Question

Why is it dangerous to introduce a new product?

Answer 1

It is really difficult to establish a new product. Product failure is too commonplace and a very minuscule of new products launched succeed in the long-term. Initially, a very small portion of consumers is willing to change their old consumption habits and try out the new product. Firms need to spend a lot of money on advertising and promoting the product in the introduction stage when awareness about the product is low in the market. The growth in sales of the product depends on the feedback of the initial users, the effectiveness of the marketing activities of the firm and the effectiveness of the products in meeting the unmet demand of consumers. Most products are discontinued in the introductory stage only due to lack of consumer interest. '

Developing a new product often involves a huge investment by a firm and its probability of success is much lower than its probability of failure, given the number of products are launched every year and the number survive in the long-term.