WHY DO NEW PRODUCTS FAIL?

According to a new study published in the MIT Sloan Management Review, the main culprit has been a faulty understanding of customer needs," says Susumu Ogawa of Kobe University in Japan and Frank T. Filler of the TUM Business School in Germany.

The solution, according to the study, is to incorporate potential customers into the product development process, an idea that they say is already being used by companies such as Procter & Gamble and Unilever.

The study suggests that customers should be asked to submit their ideas and vote for the company concept online. The concepts that received the most votes would be pursued. Then the company would ask their customers for a commitment to buy the product — perhaps at a discount — before beginning final development and manufacturing. If there were not enough preorders, the product would be abandoned before major investments were made in final development, manufacturing and marketing.

The authors contend this process, called collective customer commitment, is more efficient than focus groups that measure whether customers like an idea, not if they will buy a product, and is less expensive than test marketing.