What Percentage of New Products Fail? (New 2024)

Developing a new product is no walk in the park. Tight budgets, team dynamics, and the constant struggle to secure investor attention are just some of the hurdles to overcome. Bringing your product to market is a pivotal moment.

The question lingers: what percentage of new products fail? It’s your chance to attract target consumers, propel your business forward, and witness sales soar. However, let’s face it: many new products fail, sometimes before gaining momentum.

Content

Top 2024 Statistics: Percentage of New Products That Fail
New Products Fail To Make A Lasting Impact
Understanding The Needs Of Consumers
New Product Failure Rates: A Spectrum, Not a Monolith
Why Product-Market Fit Is Essential
A Case Study in Consumer Packaged Goods (CPG)
PDMA Study Reveals Industry Variations and Best Practices Impact

Top 2024 Statistics: Percentage of New Products That Fail

– A shocking 95% of newly launched products fail.
Weak product-market fit is the cause of 35% of new product failures.
2% of new businesses shut down due to being unable to solve a customer-related problem with a newly launched product.
– The consumer goods and services industry has the highest failure rate at 45%.
– The new product failure rate is lowest in the capital goods industry at 35%.
Only 5% of new products survive after launch.
63% of consumers prefer established products, while only 21% buy new ones immediately.
Only 11% of new product consumers remain engaged after a year.
76% of franchise buyers never try the brand’s new products.

New Products Fail To Make A Lasting Impact

95% of newly launched products ended up with failure

Studies by marketing experts like Clayton Christensen of Harvard Business School suggest a high failure rate for new products, with estimates ranging from 30,000 new product introductions annually with a 95% failure rate [according to Clayton Christensen, Harvard Business School] to 70-80% failure rate specifically for new grocery products [according to Inez Blackburn, University of Toronto]. This highlights a significant challenge for businesses bringing new ideas to market.

Even established companies aren’t immune to this disheartening statistic. For instance, the tech giant’s project “Google Glass” received millions in investment but is rarely seen now.

Big entities can spend multi-million dollars on product development, allowing for some margin for error. However, this type of error can be lethal for small businesses offering limited product lines. A single failed product can significantly impact their survival. As a matter of fact, 92% of startups fail in their first 3 years of operation for that same reason.

Sources: INC, Professional Programs MIT

Understanding The Needs Of Consumer

According to Svafa Grönfeldt, a faculty member for MIT Professional Education’s online program, “only 5% of new products survive“. She further states that many innovations fail due to the introduction of products or services without a real market need. Nobody looks for the solutions they’ve generated.

Statistics mentioned on the G2 Learning Hub, show that “63% of the population prefer established products, while only 21% buy new products immediately”. Understanding new product failure rates is crucial for any entrepreneur, especially those seeking investment with e2 visa business plan.

One of the critical aspects of product development is understanding and addressing consumer needs. A mere 2% of businesses that shut down after launching a new product report that their failure was due to not solving a significant customer problem. This highlights the importance of customer-centric product development and the need for thorough market validation before launch.

Sources: G2 Learning Hub, Professional Programs MIT

New Product Failure Rates: A Spectrum, Not a Monolith

failure rate

While some studies suggest a high overall failure rate for new products, McKinsey & Company offers a more nuanced perspective. They estimate the range to be between 25% and 45%, with significant variation depending on the industry. The capital goods industry experiences the lowest failure rate at 35%, while consumer goods face the highest at 45%. This highlights the importance of understanding your target market and its dynamics when launching a new product.

Statistics by G2 Learning Hub reveal that a surprising 76% of franchise buyers never even try the brand’s new products. This emphasizes the importance of effective communication and building buy-in within your ecosystem.

Copernicus Marketing Consulting and Research sheds light on the common reasons products fail. Their survey points to insufficient market assessment, targeting the wrong audience, poor pricing strategy, lack of consumer awareness, and poor product presentation.

Source: Easibind

Why Product-Market Fit Is Essential

weak market products causes failure

For a product to succeed, professional business plan writer identifies your target market’s needs and addresses them effectively. This means understanding both the pain points glitches or demands and their desires whether they even need a product of this nature.

Studies by Crunch Marketing highlight the importance of this concept. Their research suggests that “weak product-market fit is the cause for 35% of new product failures“. In simpler terms, if your product doesn’t solve a real problem or cater to a specific need, it’s unlikely to find success.

Furthermore, statistics from G2 Learning Hub show that “only 11% of consumers of the new product remain engaged after 1 year“. This emphasizes the need for ongoing engagement with your target audience.

Sources: G2 Learning Hub, Busy Rebel

A Case Study in Consumer Packaged Goods (CPG)

The new product failure rate can vary significantly depending on the industry. The Consumer Packaged Goods (CPG) sector, known for its intense competition, often sees failure rates closer to 70-80%.

consumer packaged goods

A study published in the 2022 Journal of Marketing and Consumer Behaviour in Emerging Markets by Ireneusz P. Rutkowski investigated this phenomenon within the food category. The study analyzed a sample of roughly 1,500 new product introductions across eight food categories: baby food, bread, breakfast cereals, chocolate, dairy, desserts and ice cream, fruit and vegetables, meals, and lunch.

The study defined new product failure as a product’s absence from a listed website at least 18 months after its market introduction. Conversely, a product remaining available on the website until 2013 was considered a success.

Key Findings:

Based on these criteria, the study found that 66% of all new food products tracked by Mintel were successful. However, the success rate varied significantly across the eight product categories studied, highlighting the diverse landscape within the CPG industry.

This case study demonstrates the importance of understanding industry-specific challenges when launching new products. By conducting thorough market research and tailoring your approach to the competitive environment, companies can increase their chances of success in the CPG sector.

Food Product CategorySuccess Rate
Baby Food87.5%
Bakery Products70.9%
Cereals65.1%
Chocolate Products78.2%
Dairy61.5%
Desserts and ice cream57.6%
Fruits and vegetables62.2%
Ready meals / lunch dishes57.0%

PDMA Study Reveals Industry Variations and Best Practices Impact

A practice study by the Product Development & Management Association (PDMA) researched failure rates across industries. Interestingly, the study revealed a significant difference in performance between the best and worst business units. The best units achieved a low failure rate of 24%, compared to 46% for the rest.

Industry failure rates also varied. Consumer goods and services generally displayed higher rates than healthcare or software. Specific examples include healthcare with a 35% failure rate and Fast Moving Consumer Goods (FMCG) with a 49% rate.

IndustryFailure Rate
Chemicals44%
Other materials39%
Industrial services43%
Consumer goods45%
Consumer services45%
Investment goods35%
Healthcare36%
IT software and services39%
Technology42%

Source: Research Gate

The Takeaway

The 2024 statistics on new product failure rates serve as a sobering reminder of the challenges faced by innovators and entrepreneurs. However, they also reinforce the importance of customer-focused design, market research, and strategic planning. For those willing to learn from these insights, the opportunity to be among the successful 5% remains open.

For more statistical articles, check out statistics on the marketing budget for small businesses, the cost of starting a small business, and the small business failure rate.

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