Is It True That 80% of New Products Fail?
It is often said that 80% of new products fail – sometimes more, depending on who you ask.
Where does this figure come from? It has been attributed to many different figures and organisations, including Harvard Business School – but according to a 2013 piece published in the Journal of Product Innovation and Management, it is actually an urban legend.
“The empirical literature does not support this popular belief. No matter how many times it is asserted or how many people believe it, the idea that 80% of products fail is as common as it is wrong,” explain authors George Castellion and Stephen K Markham.
What, then, is the actual failure rate?
It isn’t easy to work out a precise failure rate across the board, due to how many differences there are for each product, its development, and its investment. However, the McKinsey Global Institute estimates that the failure rate for new products is actually somewhere between 25% and 45%.
The rate is lowest in the capital goods industry at 35%, while failure seems to be highest in the consumer goods industry at 45%.
According to a Copernicus Marketing Consulting and Research survey, inadequate assessment of market conditions is the most common reason products fail, followed by targeting the wrong group, poor pricing strategy, lack of consumer awareness and a poor configuration of the product’s attributes and benefits.