Our recent poll on LinkedIn asked the question, “Why do so many Product Launches fail?” The results showed that an overwhelming 82% of respondents identified a lack of market knowledge as the key cause of new product launch failures. Lack of capital and the product simply not being good enough both returned 9% of the votes, and not one voter blamed the business model as the cause of failure.
From research conducted by our data science partners Attractor Network and Growth Science, we know with a high level of certainty that 77% of the cause of new product failures are exactly that; external factors as opposed to internal factors. i.e. competitors, target market knowledge and business model adoption.
So, what do we read into these results?
We can easily assess that for a poll, most respondents agree that Market Knowledge is a “cause” of successful launches however with new product launch failures in excess of 80%, we do wonder why more companies do not invest in gaining a deeper understandings of their market before investing into innovative ideas?
There are a number of assumptions and observations that can be made about this;
- The innovators do not understand what ‘Job needs to be done’ is. Many innovations come from individuals who often build a solution without necessarily knowing or understanding what problem they are intending to solve and specifically for whom.
- Lack of capital to invest into “market knowledge”, so they invest mostly into their product (with 4 out of 5 failing anyway)
- Many believe they know the market only to find out that they misread their own beliefs when they eventually launch
- Business model was not trialed and tested in the marketplace. Ensuring that you have a business model that appeals to the target market is an essential component of market entry strategy. This, like market knowledge, needs to be tested to give your new idea the greatest probability of success
- Mid tier and larger organisations may believe that they already know the market. However, as disruption theory teaches us, a disruptive innovation often means that market entry is going to be directed at the low end or non-consumption market in the early market adoption phase. This can be translated into the reality that your new idea could in fact gain adoption in different markets that what a mid tier or large organisation is used to operating in. Therefore, they do not know the real market as well as they thought
Even mid-tier and larger organisations can and do fail here. They may believe that they already know the market. However, as disruption theory teaches us, a disruptive innovation often means that market entry is going to be directed at the low end or non-consumption market in the early market adoption phase. In other words, this new idea could gain best adoption in different markets to those that a mid-tier or large organisation is used to operating in. Therefore, they do not know the real market as well as they thought.
Today, there are methods of getting to know your market so much more efficiently and cost effectively than in using traditional methods that require a lot of labour resources and can take months to produce. At Advivo ICP and with our data science partners, we are able to utilise cost effective data science tools supported with deep qualitative research techniques that provides you with the market knowledge you need to plot your market entry successfully. Please reach out with any enquiry if you would like to know more about knowing your market.