New product failure tends to get discussed as a marketing problem. It is more often a decision problem, and the decision happens a long way earlier than most people think.
Here is how a new product gets chosen in a great many food and drink businesses.
Everyone gets in a room. There is a brainstorm. Twenty ideas go up on the wall. Somebody senior says they really like the third one, somebody else agrees, and that is the decision made. It takes about ten minutes and nobody writes down why.
“It astounds me how businesses launch products,” says Emma. “I have worked in large manufacturing businesses where million pound lines came straight out of somebody’s head and we gave it a go. That is genuinely how it happens, at real scale, all the time.”
The reason this matters is not that the idea is necessarily wrong. Sometimes the person in the room has excellent instincts. The reason it matters is what that ten minute decision commits the business to.
What you have just signed up for
A retailer concept to launch cycle runs at around twelve months. Before that, there is roughly another three months of internal work: shaping the brief with the retailer, presenting on where the category is going, planting the seeds that lead to the brief being issued in the first place.
So from the room to the shelf is about fifteen months.
In that time you will have committed development time, technical resource, factory trials, artwork, packaging origination, print, stock and a listing conversation. Most of it is not recoverable.
“Fifteen months, and you find out at the end whether anybody wanted it,” says Emma. “That is the bit that should worry people. Not the money on its own, the sequence. The most expensive decision gets made first, with the least information behind it.”
And when it does not work
The uncomfortable part is what happens next, which is usually nothing.
Teams track the sales data and get a fairly clear sense within a few months that a line is not performing. What they tend not to do is pull it.
“Nobody wants to lose face and take it off themselves,” says Emma. “So they wait for the retailer to do it. You get an email saying the product is being delisted for low sales, and that is that. You accept the fail and move on.”
Which means the cost is not only the fifteen months. It is the months after launch spent supporting something that everybody already suspects is finished.
How common is new product failure
This is where the numbers get quoted badly, so it is worth being careful.
You will often see it said that 80% or 90% of new products fail. That figure comes largely from older United States sources and has been challenged in academic work as something that circulates through repetition rather than evidence.
The most rigorous measure of new product failure available is lower and still sobering. Research from the Ehrenberg-Bass Institute, published in Marketing Letters, tracked 83,719 new lines across 31 categories using consumer panel data. One in four was no longer being bought a year after launch. By two years, it was around 40%.
The same study found new product failure was more likely in higher revenue categories and for lines launched by smaller share brands. In other words, the more competitive the shelf and the less weight you have behind you, the worse the odds.
Two in five, within two years, on a fifteen month development cycle. That is the actual risk profile of the decision being made in that room.
Why more businesses do not screen
Idea screening exists. It is not a new discipline and it is not complicated. Most businesses simply do not do it.
“A straw poll of five people in a room decides it,” says Emma. “Or somebody has seen that matcha is everywhere at the moment, so we launch a matcha muffin. There will be some trend insight behind it, and they will look at what has worked elsewhere. But a lot of businesses do not realise they could put the whole list to a panel and let people who actually buy the category tell them which ones to take forward.”
There is a version of this that is quite hard to argue with. The people in the room are not the target consumer. They are experienced, they know the category and they are close to the brief, and none of that makes them representative.
“I am not necessarily the target consumer,” says Emma. “If I come up with an idea, that is a hypothesis. It is not evidence. We need to ask the people who are going to buy it.”
What screening does to the arithmetic
Idea Arena takes the twenty ideas that came out of that room and puts them in front of a large group of people who buy the category. Everyone sees every idea, worked through as a tournament, and they come back ranked into green, amber and red tiers. For a mainstream category where the audience is simply people who buy it, that can be inside 24 hours. Where the audience is more specialist and harder to reach, it takes longer. Two weeks is the outside.
The output is not only a score. Alongside the ranking you get what people actually said: why the winner won, why somebody chose to bring an idea back at the resurrection round, and what they would change about it. So the shortlist arrives with an explanation attached rather than as a list of numbers.
The case for doing it is not that screening guarantees a successful launch. Nothing does. The case is about proportion.
“Set the cost of finding out early against fifteen months of development, factory time, artwork and stock, and it is not really a close comparison,” says Emma. “You are spending a very small amount to avoid spending a very large one on the wrong idea. And if the ideas are good, you have lost very little time and gained a ranked shortlist you can defend to your board.”
Where it fits
Screening does not replace concept testing and it does not replace development. It sits in front of both.
The job is to get from twenty ideas to the four or five worth taking seriously, before anyone starts spending. Everything after that, the detail, the positioning, the audience, is a different exercise.
The alternative is what most businesses do now, which is to pick three in a meeting and find out in fifteen months. That is not a research problem. It is the most avoidable cause of new product failure there is.
Idea Arena is FIS Group’s idea screening tool, built to take a large pool of early ideas down to a shortlist worth developing, in anything from 24 hours to two weeks depending on the category and the audience. To talk through how it would work with your next round of ideas, contact Emma Wood.