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How common is new product failure and when does it vary?

Author

Listed:
  • Kirsten Victory

    (University of South Australia)

  • Magda Nenycz-Thiel

    (University of South Australia)

  • John Dawes

    (University of South Australia)

  • Arry Tanusondjaja

    (University of South Australia)

  • Armando Maria Corsi

    (University of South Australia)

Abstract

This study aims to explore how common new product failure is in consumer packaged goods (CPG) categories and investigate the conditions in which the new product failure rate varies. This study analyzes 83,719 new stock-keeping units (SKUs), which were introduced over 8 years (2002–2009) across 31 CPG categories in the USA. Failure is the permanent cessation of sales, which is measured in consumer panel data. We find that one in four (25%) new SKUs are no longer bought 1 year later—a rate that increases to approximately 40% 2 years post-launch. New SKU failure was more likely for new launches that were introduced into higher revenue categories and by smaller share parent brands. Our findings can be used as a resource to aid marketing practitioners’ understanding regarding how common failure is for new CPGs and when there is greater associated risk.

Suggested Citation

  • Kirsten Victory & Magda Nenycz-Thiel & John Dawes & Arry Tanusondjaja & Armando Maria Corsi, 2021. "How common is new product failure and when does it vary?," Marketing Letters, Springer, vol. 32(1), pages 17-32, March.
    • Handle: RePEc:kap:mktlet:v:32:y:2021:i:1:d:10.1007_s11002-021-09555-x
    DOI: 10.1007/s11002-021-09555-x
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    References listed on IDEAS

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    Cited by:

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    5. Michael Klein & Fuat Sener, 2023. "Product Innovation, Diffusion and Endogenous Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 48, pages 178-201, April.

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