Introducing new products and services is key to sustaining a company’s growth and brand relevance. McKinsey estimates that more than 25 percent of total revenue and profits across industries comes from new products each year. Despite having so much riding on the success of new product launches, however, the failure rate after three years is approximately 80%.
The waters are tricky for validating and positioning a new product or service concept. Is your product actually new, or just an incremental improvement of an existing product? Are you certain it’s solving the right problem for the right consumer? After all, YouTube started out as a video dating site, and bubble wrap was initially marketed as textured wallpaper.
Brand extensions are the most common route to new introductions—using an established brand name or trademark on new categories. A common issue with this strategy, though, is failure to understand whether
the category extension has “permission” from consumers loyal to the core brand to operate in a new category. Sometimes lack of permission can lead to unintended consequences, such as dilution of brand meaning and/or channel partner rejection.
The least common strategy, but one that often yields the greatest financial returns, is new category creation—think personal computers, cell phones and social media platforms. “New-to-the-world” product and service categories, when properly validated through consumer and market research, can offer long-term growth and profit potential. But, as with brand extensions, the success rate for these new category products is low.
Every new product introduction brings with it unique challenges, and working with an experienced third party to assess strategic options, ask the right questions and help navigate the development and launch can greatly improve the chances for a successful outcome. The skilled team of brand strategists and product development specialists with The Bloodhound Group have developed a disciplined process for new product ideation, judging category extension permissions and validating propositions for both. The approach is holistic and designed to facilitate collaboration across operating units and departments as well as to provide critical insights on potential issues that might undermine launch of a new offering.
We invite you to learn more about our brand extension process and our approach to new product ideation. Our white paper, How to Guarantee A Successful New Product Launch, outlines the key questions to ask when contemplating a new product introduction. Let us know if you would like to connect and discuss how we might support you in your new product development journey.