Question

Not all products become successfully branded products. New products in South Africa continue to fail at rates estimated as high as 50 percent. Discuss the various reasons for failure as well as the additional drawbacks that a new product of your choice has faced.

Answer 1

The various reasons that a new product such as a car of a brand has failed because there might be various shortfalls in terms of price, competition and marketing strategy. As it is a new product, there is no existing market prevalent, this reduces the scope to reach out to the customers. Less visibility is the major cause for a products failure in the market.

Another reason is price, as it is a new product, consumers are often sceptical whether the product is worth the money it is sold at. If a product is expensive than the consumers will shy away from buying and if it is cheap they question the quality and don't try to experiment. Some countries also have a different market for example the new car which is a hatchback, this style is not used by consumers in more developed markets as the capacity is low. Thus the features also determine the success rate.

The number of competitors in the market and the strategy used by them is another important deterministic factor in the growth rate in the sale of the new product as extensive competition acts as a deterent and leads to excessive pressure on the new product because it needs a trial period to break even and because of the competition, it further leads to less chances for profit making as the price is already kept at a low level because of extensive competition.