A new research study, specific to consumer goods manufacturers, is looking into product innovation and which challenges they are facing. The study focuses on consumer goods (CG) manufacturers and their investments in product innovation. It goes on to identify the major challenges manufacturers face in this pursuit. According to the research, when it comes to product innovation, companies aren’t having any trouble generating ideas, but the post-launch results are far from what’s expected. The survey showed that companies on average generate 25% of their revenues from products, which have been introduced within the past five years. However, only half of these new products achieve their profit goals. Some of the major causes of the profit shortfalls are a result of poor market analysis and lack of product differentiation.
Anyone can come up with ideas for new products. I can come up with a new toothbrush, even 100 different styles of toothbrushes, but if nothing sets it apart from the other products in the market, why is someone going to purchase my new product over the market leader? They will not. That is why it’s so important to conduct market research in the early stages of product development to ensure that there’s a place in the market for that item and to ensure that it’s positioned in the markets perfectly to reach profit expectations. Also, sometimes companies are so focused on getting new products out they don’t spend enough time looking at it’s profit margin. Oftentimes companies are so focused on increasing their top line, especially through new product launches that they don’t realize they are actually losing money manufacturing that product.
The study also identified the primary reason why good product ideas fail is because they get stuck between development and conception. When it came to execution of product ideas, nearly 60% of survey respondents indicated that the development resources were stretched too thin because of an excessive number of projects in the pipeline. Obviously a firm’s resources aren’t endless and it’s only reasonable that they will not be able to go forward with every product idea that comes to mind. It’s better to go forward with 2 good product ideas and to have the resources allocated so that there is sufficient support to bring the products to market. It’s less effective to have 10 products all moving through the R&D pipeline at the same time with fewer resources dedicated to each. It’s better to prioritize the new product ideas by importance and focus on those that show potential in the market.
For a copy of the article, click the link below:
http://www.businesswire.com/news/home/20111011005513/en/Research-Study-Uncovers-Product-Innovation-Challenges-Facing
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