New product development is the most

important strategic activity of any firm

However, it is the most risky venture



NEW PRODUCT DEVELOPMENT?

Failure rates
no more than 10% of all new products or services are successful --
that is, still on the market and profitable after three years -
Marketing Management (2003)
95% of new consumer products in US fail;90% of new consumer
products in Europe fail - Nielsen BASES and Ernst & Young study
(2002)
Costs
Introducing a new national brand can cost $20 million Marketing
Management
New Product News It probably costs $100 million to introduce a
truly new soft drink nationally and it costs $ 10,000 to introduce a
new flavor of ice cream in Minneapolis. Somewhere in between is a
worthless 'average' cost to introduce a new product

THE RISKS OF NEW PRODUCTS?

Study by Assoc. of National Advertisers (2004) --
across all types of industries
27% of line extensions failed
31% of new brands introduced in categories
where company already had a product failed
46% of new products introduced to new
categories failed
Only 1 in 9 new product ideas are carried to the
commercialization phase

THE RISKS OF NEW PRODUCTS?