing is crucial to ensure the product has reached the store before the consumer goes looking for it – and to ensure that the coupon doesn’t expire before then.
“Products have such a short proving ground these days. They are very much on the clock as soon as they appear in a store,” said Vierhile.
Don’t underestimate the niche…
As for future directions for food manufacturer NPD, he suggested that it is no longer viable to ignore niche products and categories.
“It used to be that for some of the larger companies if an opportunity wasn’t worth more than $100m, they weren’t interested in it. But a lot of the biggest opportunities out there are in the niches. The larger companies sometimes sit on their hands and let the smaller companies come in and do the innovative new products,” he said, pointing to Greek yogurt as one example where large yogurt makers have struggled to wrest the market back from the likes of Chobani and Fage, once the niche players themselves.
Vierhile also advised greater focus in the choice of new products for release, rather than launching, say, 40 products all at once.
“Why does the number of new product launches matter? If you had one product that sold 40 times as much, that would be enough. I think there needs to be more time taken up front instead of throwing new product ideas against the wall and seeing if it sticks.”